In insurance, geographical location majorly influences the calculation of car insurance premiums. The average car insurance rates tend to vary by state based on the legal requirements. As a result, insurance companies tend to vary their pricing accurately based on the underlying differences. In the state of Virginia, auto insurance is relatively cheap compared to other states. In 2019, the insurance rate for an average car was $901, which was nearly 37 percent less than the average rate in the United States. In 2020, the auto insurance rate in Virginia is $1005, which is an increase of 9.53 percent (Araujo, 2020). The cost is cheaper compared to the national average of $1,548.
Insurance rates are impacted by several factors other than location. In calculating the auto insurance premiums, factors such as motorist’s driving record, marital status, age, gender, and credit history are as well considered. However, these factors also lead to variations in insurance rates in different states of the US. For instance, auto insurance for a divorced driver is currently ranked as the second cheapest in the US. Also, according to Araujo, (2020) getting an insurance cover for a teen expensive compared to that of an adult.
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However, Virginia holds special conditions regarding car insurance. According to the Department of Motor Vehicles (DMV), one does not necessarily have to purchase car insurance. The laws of Virginia requires the driver to have a way of compensating for the property damages or injuries that result from a car accident. The state has minimum car insurance requirements put in place to meet this requirement. The minimum car insurance is $25000 on bodily liability per individual; $50000 on bodily injury in an accident; and $20000 property damages liability in an accident (Araujo, 2020). Therefore, as the law of Virginia stipulates, it is optional whether to purchase car insurance or not. Individuals can drive uninsured cars provided they can compensate damaged as of the above-mentioned minimum requirements.
For the reduction of insurance premiums, there are several ways of reducing or maintaining a low car insurance premium (Weidner, Transchel & Weidner, 2017). Insuring more than one car in the same insurance company has the effect of reducing insurance premiums for each vehicle. On the other end, when one withdraws the insurance policy of the second or third car from an insurance company, the insurance premium for the remaining vehicle would eventually increase. Secondly, it is advantageous to car owners seeking to purchase insurance policies to install anti-theft devices and vehicle engraving. This offsets premium discount as risks are minimized. Car thefts have a significant impact on insurance companies, and they are, therefore, concerned about how vulnerable a car is to theft. Hence, vehicle engraving, installing anti-theft devices, and insuring more than one car in an insurance company may have the effect of reducing car premium rates.
However, there is a measure that can be taken to maintain a lower car insurance premium rate. For instance, according to the NHTSA (n.d), an individual can avoid becoming a high-risk driver by adhering to traffic rules to avoid traffic tickets. The higher the number and severity of offenses, the higher the auto insurance premiums. In Virginia, a driver’s first minor accident where he was at fault attracts an additional car insurance premiums of $438.09 (Araujo, 2020). Also, drivers caught driving under the influence (DUI), which is among the severe driving offenses, attract an increase in insurance expenditure by an average of $368.99 annually in Virginia. Therefore, avoiding traffic offenses results in maintaining lower spending on insurance premiums (Paine, 2018). According to Paine, nations are adopting Pay-How-You-Drive drive technology, where gadgets are installed in a vehicle to track down how the car is driven. The telematics devices installed are useful in claiming reductions in insurance premiums for adhering to traffic rules.
The cost of an auto insurance cover majorly depends on location. Virginia is among the states with the cheapest auto insurance rates in the US. However, the rates have been gradually increasing over the recent past. For an individual to realize reduced car insurance, one needs to insure more than one car with an insurance company, and install the anti-theft gadget. Also, one can prevent insurance premiums from increasing by adhering to traffic rules as it would lead to traffic tickets that result in higher premiums.
References
Araujo, M. (2020, February 5). Understanding minimum car insurance requirements: State-by-state list of minimum car insurance requirements. The Balance . Retrieved from https://www.thebalance.com/understanding-minimum-car-insurance-requirements-2645473
NHTSA. (n.d.). Traffic safety facts Virginia 2014-2018. National Highway Traffic Safety Administration. Retrieved from https://cdan.nhtsa.gov/SASStoredProcess/guest
Paine, M. (2018). Road safety policy and practice: Telematics and vehicle safety. Journal of the Australasian College of Road Safety , 29 (2), 46.
Weidner, W., Transchel, F. W., & Weidner, R. (2017). Telematic driving profile classification in car insurance pricing. Annals of Actuarial Science , 11 (2), 213-236.
