And here we are, the final part of the mini-series on the woes of automobile transfer to the state of Virginia. I think the issues I have discussed reflects the norm, rather than the exception, of dealing with the Department of Motor Vehicles (DMV) in any state. But that is now the past and now I move on to examining the nuances of obtaining auto insurance.
Until yesterday, my auto insurance has been together with my parents with the insurance company Liberty Mutual. We have been with this company for many years and their rates were very good in the state of Maryland. But upon inquiry of their rates in Virginia --which turned out to be quite high-- I opted to shop around with other insurance companies. I applied an economic methodology (or just logical) of getting as many quotes as possible, and then selecting the best one in terms of price and coverage.
The Background/Vehicle Profile
I drive a 2008 Honda Civic, an LX-model with 4 doors. I first received my driver's license since the age of 16 and have a spotless record. The only blip could be a speeding ticket (caught by a camera) received last year. I also am considered a good student, with at least a 3.0 GPA from college. But I am not yet 25 years old, an age gap that commands high premiums from insurance companies.
The Playing Field
I looked into a wide range of insurance companies, from the big names to the no-named ones. I tried to select two choices with each company: one at minimum coverage possible (which allowed a straight, skeleton comparison of premiums) and one at the desired coverage. Desired coverage includes a 50/100/50 liability ratio (explained in detail later) for insured and non-insured, in addition to a $500 collision as well as comprehensive deductible. I tried to apply as many discounts as possible, given my background. Minimum coverage is 25/50/25 liability ratio and no other coverage. My cost-per-month results for the Honda Civic are as follows in Arlington, Virginia:
- Geico -- $86.35 for desired, and $42.84 for minimum
- AllState -- $73.83 for desired, and $27.5 for minimum
- State Farm -- $63.6 for desired (did not bother to get a minimum quote)
- Liberty Mutual -- $150 for desired
- Progressive -- $85.35 for desired, and $40.01 for minimum
- Nationwide -- $77.60 for desired, $40.63 for minimum
- 21st Century -- $105.78 for desired, $91/23 for minimum
- Esurance -- $74.14 for desired
- Costco -- $120 for desired
From the results above, AllState and StateFarm appeared to be my best options in terms of cost-to-price. AllState had the best priced (by far) of the barebones insurance. However, you should never opt for the barebones package unless finances are really tight or another exceptional reason. My explanation is a no-brainer, with the current rates of medical expenses and car repair costs, you will likely be bankrupt if you get into any accident. Period. $25,000 sounds like a lot of money, but it's a drop in the bucket if either you get insured or someone else is.
Ultimately, I picked StateFarm and loaded up on the coverage. My final premium is about $77 per month, which includes: 100/300/100 liability ratio, $0 deducible for comprehensive damage, $500 deductible for collision, $1000 medical expense, and towing reimbursement of up to $100. This price also included renter's insurance (for my apartment) as StateFarm offers a sizeable discount -- which turned out to be only an extra $2 per month. I was very satisfied with how things worked out. It also helps StateFarm has an office closeby!
The Policy Jargon
After talking with multiple agents and reading on this topic, I feel that I have a pretty good command of the definitions for each coverage topic. You can read about each topic on any insurance company's website (e.g. State Farm's), or you can read my interpretation of each:
- Automobile liability. This is divided into two categories, property damage and bodily injury damage. Both categories are normally the same. To illustrate, my 100/300/100 liability ratio is $100,000 per person for bodily injury ($300,000 total per incidence) and $100,000 for property damage. This topic comprises the bulk of the insurance premium.
- Medical expenses. Think of this as specialized coverage for any medical expenses. $1000 may seem little, but it's specific for medical-related costs and hence easier to file claim on.
- Underinsured motorist. As its name implies, this is when you get into accidents with those without sufficient coverage or no auto insurance at all. By law, liability ratio for this is the same as the automobile liability. But the premium is much less.
- Collision. When you get into a collision with a moving or non-moving object (God forbid!) and your car is damaged, this is what you'd use. Normally there is a deductible, which comes out of your pocket before the insurance company starts paying. After "Automobile Liability", this it typically the second most expensive premium.
- Comprehensive. Any other damage than collision, be it theft, fire, etc. This is actually one of the most affordable premiums and I strongly recommend decreasing your deductible to $0. The different in cost is about $20 from $500 deductible, and the peace of mind is worth it in my book.
- Towing and Labor. Used when your vehicle is disabled and needs to be towed. Insurance covers the first portion of the costs, and you are responsible for the rest. This thing costs only a couple of bucks, so you should definitely have it.
- Miscellaneous (e.g. rental coverage). I do not regard these as necessary, as is the case of reimbursement for rental cars. To each his/her own though...