How Does an SR22 Affect Insurance Premiums?

SR22 is misunderstood by many people. It is not an insurance policy. It is a certificate of financial responsibility that proves you are financially able to cover the damages that result from an accident for which you are responsible. The states regulate the reasons for the requirement and the fee insurance companies may charge for issuing the certificate. What an SR22 signals to insurers is that you are a problem driver and you will be treated as such. It will be reflected in your premiums.

If you are required to get an SR22, you have to find an insurance company that is willing to issue them because not all of them do. Insurance companies absorb risk. When they issue a policy, they basically gamble on the odds of you costing them money. This is why they look at your driving record and your credit report. They make money by insuring drivers that have the least odds of filing a claim. Your rates reflect their perception of these odds. An SR22 increases the odds dramatically and you are charged premiums accordingly -- from 14 to 40 percent. Many premium insurance companies won't insure you at all, or will drop you, if you are ordered to have an SR22 -- they don't want the risk.

If you live in a state with a mandatory insurance law, you are required to have insurance at certain minimum levels. In states with mandatory insurance, certain traffic offenses or criminal offenses involving a vehicle -- like reckless driving or DUI -- can trigger a requirement for you to get an SR22 and insurance. If you think you can drop the insurance and get away with it, think again. The insurance company that issued the SR22 certificate with your policy is required by law to notify your state that the insurance is no longer valid. There are penalties that vary depending on the state that requires the certificate.

You may cleverly think that if you move, you can avoid that pesky SR22 your state wants you to pay, but no, that isn't how it works. An SR22 is filed with your state and if you move, and drop the coverage, your state is notified. You are then required to carry the SR22 in your new state. The true downside of this is that even if your new state has lower required insurance limits than your original state, you have to carry the higher limits required by your former state. SR22 typically has to be in force for three years, which is a high price to pay for traffic violations.