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Insurance Basics

April 13, 2021

The DUI Law Firm of Jon Woolsey wants you to understand all of the ramifications of being charged with driving under the influence and what to expect if you end up being convicted of the charge or cop to a plea that places an alcohol-related violation on your driving record. Obviously, insurance companies will vary tremendously by area so we always recommend that you check with your carrier for better understanding of your particular case. However, we do have some general information here that will give you a good idea of what to expect with a DUI/DWI on your record.

Who Provides Insurance Companies with My Driving Information?

Most of the information that insurance companies collect and use for rating purposes is made available to them from government agencies and credit-reporting companies. For example, you can get a copy of your motor vehicle report from your state’s department of motor vehicles.

Most state laws require DUI convicted drivers to get an SR-22 from their insurers, so you can’t hide. In addition, your company may cancel your insurance mid-term or terminate the policy at the end of the term because of your DUI conviction, especially if you are currently in a preferred class. Your company will send you a notice stating why you’ve been canceled, and then you’ll have to find another insurer while having a cancelation on your claims history.

Will My Premiums Go up If I Have a DUI/DWI on My Record?

Insurance companies will most likely increase premiums after a drunk driving conviction by as much as two or three times. In most cases, this is simply price gouging as the statistical incidence of accidents caused by convicted first offenders is far below the level that would justify the increases.

There are no laws regulating the premiums charged;

However they vary wildly from one company to another and certainly justify comparison-shopping. In most states, an insurance company has three years after a DUI to cancel you or raise your rates.

Do insurance companies ALWAYS increase premiums?

Not necessarily so! The results will vary from state to state and may depend on such factors as how long you have been insured with the company and your past driving record. If you are dropped, you will have to shop around for a new insurer and chances are your rates will be sky-high. Your increase in insurance rates can constitute the single biggest financial cost of being convicted for drunk driving.

Rates don’t always go up!

You may be surprised to know that when your insurer does find out about a DUI conviction it doesn’t automatically impose higher premiums. The insurer will look at your history with the company and your claims record, and your fate is in its hands.

Insurers can miss DUI convictions!

It’s possible that your insurance company will never find out about your conviction if you don’t have to get an SR-22. A June 2002 study by the Insurance Research Council revealed that as many as one-quarter of driving convictions never end up on motor vehicle records, due to lack of shared information between courts and motor vehicle departments or because a conviction has been erased through alternative means, such as driving school. If you get your charge reduced in a plea bargain, or have a limited license suspension, such as 30 days, it’s also very unlikely your insurer will find out about your conviction.

Many insurance companies check your motor vehicle record only once every three years or when you’re applying for a new policy. Sometimes, accidents, tickets, and drunk-driving convictions can escape your insurer’s attention or don’t end up on your motor vehicle record. However, if your insurer does find out about a driving under the influence (DUI) conviction, you’re likely to feel the pinch of higher rates and possibly policy cancelation or non-renewal.

Can my insurance company cancel my plan after learning of a conviction?

Although all states forbid insurance companies from denying coverage to policyholders because of race, religion, residence, age, or occupation, you should be aware that your policy may be canceled for the following reasons:

  • Having your driver’s license suspended;

  • Having too many traffic violations or;

  • Being convicted of a felony, criminal negligence or;

  • Being convicted of or pleading guilty to drunk driving.

For more information on the effects of drunk driving on your insurance, contact your auto insurance company. Here’s one example of what an insurer does with knowledge of a drunk driving conviction:

State Farm’s action depends on which subsidiary you’re with. If you have a preferred policy with State Farm Mutual Insurance Co. and receive a DUI, State Farm may move you into State Farm Fire & Casualty, which is the standard-policy company. If you’re moved from preferred to a standard status, you’ll be paying higher rates already. State Farm will also review your motor vehicle and insurance claims history to determine if it needs to raise your rates further.

If you are convicted of drunk driving, you can usually assume that your auto insurance company will either drop you or raise your rates.

With this offense, you have shown yourself to be a risk to your insurance company. In addition, other agencies will also know of your driving record and may reject coverage or demand high premiums for a drunk driving charge.

What is an SR-22 form?

You’ll likely have to file proof of insurance for three – sometimes five – years with your state’s department of motor vehicles. Your insurance company will have to provide the DMV with an SR-22 form, which removes your license suspension, by providing the state with proof of insurance. An SR-22 also means your insurance company is required to notify the DMV if it cancels your insurance for any reason.

Some insurance companies don’t offer SR-22 policies, so you may also be non-renewed or canceled because your company can no longer provide what you need. Certain states don’t allow insurance companies to drop you in the middle of the policy term even for a DUI, so make sure you know the laws in your state.

There is truth to the old saying that “timing is everything!” By taking action now, with the help of a professional insurance agent who is knowledgeable about these matters you will save yourself time and money. By taking action now you can limit your financial risk and make sure that your insurance coverage does not lapse leaving you without the proper protection.

Many insurance agencies will “shop and lock”. Meaning they will “shop” numerous insurance companies for you and then you have the ability to “lock” the lowest rates. Realize that waiting until the last minute to handle these insurance needs will only cost you more money and will limit your options. Also by purchasing your insurance now from a reputable licensed insurance agent you will have at least some peace of mind that this part of your ordeal is over with.