OBTAINING INSURANCE AFTER A DUI CONVICTION
- June 18th, 2013
- Bruce Denson
- Comments Off on OBTAINING INSURANCE AFTER A DUI CONVICTION
In our car-centric society, where most adults need or want a clean driver’s license for transportation and work, a DUI conviction can be one of the most problematic legal entanglements that a motorist may encounter. There’s no question it’s going to be a costly affair, but drivers want to know how costly, and for how long?
The damage comes in two waves:
Initial fines, court costs, penalties, and legal fees can together easily surpass several thousand dollars. But the real cost of a DUI comes later in the form of severely increased insurance premiums. For those unfamiliar with the principle of insurance, it’s worth taking a moment to consider why this is.
What is insurance, anyway?
One helpful definition is “capital willing to take a risk.” Insurance companies assess the risk of each driver they cover and agree to insure drivers up to a specific dollar amount in exchange for periodic payments (premiums). When a driver gets a DUI, from the perspective of an actuary, he has just become a greater risk and must therefore compensate the provider of his coverage.
The issue of insurance coverage is critical in the aftermath of a DUI conviction because, for most defendants, it is impossible to recover their driver’s license from suspension without filing an SR-22 form. This form, required by the DMV, can only be issued by your insurance company, which must also immediately notify the DMV of any lapse or interruption to your policy. In other words, the state absolutely does not want anyone, especially a DUI-convicted driver, to continue to drive on the road without insurance. This is the goal of the SR-22 filing process.
OK, so now you’ve got to get insurance
The market for capital and risk in the automotive sector of the insurance industry is broken roughly into three levels: standard market, secondary market, and assigned risk pool.
The standard market is for drivers with clean records. The secondary market, where most drivers with recent DUIs now find themselves, usually charges 3 to 4 times more for coverage. That’s right — with even a single DUI, insurance premiums increase dramatically. After a second DUI, you may not be able to find private insurance at any price. At that point, you’ll be in the state-managed “assigned risk” pool, which is not desirable.
Although no aspect of your driving record ever truly “disappears,” after some time, your state’s DMV will no longer report the DUI conviction to insurance companies. For many states, this is five years, although it could be as little as three or as many as ten.
If you were paying $1,500 per year for insurance and your premiums doubled for five years after a DUI, you would end up paying an extra $7,500 for that momentary lapse in judgment — on top of substantial initial costs related to the conviction itself. A costly mistake in more ways than one.