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How to best manage your car insurance when you have an SR-22

SR-22 If you ever get involved in a serious motor-vehicle mishap, such as a DUI or driving without a license, you may need to get familiar with something called an SR-22.

An SR-22 is a document attached to an auto insurance policy and kept on file with a state's department of motor vehicles (DMV) for a specified period of time. Its purpose is to prove to the state that you have auto insurance following a serious driving-related offense.

An SR-22 is most commonly required when a driver is involved in an at-fault accident and doesn't have insurance, but there are several other circumstances where an SR-22 can come into play.

And it can get a bit complicated.

"I would say about 80 percent of the clients we deal with have no idea what an SR-22 is before they contact us," says Phillip Huynh, owner of the Austin, Texas-based Speedy SR-22 Insurance Services. "It's a topic that has many layers, and it can be a little confusing for the average driver."

Why would I need an SR-22?

The particulars of SR-22s will vary from state to state. In fact, Delaware, Kentucky, Minnesota, New Mexico, Oklahoma and Pennsylvania don't even require an SR-22. But if you live in any of the other 44 states (or the District of Columbia), here's the basic gist.

Typically, a state's DMV will require you to get an SR-22 in order to reinstate your driving privileges following a particular offense. These offenses include:

  • Driving without insurance.
  • Being involved in an at-fault accident without insurance.
  • A DUI or DWI conviction.
  • Too many moving violation tickets in a short period of time.
  • Driving with a suspended or revoked license.

"An SR-22 is basically the DMV's way of making you prove that you've got the state's required minimum liability insurance," says Benjamin Luftman, an Ohio-based criminal defense lawyer who specializes in traffic law.

How do SR-22s work?

Let's say you're pulled over for speeding and cannot provide proof of insurance. In Ohio, the penalty for a first-time offense is a 90-day license suspension and a $150 license reinstatement fee.

In addition, the DMV will only reinstate your license if you obtain an SR-22 and carry it with you for three years.

What's important to understand, Luftman says, is that an SR-22 is not a different or unique type of insurance. Rather, it's a certificate (or bond) attached to a new or existing auto policy proving that you're covered up to the state's minimum liability requirements.

"No matter where you live, an SR-22 is only meant to show that you're covered for liability in an accident," Luftman says. He adds that this coverage doesn't cover damage to the car you're driving or medical costs for you or your passengers.

Where do you get an SR-22?

This is where things can get a little confusing.

If you get into a crash or are charged with a moving violation and don't have auto insurance (which is one of the most common reasons people need an SR-22 in the first place), you can most likely find an agency that specializes in helping drivers obtain a minimum liability insurance policy with an SR-22 bond attached.

By buying a policy like this, you can comply with the state’s SR-22 requirements but don’t have to get your primary insurance company involved in the process (and thus run the risk of being dropped or having your premium potentially double or even triple.)

These are considered high-risk insurance policies that cover you up to the state's minimum liability requirements (at least) and the cost, says Heather Wilson, owner of the Wisconsin-based Compliance Insurance Agency, is going to vary wildly depending on your driving record and the state in which you live.

On the other hand, if you already have auto insurance but need an SR-22 (perhaps because of something like a DUI conviction), most major insurers will provide you with an SR-22 for a minor filing fee of about $15. But the consequences will probably cost you a lot more.

"I know for a fact that certain major insurance companies will drop you at your next renewal period if you tell them you need an SR-22," Huynh says. "That's why you need to explore all of your options before calling your insurance company."

One option is to find a company, like Huynh's, that will write you something called a nonowner auto insurance policy, which is insurance meant to cover liability risk for an individual who doesn't own a car. Your SR-22 will be attached to this policy, satisfying the state's requirement.

The price will depend on many factors but may cost between $500 and $1,000 for six months of coverage.

Why you need to take the SR-22 seriously

1. You don’t get your driving privileges back until you get an SR-22.

"The last thing you should do is ignore an SR-22 request from the DMV," Wilson says. "And if you get pulled over again and they find out you've been driving without a license, you're now digging yourself into a deeper and deeper hole."

2. You must pay your insurance premium on time, without exception.

If you fail to make a payment and your policy lapses, the DMV is notified immediately and your license automatically slips back into suspended status.

3. Your state may not let you know if you lose your driving privileges again.

Many states (like Ohio) aren’t required to let you know if you lose your driving privileges again. "So now you're driving around without a license and without insurance,” says Luftman. “If you get pulled over, even for a minor violation like speeding, your license is going to be suspended for a year and you'll have to get another SR-22. At that point, you've basically fallen into the DMV sinkhole."

4. Moving state won’t solve the problem.

If you move to another state during the time you’re required to have an SR-22, you still must fulfill your former state's SR-22 requirement if you want to continue driving, Luftman says. 

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