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The Responsibilities and Risks of an Insurance Company That Issues SR-22 Coverage

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A lot of high-risk drivers are required to carry a special type of auto insurance coverage called SR-22 insurance. This coverage is not available from all insurance companies, and one reason for this is that an insurance company takes on extra responsibilities and risks when issuing an SR-22 policy. Here are three of the duties an insurance company assumes when they offer SR-22 insurance coverage to drivers.

Completing the SR-22 Form

SR-22 insurance is not really insurance itself, but a form that proves a person has insurance coverage. If you have been charged with a DUI, for instance, you will often have to purchase an SR-22 policy in order to keep your driver's license.

When an insurance company agrees to offer you SR-22 insurance, their first responsibility is to create the SR-22 form for you. This is an additional step they must take for SR-22 policies that is not needed with regular auto insurance policies. They will either mail this form to you or email it, and you will be responsible for bringing it to the DMV by the date listed on the notification letter you received in the mail. Once you get your policy in place, you must make sure you pay all your bills to prevent the policy from lapsing.

Monitoring the Policy

The second responsibility the insurance company assumes is monitoring this policy. When you need SR-22 coverage, it will be for a certain length of time, which is usually three years. If you fail to pay the bill for the insurance, the policy will lapse, and this will create problems. As soon as the policy lapses, the insurance company is legally required to inform the DMV of the policy lapse. 

If this occurs, the insurance company must fill out an SR-26 form to mail to the DMV. This form simply states that the SR-22 policy has lapsed. The insurance company will also use this particular form once you have completed the timing requirements for the coverage. In this situation, the SR-26 form lets the DMV know that you have completed the term they had requested. The DMV will then remove this condition from your record, and you will no longer need to have the coverage. 

One important thing to realize is that if your policy lapses before your term is complete, you may be required to start the entire term from the beginning. In addition, the DMV also has the right to revoke or suspend your driving privileges if there is a lapse in coverage.

Insuring a High-Risk Driver

SR-22 insurance coverage is needed only for high-risk drivers, and because of this, insurance companies charge more for this type of coverage. Drivers that are in high-risk categories are more likely to get in accidents and receive traffic violations. If the high-risk driver causes an accident, the insurance company will have to pay for it.

According to Value Penguin, if SR-22 coverage is ordered after a person gets speeding tickets, this person can expect to pay 32% more for their car insurance. If the coverage is needed for something more severe, such as a DUI, the coverage may cost 135% more for the person. This can be a big increase from what you are used to paying, but there is no way around it.

If you want to continue to be able to drive with a valid driver's license after a major traffic violation, you must purchase an SR-22 policy. As you look for the right policy, you may want to call around and compare quotes so you can find the most affordable policy for you. You should also make sure you begin looking quickly so you can avoid losing your driver's license.