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. If your insurer does find out about a DUI conviction, however, you’re likely to feel the pinch of higher rates and possibly the task of seeking a new company.
High rates or cancellation?
There are two ways insurance companies generally deal with customers convicted of DUI. First, your insurer will likely raise your insurance premiums and label you a high-risk driver if they’ve found out you’ve been convicted of DUI. In this case, you’re likely going to 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, letting the state know you’ve still got coverage.
Your insurer will likely raise your premiums, and it might cancel your policy if you’ve been convicted of DUI.
“The court will order you to file SR-22 and you’re not going to be able to hide that from your insurance company,” says Dan Kummer, manager of auto personal lines at the National Association of Independent Insurers. Most state laws require DUI convicts to get an SR-22.
Second, your company may cancel your coverage mid-term or terminate the policy at the end of the term because of your conviction. “A lot of times, if you’re with a preferred carrier, they’ll cancel you outright [for a conviction],” says Kummer. Your company will send you a notice in the mail telling you why you’ve been cancelled and then you’ll have to find another insurer while you have a cancellation on your claims history.
The state of California is considering legislation that would allow all insurance companies to immediately cancel policies of anyone convicted of any alcohol-related incidents, but certain states don’t allow insurance companies to drop you in the middle of the policy term, so make sure you know the laws in your state.
Insurers can miss DUI convictions
It’s possible that your insurance company will never find out about your conviction. Since insurance companies check motor vehicle records only every three years or so, your DUI conviction might go unnoticed.
“We won’t know [about the conviction] unless it’s in the motor vehicle report, a police report, or we find out from a claims representative,” says Sharon Frazier, a spokesperson for State Farm Insurance Co. “I’m sure there are a number that slip through the cracks. Human error and computer error happen all the time.”
An insurance company has three years after a DUI to cancel you or raise your rates.
What’s more, you could plea bargain your conviction down so that it never appears on your motor vehicle record as a DUI. “You never know what the courts are going to do,” says Kummer. “They might allow you to go to school or pay fines to lessen the charge in a plea agreement.” Your license may be suspended for only 30 days, as well, making it unlikely that your insurer is going to find out about your conviction.
If your insurance company misses the conviction at the time it happens, it has three years, according to most state laws, to cancel your policy or raise your rates because of the DUI.
“We might do nothing or we might cancel their policy.”
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. “If we find that a policyholder has been convicted of DUI, we look at their history and their track record,” says Frazier. “We might do nothing or we might cancel their policy.”
The action State Farm takes also depends on which subsidiary you’re with. If the policyholder is with State Farm Mutual Insurance Co. and the company doesn’t cancel the policy, it also won’t raise the rate based on the conviction. “If rates go up at all, it’ll be an across-the-board action, not based on one individual’s driving,” says Frazier.
On the other hand, policyholders with State Farm Fire and Casualty who are convicted of DUI but not dropped by the insurer will definitely see a premium increase, according to Frazier.
Nationwide Insurance Co. will cancel a policy in mid-term if that policyholder has been convicted of DUI, says Bob Cunningham, a spokesperson for the company. Nationwide periodically checks the motor vehicle records of its insureds, and if one were to come back showing a DUI conviction, the company makes a decision based on the person’s driving history and insurance track record.