It’s estimated that up to 40 percent of all vehicle accidents are work-related. Whether it’s an employee in a rush or a distracted driver, the cost of these incidents can add up for a business.
There are many costs associated with car accidents. If an employee is injured while on the clock, you may be responsible for paying medical fees. You may also have to pay for repairs to a damaged company vehicle.
Another concern might be an increase in insurance costs. As you shop around after an accident or two, you might hear the term SR-22 insurance being tossed around.
What is this type of insurance? Do you need it for your business?
Our guide will shed light on when this type of insurance should be on your radar.
Defining SR-22 Insurance
What is SR-22 insurance? It’s the first question most people have.
It’s actually not insurance at all. It’s a form, called an SR-22, that your insurance company may need to file.
What is an SR-22? The form is court-ordered by your state if you rack up too many points on your license. Your insurance company must file the form with the government to prove you have enough insurance.
In some states, you may also hear about the FR-44. It’s like an SR-22 but usually requires more liability insurance. It’s often used for drivers who have had alcohol-related convictions.
Other terms include “SR-22 bond.” It functions as a certificate proving your financial responsibility.
Who Needs SR22 Insurance?
As we mentioned, a court has to order your insurance company to file the SR-22 form. If you need this type of insurance, you’ve likely been in trouble with the law.
There are a few different reasons a judge might order you to file an SR22 bond. In some states, this includes a drunk driving infraction. States like Florida and Virginia use the FR-44 for alcohol-related convictions.
Other likely reasons include:
- Causing an accident without insurance
- Reckless driving
- Several traffic violations in a short period of time
- Injuring someone in an at-fault accident
- Driving without insurance
As you can see, there are a few reasons the state might require SR22 insurance. You may also need to file the form if you’re reinstating your license after having it suspended.
What Does the SR22 Do?
The SR22 acts as a certificate or guarantee from your insurance company to the state. It says your insurance coverage meets or exceeds state minimums.
The reasons for this are relatively obvious. States set minimums because the costs of accidents can become quite high. If you were caught without insurance, the state wants to be sure you’re carrying proper coverage.
The state usually flags people they consider to be high-risk drivers as well. After an at-fault accident, you may find your insurance premiums go up. You might try to reduce your coverage to save.
Requiring SR-22 insurance assures the state that high-risk drivers still meet minimums.
Costs and Premiums
Now you’re wondering how much an SR-22 bond will cost you. Keep in mind that this is a form, not a type of insurance per se.
Most insurance companies will charge you a fee to file the form. You can attach the form to a non-owner or owner policy. Owner policies cost more since they cover personal injury and damages to the vehicle.
A non-owner policy is less expensive because it provides less coverage. It’s generally assumed the owner of the vehicle will have another insurance policy on it.
What does the SR22 policy cost itself? The cost increases are premiums related to the traffic violations on your record. You might need to file an SR-22, but your insurance will jump because of those three speeding tickets.
All in all, you can assume that you will pay more for insurance if you need an SR22 policy.
How Long Do You Need It?
The good news about SR-22 filings is that they do expire. The state may require you to have SR-22 insurance for anywhere from one to five years. This depends on the nature of your situation.
It can even vary by state. According to Florida SR22 Insurance, the period in Florida is two to three years on average.
Does a Business Ever Need to File SR-22s?
Now you understand the circumstances surrounding SR-22 filings and insurance. Will you ever need this type of insurance for your business?
The answer is that you could. If you’re the sole proprietor and you need an SR-22 policy, you’ll need this type of insurance for your company vehicle.
A business owner may also need SR-22 policies for employees. Consider a delivery driver who racked up a few traffic violations while working for you. They may be court-ordered to have SR-22 insurance.
In this case, you could consider a non-owner policy so the employee could continue their job. The SR-22 would be attached to the non-owner policy. This would save you some money, as this type of policy covers less.
The SR-22 insurance is supplemental to your regular auto policy. A non-owner policy is less expensive is because it’s assumed the vehicle owner has another policy.
In this scenario, your employee would likely need to file the policy in their own name. It would be with your insurance company. You may need to provide guarantees about your own insurance.
Keep in mind this may not be an option if the employee uses the vehicle on a regular basis.
Make Sure Your Business Is Covered
Making sure you have the right auto insurance is important for a business. It can save you from lawsuits, damages, and medical costs. In some cases, you might need SR-22 insurance.
If you need help determining what insurance your business needs, take a look around our blog. We have more guides to help you protect your business with the right policies. More great business advice is just a click away.