If you’ve recently been required to have SR-22 insurance, you probably have a lot on your mind. You’ll need to shop around for the best SR-22 insurance, you’ll need to send in an application to get your license back, and you may even need to pay for your car repairs.
But, deep in the back of your mind, have you ever wondered: Where does SR-22 insurance come from, anyway?
This article walks you through the history of car insurance, how states came to require it, and why SR-22 helps solve a really difficult problem.
What is SR-22 Insurance?
An SR-22, also known as a certificate of financial responsibility, is a document that you and your insurance company need to file with your state DMV to show you have at least the minimum in car insurance.
Each state has its own definition of what makes a high-risk driver, but the most common situations include:
- Driving under the influence (DUI)
- Too many at-fault accidents
- Getting caught driving without insurance
It’s important to remember that an SR-22 technically isn’t a type of insurance like liability insurance or life insurance. Instead, an SR-22 is a certificate that proves to the government that you have the state-required minimum insurance.
If you’re ordered to file an SR-22, you’ll be required to do so for a certain amount of time before you can remove it from your record — typically 3 years. But where did this requirement come from in the first place?
A History of Car Accidents, Car Insurance, and SR-22
Picture this scene: an inebriated car driver from out of town accidentally hits a local cyclist. The cyclist ends up with a broken leg and is on her own to cover her medical bills. Meanwhile, the car driver spends a night in jail but is otherwise off the hook. If this doesn’t seem like a fair outcome to you, you’re not alone. In fact, it’s situations like this one that probably led people to start demanding car insurance.
The concept of insurance — a way to manage risk and protect someone against financial losses — is thousands of years old and can be traced to the earliest civilizations. So, it’s no surprise that when cars were invented, car insurance would soon follow. The first car insurance policy dates back to 1897, and it was a form of liability insurance that protected the car owner if the car damaged property or injured another person.
While car insurance was an excellent way to help victims of car accidents, it wasn’t until 1925 that some states started requiring drivers to show some proof of financial responsibility. Back then, drivers had a choice of getting car insurance or showing that they had at least $10,000 in cash or bonds.
After 1927, Massachusetts started requiring that all drivers show proof of insurance coverage before registering a car, and other states like New York and North Carolina followed. Back then, just like today, car insurance was regulated at the state level.
By the 1970s, almost every state had mandated car insurance. But, while it’s easy to show proof of car insurance when registering a vehicle, it’s much harder to track who’s keeping their car insurance policies active. With so many states registering thousands or millions of vehicles, imagine how hard it would be for both the DMV and insurance companies to track every driver’s insurance, especially before modern computers. This is where the SR-22 certificate comes in.
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SR-22: The Best Balance Between Safety and Efficiency
It’s true that most drivers meet the state-required minimum insurance coverage, even if no one is checking. However, those few who didn’t drive with active insurance posed a huge risk to other people, especially if they were reckless drivers or drank and drove.
Even if it was possible to sue an uninsured driver, the legal process could take months or even years. In the meantime, accident victims would have to find a way to pay for their own medical and repair costs until the case was resolved. And, even if a victim won their case, there was little one could do if the other driver couldn’t afford to pay or declared bankruptcy.
This was the central problem of requiring car insurance. How can governments protect people from high-risk drivers without having to verify everyone’s car insurance? The answer was the SR-22 form. Instead of spending taxpayer dollars to check millions of compliant people, state governments decided to focus on high-risk drivers — those drivers who have shown that they’re likely to cause an accident and therefore be subject to a liability insurance claim.
The SR-22 form — “SR” stands for “safety responsibility” — ensures that DMVs focus their resources on those who are most likely to be uninsured or underinsured.
Is SR-22 Insurance Required in Every State?
While most states ended up adopting the SR-22 form, some states don’t require it. These states are:
- New Mexico
- New York
- North Carolina
However, keep in mind that all of these states require that every driver have car insurance, and the penalties for getting caught driving without car insurance are just as severe as anywhere else. Besides facing fines and license suspension, you can face jail time in some cases.
If you’re required to file an SR-22 and move to one of these states, you’ll still need to keep filing your SR-22, even if these states don’t issue SR-22s themselves.
Is an SR-22 the Same as an FR-44?
There are two states, Florida and Virginia, that never adopted the SR-22 but started requiring a new form, the FR-44. “FR” stands for “financial responsibility” and is very similar to an SR-22.
There are two big differences:
- FR-44 is specifically for DUI offenders, while an SR-22 also can be for reckless or uninsured drivers.
- FR-44 requires you to carry liability insurance with a coverage minimum of at least $100,000. This is much higher than the state-required minimum insurance limits in these states.
Besides that, FR-44 and SR-22 are virtually the same. You’ll need to file an FR-44 through your car insurance company, and you’ll need to keep your FR-44 insurance active with no lapses for a specified time period.
When You Need SR-22 Insurance, Get the Best Option
While no one wants SR-22 insurance, you can now see why it helps keep costs down for your state and, most importantly, taxpayers. But that doesn’t mean that SR-22 insurance has to be expensive. At SR-22 Adviser, we work with risk drivers around the country to get the insurance they need at an affordable price. All it takes is a few minutes with our partner for an online quote for affordable SR-22 insurance.