How Will a DUI Affect My Auto Insurance Rates?

August 2010

You have unfortunately received a DUI conviction and you’re wondering how dramatically your auto insurance rates will increase, right? It is rare to find an insurance company that will not raise rates following a DUI conviction. However, if you learn from your mistake this will be temporary and will only impact your insurance rates for a handful of years.

Why do DUIs almost always lead to a rate increase? The answer is simple: the law of large numbers. All insurers utilize this theory to develop their rates. Let’s explain how the law of large number works:

The law of large numbers is the observed frequency of an event more nearly approaches the underlying probability of the population as the number of trials approaches infinity.

Huh? In other words, the more cars insured, the more accurately an insurer can predict the percentage of policyholders likely to have a loss. This theory is applied to a number of factors, including drivers with DUIs and other traffic violations; the age of the driver; the mileage driven each day by a driver; the population density; potential for stolen vehicles; and much more. Actuaries calculate these factors and determine the likelihood a loss may occur. This is how insurance companies determine rates and this is why there are so many rating variables. Insurance is a gamble: the insurer is gambling you will not have a loss or claim against the company; and you, the policyholder, are gambling that you might have a loss or claim. The higher the risk for the insurance company, the higher the price will be for the policyholder to take the gamble.

Your driving record will reveal any DUI conviction. When purchasing an auto insurance policy the company will generally review a copy of your driving record. Many insurers also review your driving record when renewing your policy, as well.

As we explained, based on the law of large numbers, insurance companies will likely determine that a DUI conviction may make you a higher risk driver. In California, some insurers may also deem you a “substantial increase in hazard.” This means the insurer can cancel your policy because they believe you are too risky to insure.

Most of the time, you'll also have to file an SR-22 if you're convicted of a DUI. An SR-22 is a statement of financial responsibility that serves as proof that you have the proper amount of insurance. Depending on your situation, you may have to file an SR-22 for several years. Having an SR-22 often puts you in the higher risk category with auto insurance companies, which means your rates could increase and remain higher several years after you receive a DUI.

Not all insurance companies will raise rates dramatically after a DUI conviction. At LOW COST DUI INSURANCE, we work with some of the most considerate insurance companies when dealing with drivers with a DUI. We can’t guarantee your rates won’t increase after a DUI, but we will work with our insurers to make sure you receive the most competitive rates possible. Contact LOW COST DUI INSURANCE now – 877-323-4DUI (4384) - and let us help you save money on your auto insurance premiums.