Insurance Effects of a DUI Conviction
A DUI conviction is a permanent part of your driving record. You probably realize the effects that a DUI conviction can have on your personal and professional like, but have you considered the financial impact? A DUI conviction — driving while under the influence of alcohol or drugs — can have a detrimental effect on your insurance eligibility and premium costs. With a DUI conviction, you are considered a financial high-risk investment for many insurance companies. As a result, this may affect your ability to carry quality, cost-effective insurance policies including car, life, and disability insurance.
An insurance company accepts money for insurance premiums which may provide you with financial help on a qualifying event at a later date, but the company makes its profit on premiums not paid out. Any company providing insurance coverage counts on not having to pay out claims, and your likelihood of causing a payout is one of the main factors affecting your eligibility and premium costs. With a DUI conviction, many insurance companies automatically place you in a category of likely claim payout, or “high-risk”. Once this happens, the company can protect itself by either:
* raising your premiums (rates can double, triple, or even quadruple)
* cancelling the existing policy, or
* denying renewal when the policy expires
Car Insurance
Many states require car insurance for all drivers. Even if you live in a state where this is not a requirement, car insurance is a way to protect your own assets in the case of an accident. However, once you have been convicted of a DUI, you become a high-risk for a claim payout. This is because statistics show that driving under the influence increases the likelihood of being involved in a car crash by three times that of a sober driver. Payout on a DUI related accident can be an extremely expensive occurrence that the insurance company would like to avoid. Depending on where you live, the company may not be able to cancel an existing policy in midterm, but there are no regulations against non-renewal or premium increases. As a result, your premiums could increase dramatically.
Life Insurance
While no one is required to carry life insurance, it is a way to protect your assets for your family when you die. You may be surprised to learn that a DUI conviction may raise your life insurance rates. Basically, your life insurance premiums are based on your health condition and your predicted life span. Insurance companies use medical and other records, such as your driving record, to assess your current and predicted health status. Any indicator that you may have an alcohol problem can raise your premium rate. This is because alcohol abuse can reduce your life span by 10-15 years. While a DUI conviction does not necessarily mean that you regularly abuse alcohol, an insurance company may use this as an indicator of a potential problem and classify you as high risk. As a result, you may face issues with denial of coverage, policy cancellation or non-renewal, or premium increases.
Disability Insurance
You may be unaware of personal disability insurance, as only 25% of the private sector workers are covered by such. Much like Social Security Disability, private disability insurance is designed to replace your income in the event of an illness or injury which prevents you from working. This insurance can be provided under an employer-sponsored group plan, or can be purchased individually. Many persons who are covered under an employer plan also take out individual coverage, and are able to draw from both policies in the event of work interruption. However, as with life insurance, your premiums are based on your health condition. Currently, approximately 4% of all disability claims are associated with substance abuse. Therefore, any indicator of potential alcohol abuse, such as a DUI, may cause you issues with denial of coverage, policy cancellation or non-renewal, or premium increases.
While there is always the possibility that a carrier may not find out about your conviction immediately, in most states there is a time window (usually three years) in which policy changes can be enacted based on DUI. If the questions are not addressed on your insurance applications, and records are not available, you may escape the adverse effects of a DUI conviction. However, this is unlikely, and any attempt to willfully cover up the conviction could result in immediate policy denial or termination, and possibly criminal charges.
If you find yourself facing a DUI conviction, you may need to reassess your insurance situation. You may find it helpful to seek an insurance broker who can provide quotes from many different companies. Some brokers even specialize in finding insurance for persons having a DUI conviction. Further information can be found at the following links.