What is an SR22 Bond?
When problem drivers are caught driving without insurance or arrested for DUI, most states will require them file proof of insurance with the Secretary of State. An SR22 bond, also called a financial responsibility bond, is one way for these drivers to meet their state's minimum insurance requirements.
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Function
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The purpose of an SR22 bond is twofold. First, it allows a driver to keep their license. When they obtain the bond, an SR22 form is sent by the insurer to the Secretary of State as proof of insurance pursuant to the law. Second, the bond protects other drivers. Anyone involved in an accident with an uninsured driver will have a difficult time collecting for damages, at least in a short period of time. By transferring the responsibility of collection to an insurance company, the victims of an accident receive compensation in a speedy fashion.
Features
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The exact features of an SR22 bond will vary by state. In some states, SR22 refers to an insurance policy, while in others it is a true bond, like a surety, where the driver makes a deposit to a certified agent. If, subsequently, the driver is in an accident, the surety company will quickly pay out up to the maximum of the SR22 bond to the victim for medical bills or repairs, and then collect the difference between the deposit and the payout from the driver.
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Types
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Not every state allows for auto insurance in the form of a bond, but among those who do, the most bare minimum is designed to simply cover injury or damages to other parties, and does not cover the driver's vehicle, medical expenses, or those of their passengers. More expansive SR22 insurance covers the driver's damages and injuries in accidents involving their own vehicle. Other policies, called operator's insurance, covers the driver when driving other people's vehicles, an option for those who don't own a car themselves. Owner-operator coverage protects the driver in any vehicle.
Effects
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Once the SR22 bond is paid for and in place, the driver must direct the insurance company, usually by phone, to send an SR22 form to the Department of State, where it can take up to 30 days or more to be processed. With the bond on file, the state issues a letter to the driver and a copy of the form as proof in case they're stopped. If the SR22 requirements are the only encumbrance on their license, it will usually be conditionally reinstated at this point if necessary.
Considerations
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By law, the insurance carrier is required to notify the Department of State if the driver fails to maintain or renew their insurance policy. In the case of an SR22 bond, this may involve regular payments to the surety company. If the state receives such notification, the process of suspending the driver's license will begin. Depending on the circumstances that created the need for an SR22 filing, drivers will need to keep proof of their insurance on record for a minimum of two to three years. If the driver moves out of state, they can appeal for their SR22 requirements to be waived, but will be subject to the insurance requirements of their new residence.
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