Auto Insurance Bonds and Alternatives to Traditional Insurance Policies
An SR-22 Bond
is a filing between the insurance company and the State which requires the insurance company to notify the State when your coverage is started, and also notify the State any time your coverage is cancelled. You may be required to carry an SR-22 bond if you've ever been charged with a major traffic violation, such as Driving Under the Influence, or if you've been charged with Driving Under Suspension or Driving Without Insurance. You'll be required to carry the SR-22 for either 3 years or 5 years from the date of the offense, depending on the severity of the offense and your prior driving history.
The SR-22 bond is added to an insurance policy for a nominal fee. The SR-22 Bond does not provide any coverage
; it's simply a means for the State to monitor whether or not a driver has an active insurance policy. A Financial Responsibility (FR) Bond may be purchased instead, and satisfies the SR-22 requirement.
Who is an SR-22 Bond for?
An SR-22 Bond is only necessary if you've been ordered by the State to carry one, since the SR-22 provides no additional coverage itself, and is merely a way for the State to monitor the status of your insurance.
Financial Responsibility / FR Bonds
A Financial Responsibility Bond
(otherwise known as an FR Bond
) is meant to cover an individual driver, rather than covering a specific vehicle or vehicles. An FR Bond would then provide State Minimum liability coverage for the driver while they're legally operating a motor vehicle. It will not cover damage to the vehicle being driven, injury to the, and may not pay for injury sustained by your passengers.
It is important to remember that the FR Bond follows the owner of the policy, and not their vehicles
. If you carry an FR Bond and someone else causes an accident while driving a vehicle you own, there will be no coverage, and you may be subject to penalties including repayment of damage and suspension of your driver's license.
Who is a Financial Responsibility Bond for?
Drivers who are looking to meet only the State Minimum limits of insurance, and who operate a number of vehicles that they may or may not own may be interested in this coverage.
Named Non-owner Policies
Policies are similar to Financial Responsibility Bond policies in that they are meant to cover a driver, rather than a vehicle. These policies differ from FR Bonds in two key ways: First, Named Non-owner policies give you the option to carry better-than State Minimum limits. You can even add options like Uninsured Motorist Bodily Injury and Medical Payment coverages.
However, unlike FR Bond policies, Named Non-owner polices are not meant for drivers who have a vehicle titled in their name
(hence the 'Non-owner.')
Some companies will also exclude coverage for vehicles owned by other residents in the household, or vehicles that the driver has regular or customary access to.
Who is a Named Non-owner policy for?
These policies are ideal for drivers who have a valid license, don't own their own vehicle, and who may occasionally drive someone else's vehicle. They're also great short-term solutions for drivers between vehicles, as they can avoid causing a costly lapse-in-coverage, and can easily be converted into a normal auto policy if the driver purchases a vehicle.