How to Create a Surety Bond for Auto Insurance in 2024
Depending on your state, car insurance bonds require a phone call, paperwork, and a small fee.
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Tim Bain
Licensed Insurance Agent
Tim Bain is a licensed insurance agent with 23 years of experience helping people protect their families and businesses with the best insurance coverage to meet their needs. His insurance expertise has been featured in several publications, including Investopedia and eFinancial. He also does digital marking and analysis for KPS/3, a communications and marking firm located in Nevada.
Licensed Insurance Agent
UPDATED: Aug 23, 2024
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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Aug 23, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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Drivers use car insurance bonds in conjunction with car insurance or as a replacement for standard car insurance. Car insurance bonds, or surety bonds, are technically known as SR-22 bonds. The ways SR-22 bonds interact with auto insurance varies by state. We’re going to dive into when a situation requires a surety bond instead of car insurance.
There are many reasons why a driver may wish to use a bond for auto insurance. Luckily, obtaining a car insurance bond is relatively easy to do in most states and simply requires a bit of paperwork and a conversation with a car insurance bond representative. However, keep in mind that the term is “surety bond for car insurance,” not “surety bond car insurance.”
So what exactly is a private auto insurance surety bond? Can you have a bond instead of car insurance? Are there cases when you are required to have a surety bond in lieu of auto insurance? Let’s get into it.
- Car insurance bonds are a legitimate alternative to traditional auto insurance in some states
- Some drivers will need an auto insurance bond to keep their license and vehicle registration intact
- Except for the voluntary SR-22 procured for self-insurance purposes, a bond for auto insurance is usually temporary
How do drivers create car insurance bonds?
So what is an insurance bond for a car? Can you create a surety bond DIY? Drivers do not “create” a car insurance bond. So if you’re looking for DIY surety bonds, you won’t have much luck. Depending on your circumstances, an auto insurance company or a third-party surety company will develop a car insurance bond for you.
Usually, your insurance company will authorize an auto insurance bond on your behalf and electronically file any required paperwork with your state. If you must use a surety company, the company will create an auto surety bond and relay paperwork to your insurance company. From there, your insurance company will file the auto bond with your state.
A process for a typical SR-22 bond insurance for cars requires drivers to notify their company that they wish to obtain an auto insurance bond in lieu of car insurance and fill out paperwork. Some drivers may have to pay a fee during the process.
If you are considering obtaining an SR-22 bond instead of car insurance, contact your state’s motor vehicle department or insurance department for specific steps based on your situation to see if surety bond auto insurance is even an option.
Difference Between Traditional Auto Insurance and SR-22 Car Insurance Bonds
Usually, SR-22 bonds act as a legal document validating to a court that you have the financial resources necessary to maintain your auto insurance coverage. So, in the case of an unexpected accident, an SR-22 automotive bond will demonstrate that you will be capable of paying out of pocket if an accident ensues damages.
With standard auto insurance, the insurance company assumes liability for an accident. In other words, auto insurance removes liability off the driver and places it on the insurance company and coverage plan. Although subjective to your auto insurance policy limits, an insurance company is responsible for paying any damages accumulated from an accident which is not the case with auto bond insurance.
SR-22 insurance bonds require drivers to set aside a significant amount of money in case of a collision. Although it is cheaper at the get-go to set up an SR-22 bond car insurance, paying out of pocket for vehicle repairs and replacements tends to be expensive.
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Who needs a surety bond for auto insurance?
So what are the circumstances for getting an insurance bond for a car? What is an SR-22 bond used for? Typically, the courts will order a driver to get a surety bond or an SR-22 bond as auto insurance after one or more serious driving-related incidents. For example, if authorities arrest you for a DUI or a DWI, a court may require you to obtain a bond due to the high risk you pose to others by being on the road.
Here is a look at the most common penalties for a first-time DUI offense.
Common Penalties for a First-Time DUI Offense
| Type of Penalty for First DUI | Penalty Details |
|---|---|
| License revoked | 6 months |
| Jail time | BAC over .20: 10 days BAC over .25: 15 days BAC over .30: 20 days up to 180 days |
| Fine | Up to $1,000 |
| Vehicle impounded | No law |
| DUI program | Alcohol Diversion Program possible |
| Community service | Determined in court |
| Mandatory ignition interlock device | Yes |
| Required to get license reinstated | $98 min, SR22 insurance, and retake driver test |
| Probation | Determined in court |
After one or more serious-driving offenses, it is possible that you will be charged up to $10,000 in fines and other penalties. In this case, you will most likely need a bond since it provides a guarantee of extra liability coverage in addition to your current auto insurance policy.
You may also use an auto insurance bond if authorities catch you driving without insurance or as a legitimate self-insurance alternative to standard driving insurance or vehicle bond insurance. If you have been caught driving without insurance, it may be difficult to have driving privileges restored without obtaining a surety bond for your auto.
Additionally, some states allow drivers to self-insure as long as they have a bond, which presents proof of financial resources. If you must have a bond, your auto insurance rates will increase significantly. However, you may be able to find cheap SR-22 auto insurance in your area. But make sure you know the requirements in your state, whether you need to find out about a California auto insurance surety bond, a vehicle surety bond in Wisconsin, or how much is an SR-22 bond in Ohio.
The Cost of Using a Bond for Auto Insurance
Generally, auto insurance bond costs are low. However, pricing does vary by state. Usually, drivers who use auto insurance bonds pay the most amounts to auto insurance companies. High-risk drivers are more likely to be involved in an accident. Therefore, their auto insurance rates are high, but the cost of an automobile surety bond may not be.
Typically, the cost of self-insured bonds in place of standard auto insurance is determined by your credit history. Drivers with good credit tend to pay much less for a surety bond for their car than those with poor credit.
For self-insurance bonds, you may also pay a one-time deposit to your state’s DMV. This one-time payment is usually equal to or higher than the liability insurance requirement of your state.
How long is a bond for auto insurance in place?
A vehicle insurance bond is usually temporary, with the exception of voluntary SR-22 bonds procured for self-insurance purposes. While states have different auto insurance laws, auto insurance bonds usually expire after three to five years as long as the driver is not found guilty of any additional offenses.
Depending on the severity of your circumstances, a court may alter an auto insurance bond’s time frame if necessary. If you move to another state, the law still requires you to fulfill the terms of the bond in the state where it was issued.
What if I violate the terms of my auto insurance bond?
A court that orders you to secure an auto insurance bond is one that is suspicious of your driving integrity. As such, state courts take bond compliance very seriously. If you violate any terms stated in your bond, your actions imply a violation of the conditions set by the court.
If you must receive a bond for car insurance, do everything in your power to make sure you fulfill its terms and obey the law in the future.
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Insurance and Third Party Bond Companies Create Car Insurance Bonds
If you wish to pursue an SR-22 bond, you will not create one for yourself. Instead, your auto insurance or a third-party company will authorize a bond on your behalf. Car insurance bonds and auto insurance laws vary state by state, so the process may look different depending on where you live. Typically, drivers can expect to contact a bond-creating company, fill out paperwork, and possibly pay a fee.
Frequently Asked Questions
Can I use a bond to meet the insurance requirements for ridesharing or delivery services?
The insurance requirements for ridesharing or delivery services, such as Uber or DoorDash, may vary. It’s recommended to check with the specific company and your state regulations to determine if an auto insurance bond can fulfill the insurance requirements for these services.
Can I switch from a bond to traditional auto insurance?
In most cases, you can switch from a bond to traditional auto insurance. However, it’s essential to consult with your insurance provider to understand the process and any potential requirements or restrictions involved in transitioning from a bond to a traditional auto insurance policy.
Can I cancel my auto insurance bond before it expires?
The ability to cancel a surety auto insurance bond before its expiration date depends on the regulations of your state and the terms of the bond. Some states may allow cancellation, while others may require you to maintain the bond for a specific period. It’s crucial to review the terms of your bond and consult with your insurance provider for guidance.
Do I need an auto insurance bond if I don’t own a car but still want to drive?
If you don’t own a car but still want to drive, you may be able to obtain a non-owner auto insurance policy instead of an auto insurance bond. Non-owner policies provide liability coverage when driving vehicles you don’t own. However, the availability and requirements of non-owner policies may vary by state and insurance provider.
Will an auto insurance bond cover damages to my own vehicle in an accident?
No, an auto insurance bond, including SR-22 bonds, generally does not cover damages to your own vehicle in an accident. Auto insurance bonds primarily provide liability coverage, which means they cover damages or injuries you may cause to others. It’s important to consider additional coverage options if you want protection for your own vehicle.
Can I use an auto insurance bond to reinstate a suspended license?
In some cases, an auto insurance bond, such as an SR-22 bond, may be required to reinstate a suspended license. The specific requirements for license reinstatement vary by state and the reason for the suspension. It’s important to consult with your state’s motor vehicle department to understand the exact steps and requirements for reinstating your license.
What is the difference between a surety bond and liability insurance?
Is a surety bond an insurance contract? Sort of. A surety bond is a three-party agreement where one party, the surety, guarantees that another party, the principal, will fulfill their obligations to the final party. Liability insurance is a two-party agreement where an insurance company provides protection financially for the insured.
What is the difference between a bond and a surety?
You may want to know, is a surety the same as a bond? While related, no, a bond and a surety are not the same thing. A bond is a written agreement that offers a guarantee, while the surety actually guarantees the bond will be fulfilled.
What companies offer a surety bond for a vehicle?
If you need a surety bond, you may be wanting to looking at some of the major names in insurance. But you might wonder, does Geico do surety bonds? Does USAA do surety bonds? Can I get a surety bond with Progressive? You might be able to but you you should probably look specifically for a company that specializes in motor vehicle bond insurance.
What are the risks of a surety bond?
When you are in the situation of needing a surety or an SR-22 bond, you might be wondering, is a surety bond a good idea? If it’s not, what are the disadvantages of a surety bond? Sometimes a surety bond can be expensive, and you might have to offer up collateral that you really don’t want to lose. There’s also the risk of limited coverage and higher rates, since you’re seen as a bigger risk. Keep these negatives in mind when you’re wondering how to get a surety bond for a car.
What is bonded auto insurance?
Bonded car insurance isn’t a specific term typically found in auto insurance. Sometimes drivers may wrongly combine auto insurance and a surety bond, which are two different products. Surety car insurance isn’t the same thing as surety bonds for vehicles, so make sure you understand that fact.
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Enter your ZIP code below to view companies that have cheap auto insurance rates.
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Tim Bain
Licensed Insurance Agent
Tim Bain is a licensed insurance agent with 23 years of experience helping people protect their families and businesses with the best insurance coverage to meet their needs. His insurance expertise has been featured in several publications, including Investopedia and eFinancial. He also does digital marking and analysis for KPS/3, a communications and marking firm located in Nevada.
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.