Can An Insurance Company Suspend Your License? Everything You Need To Know

Legally reviewed by Jesse Bernheim on December 8, 2022 Jesse Bernheim is a member of the 1-800-Injured network.

There are a lot of things that go through your mind after a car accident, like medical bills, repair costs, and the paperwork that needs to be taken care of. But one thing you might not think about is how an unpaid insurance claim might affect your license.

If you are in an accident and the other driver files a claim on your insurance, both of your insurance companies and your lawyer will need to find out some important facts about the crash, most importantly who was at fault. In the event that the other driver’s insurance company says you caused the accident and your own insurance company doesn’t pay out, they may go to court to get back the money they gave them.

Losing your driver’s license can have a major impact on your life. For most people, driving is essential for getting to work, school, appointments and more. That’s why driver’s license suspensions or revocations are serious matters.

But who exactly has the power to take away your driving privileges? Can an insurance company suspend your license if you get into an accident or file a claim? Or is that authority reserved for government agencies like the DMV?

In this article we’ll unravel the facts on insurance companies and driver’s license suspensions. Read on to learn

The limited power insurers have over licenses
When the DMV can suspend your license
If insurance claims affect your license
What happens when your license is suspended
How to protect your driving privileges after an accident

The DMV’s Authority Over Licenses

First, it’s important to understand that insurance companies themselves cannot suspend or revoke driver’s licenses. That authority lies with the Department of Motor Vehicles (DMV), a state government agency. The DMV is the sole entity that can take away your legal permission to drive.

There are a few common situations where the DMV will suspend licenses

Repeat serious traffic violations – Accumulating tickets for offenses like reckless driving or DUI can lead to a suspension after multiple offenses.
Lapse in car insurance – Most states require drivers to maintain continuous auto insurance coverage. Letting your policy lapse can trigger a suspension.
Failure to pay child support – In some states, missing child support payments can result in a suspended license.
Unpaid traffic tickets – Failing to pay fines for traffic citations may prompt the DMV to suspend your license until debts are settled.
Medical conditions – The DMV can suspend licenses due to drivers having serious medical conditions like epilepsy that can cause blackouts behind the wheel.

So while your auto insurer has no direct power over your license, the DMV certainly does in many situations.

When Insurance Claims Can Indirectly Affect Licenses

Though insurance companies can’t directly suspend or revoke licenses, there are some indirect ways insurance can impact your driving privileges:

Lapsed coverage due to claim denial – If your insurer denies a claim and you stop paying premiums as a result, you could face a lapsed coverage suspension.
License used as leverage for judgments – In some states, if you cause an accident and are uninsured or underinsured, the injured party can seek to suspend your license to satisfy a judgment.
Policy cancellation for high-risk driving – If your driving record worsens, your insurer may drop you, leaving you uninsured and vulnerable to a suspension.
SR-22 requirements after accidents – High-risk drivers may need to file an SR-22 proving insurance coverage to avoid suspension after an accident.

So while the insurance company can’t suspend your license directly, situations stemming from claims and insurance policies can create risks for your driving privileges.

Protecting Your License if You’re At-Fault for an Accident

Unfortunately, being at-fault for a serious auto accident can put your license at risk in a few key ways:

You could face license suspension if you’re convicted of traffic violations related to the accident.
The other driver may win a judgment against you that your insurance won’t fully cover. Some states let plaintiffs suspend licenses to enforce judgments.
Higher risk after an at-fault accident could prompt your insurer to drop you, creating a lapse in coverage that could lead to suspension.
You may need to maintain special insurance requirements like an SR-22 filing to avoid suspension.

To help shield your license, here are some tips if you’re at-fault for an accident:

Consult an attorney – An experienced lawyer can help negotiate settlements within your policy limits and defend against certain judgments that could impact your license.
Review insurance needs – Talk with your agent about increasing liability coverage and maintaining uninterrupted coverage to avoid suspensions.
Take defensive driving courses – Completing defensive driving can provide insurance discounts and show commitment to safer driving.
Carefully weigh SR-22 requirements – Seek legal and insurance advice to make informed decisions on SR-22 filings and how long to maintain them.

Consequences of Losing Your License

Driver’s license suspensions and revocations shouldn’t be taken lightly. Some major consequences can include:

Fines – You may have to pay license reinstatement fees, which typically range from $50 to $300 depending on the state.
Work disruption – Suspensions present challenges getting to work, which could jeopardize your job depending on your occupation.
Insurance increases – Once reinstated, you’ll likely pay significantly higher auto insurance rates, especially if suspended for dangerous driving.
Transportation limitations – Depending on where you live, it may be extremely difficult managing routine transportation without a license.
Jail time – Driving with a suspended license can potentially result in fines or even jail time if caught.

Key Takeaways

While auto insurance companies can’t directly suspend or revoke your driving privileges, they can certainly create scenarios that put your license at risk. An insurer dropping you after an accident claim could leave you uninsured and prompt the DMV to suspend your license.

That’s why working with experienced car accident lawyers is so crucial after a collision. They can help protect your license by resolving matters within your policy limits and contesting wrongful license suspension attempts.

Don’t let an insurance company indirectly threaten your driving freedom. With smart legal guidance, you can keep your license intact and regain your peace of mind.

Why Do Insurance Companies Sometimes Refuse to Pay

The same is also true if you are the victim in the crash. There are a lot of insurance companies that try to avoid paying claims if their policyholder is the one who caused the accident. This could mean taking too long to make a decision, being picky about small parts of your claim, or just trying to find as many reasons to blame you as possible to lower the amount they pay.

When you’ve been hurt in an accident, hiring a personal injury lawyer is a key step toward getting justice and the money you deserve. But if the insurance company still won’t pay, your lawyer may have to go to court and file a lawsuit.

There may be a statute of limitations anywhere from one to four years after the accident, depending on where you live. This means that a victim has the right to go to court until that much time has passed since the accident. At this point, a personal injury lawyer can try to reach a settlement so that the case doesn’t have to go to court.

How Can a Driver’s License Be Suspended?

One important thing to remember is that an insurance company cannot take away someone’s driver’s license. There are other ways that someone’s license can be taken away as well. They might be able to file a complaint with the state’s licensing department, but the state is the only one who can decide if the license should be suspended.

Not having the right insurance, not paying fines or tickets, getting too many points on your record, or being convicted of certain crimes are all common reasons why a driver’s license can be taken away. In some situations, a driver may even lose their license if they don’t pay the fines or fees that come with an unpaid insurance claim.

It’s important to keep in mind that while you’re trying to settle a claim or get ready to sue, one party may think there is a liability issue but no one has figured out who is at fault. At this point, the insurance company might be more likely to settle the dispute through talks and agreements outside of court rather than going to court or trying to get the driver’s license suspended.

Everyone who drives should also remember that they have rights when it comes to getting paid after an accident, and they should do what they need to do if their insurance company isn’t being helpful. It might be best to work with an experienced personal injury lawyer to make sure that these rights are upheld and that a fair settlement is reached.

How to Find Insurance With a Suspended License : Basic Insurance Advice

FAQ

Can my license be suspended for an unpaid insurance claim in Texas?

Yes. If no more than two (2) years have elapsed since the date that the last payment was due, you may submit a copy of the original installment agreement along with a Notice of Default on Installment Agreement (SR-73) to the department for the license of the at-fault driver to be suspended.

Can my license be suspended for an unpaid insurance claim in Washington state?

If you drive your car without the required insurance, you could receive a fine of $550 or more. If you are at fault in an automobile collision and you do not have insurance, your driver license may be suspended if you do not pay for the resulting damages and/or injuries. See bit.ly/3UXZweb.

Can my license be suspended for an unpaid insurance claim in Colorado?

Your license may be suspended for reasons related to insurance and SR22 insurance. There are no driving privileges that can be granted while your driving privileges are revoked or suspended for insurance matter; however you may request a hearing in certain situations.

Can my license be suspended for an unpaid insurance claim in Illinois?

Damages Caused by an Uninsured Motorist If the judgment remains unsatisfied (unpaid) for thirty days, the court orders the Secretary of State’s office to suspend the individual’s driver’s license/registration.

Can I get car insurance with a suspended license?

Getting car insurance with a suspended license is possible if you explore specialized insurers, compare quotes, and consider non-owner or high-deductible policies. A suspended license usually results in higher insurance premiums due to the perceived increased risk by insurers, and you may need to file an SR-22 or FR-44 to meet state requirements.

Does a license suspension affect car insurance?

Not surprisingly, a license suspension can have a huge effect on car insurance. One, car insurance companies might cancel your policy before its end date, and two, you might decide to cancel it to save money. But there are more benefits to keeping your car insurance active than canceling it, even with a suspended license.

What happens if my car insurance is suspended?

In other words, the insurance company would have to prove that whoever was driving — a parent, a neighbor, a friend, a roommate — knew about the license suspension and still didn’t contact the company within 60 days. If your license is suspended, your car insurance will eventually be canceled.

Can an insurance company suspend my license?

Things are obviously too much for you to handle and you may make matters worse. An insurance company does not have the power to suspend your license; only your state’s DMV which issued the license can do that. But, the Ins. Co. can report information that could lead to the suspension of your license.