How Does Drunk Driving Affect Car Insurance?

Every day, thousands of drivers get behind the wheel after a few drinks, often without considering the financial cost to American society — or the driver's own wallet.

The term "responsibility" refers to the act of determining whether or not a person is responsible for his or her own actions (MADD). This figure includes money paid by federal, state, and local governments, as well as employers, to deal with drunken driving, as well as costs for victims and their families' quality of life.

According to Frank Harris, MADD's state legislative affairs manager, "Drunk driving is still heavily subsidized by every American - through taxes, higher insurance rates, and victims dealing with the emotional toll of injury or the loss of a loved one."

Everyone pays

If drunken driving costs to society were paid directly, research shows that every licensed driver in the United States would get hit with a bill for more than $600 each year.

“That’s a lot of money,” says Ted Miller, senior research scientist for the Pacific Institute for Research and Evaluation, a public policy research group that crunched the cost figures for MADD’s “Report to the Nation.”

So, what do the big-picture costs of drunken driving look like? According to MADD, the costs can be divided into two categories: direct expenses of about $61 billion and quality-of-life costs of about $71 billion.

According to Miller, drunken driving expenses include:

A.$32 billion in work-related costs.

If a victim of a drunken driving crash can’t work because of injuries, Miller says, those who pay the resulting costs might include:

  • The employee who has lost pay.
  • The government, through the payment of benefits to an injured worker.
  • The at-fault driver, if a legal settlement is reached.

"We also looked at the value of lost household work, and the cost to hire somebody to do that," Miller says. For example, a crash victim might need to hire a housekeeper if he or she was unable to cook meals, vacuum the carpets or clean the bathroom.

B.$12 billion in medical costs.

This tab includes the cost of emergency medical services at the scene of a crash, as well as hospital and nursing home bills, doctor bills, and prescription medication. The costs might be paid by the patient, by health insurance companies, by auto insurers, and by government programmes such as Medicare and Medicaid, according to Miller.

C.$6 billion in property damage.

Damage to vehicles, guardrails, signs, and other property is included in these costs. According to Miller, they may be paid by auto insurers, government entities, or out of pocket by the at-fault driver.

Other costs include:

  • $4 billion in legal costs. This includes court costs paid by the government and legal costs paid by insurers, plaintiffs and defendants.
  • $4 billion in insurance administrative costs such as processing claims and dealing with fraud and abuse.
  • $3 billion in other costs such as travel delays and crash cleanup.

More difficult to quantify is the estimated $71 billion in quality-of-life costs, which involve complicated calculations that put numbers on pain and suffering. According to Miller, if you count three injured people who each lost one-third of their quality of life as one life lost, drunken driving crashes kill 26,500 people each year.

Drunken drivers pay

Everyone bears societal costs, whether directly or indirectly, but drunk drivers who are caught may face a hefty fine. Experts estimate that a typical first-time drunk driving conviction can cost $10,000 to $19,000 or more. According to the 2011 Illinois DUI Fact Book, the average drunken driving conviction in Illinois costs about $16,580. Repeat offenders, according to experts, can face much higher penalties.

"It's frightening when you consider the personal and financial consequences," says Carole Walker, executive director of the Rocky Mountain Insurance Information Association, a nonprofit organization that helps the public understand insurance issues.

Here are some examples of typical costs:

  1. High-risk insurance.

A driver convicted of driving while intoxicated may be moved to a higher-risk category with his or her auto insurance carrier, or even dropped and forced to seek insurance elsewhere. Experts predict that premiums will rise in either case.

"It could double or even quadruple your rates, depending on whether it was a first offense and what risk category you were in," Walker says.

This could amount to hundreds, if not thousands, of dollars per year. The Illinois DUI Fact Book, for example, estimates a total cost of $4,500 in higher premiums - an extra $1,500 per year for three years.

  1. Fines and penalties.

According to a compilation of state laws prepared by the National Highway Traffic Safety Administration, fines for a first-time offender can range from as little as $100 in some states to $5,000 or more in others. In some states, repeat offenders face fines of up to $10,000. Offenders in some states may have their driver's license suspended or revoked for up to 180 days.

  1. Legal fees.

Attorney's fees for a misdemeanor charge typically range between $1,500 and $6,000. According to Virginia DUI attorney Bob Battle, they could reach $15,000 for a felony charge that requires a jury trial.

  1. Lost wages.

First-time offenders may avoid jail time, but they may be sentenced to up to two years in prison, depending on the state. "Courts vary tremendously, based on whether the judge will let people serve on weekends so maybe they can keep their job," Battle says. Based on a month in jail for an offender earning $55,000 per year, the Illinois DUI Handbook estimates more than $4,230 in lost income.

  1. Alcohol education or treatment.

Some states require offenders to attend an alcohol education class, which can cost up to $300. "Taking the class can be very expensive, and it's often a requirement for getting your license back," says Lilliard Richardson, executive associate dean at Purdue University in Indianapolis, whose major fields of study include traffic safety.

  1. Driver monitoring.

According to the MADD report, 32 states now require an ignition interlock device for some first-time offenders, and 15 require them for all offenders. The device, which will not allow the car to operate unless the driver passes a breath test, can cost more than $1,400, according to the Illinois DUI Fact Book. This includes installation, rental, and year-round monitoring.

Many offenders must also pay for cab fare or other transportation if their licenses are revoked, as well as fees to apply for new licenses.