Insurance Surcharges

Insurance Surcharges: What Drivers Need to Know

Getting into an at-fault accident or receiving a traffic ticket can be an unpleasant experience for any driver. Not only do you have to deal with potential injuries, vehicle damage, and other consequences, but you also have to worry about the impact on your auto insurance premiums. Many drivers are surprised to find out that their insurance company charges a fee called a surcharge after accidents and violations.

What exactly are insurance surcharges, how do they work, and what can drivers do to avoid or minimize them? This article will explain everything drivers need to know about car insurance surcharges.

How Surcharges Affect Your Premiums

When a surcharge is applied to your auto policy, it will directly raise your premium payments. The exact amount will vary depending on factors like:

• Your insurance company
• Your state’s regulations
• The severity of the incident

For example, minor fender benders may lead to smaller surcharges than major at-fault accidents involving injuries or totaled vehicles.

In Massachusetts, every at-fault accident and moving violation has a set number of surcharge points assigned to it. Your premium increase is determined by how many points you accumulate – the more points, the higher the surcharge.

In most states, a single minor violation or accident can increase your premiums by 20-40% on average. Major violations may double your premium or more in some cases.

Multiple surcharges can have a cumulative effect, rapidly increasing premiums for drivers who have repeated incidents.

How Long Do Surcharges Last?

Surcharges don’t last forever, but they typically remain on your policy for 3-6 years depending on your state and insurance company. Some states have laws limiting how long insurers can apply surcharges.

For example, California prohibits insurers from surcharging drivers for accidents that happened over 3 years ago or minor traffic tickets over 5 years old.

The type of incident also plays a role. In general, more serious violations and at-fault accidents lead to lengthier surcharges compared to minor fender benders and speeding tickets.

Can I Avoid Surcharges?

The best way to avoid surcharges is to maintain a clean driving record free of accidents and violations. However, even defensive drivers can make occasional mistakes.

Having accident forgiveness on your policy can help minimize surcharges in the event of one-time incidents. Some insurers also offer one-time ticket forgiveness.

Comparing quotes from multiple insurers after an incident can help find the best rates. Not all companies surcharge equally. An independent agent can shop quotes from multiple carriers.

How to Reduce Surcharge Impact

If you do get slapped with a surcharge, here are some steps that can help reduce the impact on your premiums:

• Increase your deductible – Higher deductibles lead to lower rates. Going from $500 to $1000 cuts premiums by 10-15% on average.
• Drop unnecessary coverage – Eliminate collision, rental reimbursement, and other optional coverage to cut costs.
• Ask about discounts – Taking a defensive driving course or bundling home and auto policies can offset some surcharge costs through discounts.
• Maintain a good driving record – Going 3 years claim-free can reduce surcharges and qualify you for additional discounts.
• Shop around – Compare quotes every 6 months. New carriers may offer better rates than your current insurer.
• Negotiate with your agent – Ask about policy tweaks like using a telematics program to monitor driving habits and earn premium reductions.

The Takeaway

At-fault accidents and traffic tickets can hit you twice – first with fines and repairs, then higher insurance costs from surcharges. While surcharges can’t be avoided entirely, taking proactive steps can help minimize the impact on your premiums. Maintaining a clean driving record, shopping quotes regularly, and optimizing your policy are the best defenses.