What is a Car Insurance Surcharge?

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A car insurance surcharge can come from several different places. Many surcharges come directly from traffic violations and at-fault accidents. However, some other causes for surcharges might surprise you. Not all surcharges are the same and you should be able to find out if a surcharge is applied to your car insurance policy. Knowing what a car insurance surcharge is will better arm you in the battle of fighting a possible discrepancy.

What Exactly is a Surcharge?

In most cases, the word surcharge might as well mean penalty. It usually refers to an increase in premium due to something within your control, like an accident or an excessive amount of claims filed. Another common reason a surcharge is incurred is due to a traffic ticket. The surcharge or the penalty is extra money being charged to your policy, but the increased rate should go away and, normalizing once the surcharge drops off.

Most Common Types of Surcharges

Depending on what state you live in, a surcharge can also be caused by a state-mandated fee. A state fee is not within your control and is a requirement by the state. No-fault states often require you to pay extra for medical coverage and it is possible for the charge to referred to as a surcharge.

How the Insurance Company Knows When To Apply A Surcharge

Most insurance carriers review your driving record at the time you purchase the policy and at every renewal date afterward. Traffic violations like speeding tickets or reckless driving offenses will be caught by your carrier and the surcharge will be applied. This system of checking and adding the charge is totally automated.

The insurance carrier will also look at any claims filed to determine if a surcharge is warranted. The surcharge will last different periods of time depending on the type of violation.

If you think your car insurance policy has a surcharge which should have dropped off or was not yours to begin with, contact your insurance agent immediately. The amount of a surcharge varies by occurrence, it adds up quickly over the course of a year. Surcharges can last for a few years or sometimes even longer.

In order to get the best possible car insurance rate, you will want to avoid surcharges if at all possible. Keep an eye on your driving record and consider paying a small at-fault claim out of pocket. Make your payments on time and never let your policy lapse.

What You Can Do About It

The most obvious long-term answer would be to improve your driving behavior and avoid getting into any accidents or getting ticketed for any moving violations. But there are other options sometimes available, and they all involve picking up the phone to talk to your insurance agent and discuss the situation. Sometimes, all you need to do is ask the company to remove the surcharge and if you are a loyal customer, they might grant your request.