What Is a Car Insurance Surcharge and How Long Is It?
Why your car insurance premium goes up
A car insurance surcharge can come from several different places. Many surcharges result directly from traffic violations and at-fault accidents. Other causes might surprise you. Whatever the reason, you should be able to ask your insurance company and find out if a surcharge has been applied to your car insurance policy.
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. Traffic tickets are another common trigger of surcharges.
Extra charges typically last for three to five years, and your insurance premium returns to normal when that time has passed.
From the insurance company's perspective, any driver who has committed moving violations and received tickets is a higher risk. Higher-risk drivers file more insurance claims. It's strictly business.
Most Common Types of Surcharges
Surcharges are an insurance company's way to recover the extra costs they put in to handle your claim. For instance, an appraiser may have to look at your car and file a report estimating damages. Sometimes it's administrative cost because of something the policyholder did or didn't do on schedule.
These are the reasons you'll typically experience an additional surcharge to your regular car insurance premium:
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 of the state. No-fault states often require you to pay extra for medical coverage and it is possible for the charge to be referred to as a surcharge.
How Does the Insurance Company Find Out?
Most insurance carriers review your driving record at the time you purchase the policy and at every renewal date thereafter.
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 stay for different periods of time depending on the type of violation.
If you think your car insurance policy has a surcharge that should have dropped 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.
To get the best possible car insurance rate, you will want to avoid surcharges as much as 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 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.
Lawyers.com. "Accidents, Tickets & Your Car Insurance Rates." Accessed March 31, 2020.
The Zebra. "When Does Car Insurance Go Down After an Accident?" Accessed March 27, 2020.
National Association of Insurance Commissioners & The Center for Insurance Policy Research. "Retaliation: A Guide to State Retaliatory Taxes, Fees, Deposits and Other Requirements." Accessed March 31, 2020.
Insurance.com. "Ticket's Impact Usually Lasts 3 Years." Accessed March 31, 2020.