What is a Car Insurance Surcharge?

Losing money
••• Alberto Ruggieri / Getty Images

If you have a car insurance policy, you probably expect to pay the same amount every month or specified pay period. But once in awhile, you may discover a charge on your statement that you didn’t expect to pay and is listed only as “surcharge.” What is this, and is there anything you can do about it?

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?

A surcharge could be interchangeable with the word penalty in most cases. It usually refers to an increase in premium due to something within your control. The higher rate should go away once the surcharge drops off. The increase in premium is usually due to something within your control such as a traffic ticket. The higher rate should go away once the surcharge drops off. The surcharge or the penalty is extra money being charged to your policy.

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.

What Causes A Car Insurance Surcharge?

How Does the Insurance Company Know 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.

Can I Do Anything 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.