What is a Car Insurance Surcharge?

Losing money
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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 on 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 refer to a state-mandated fee. A state fee is not within your control and is a requirement by the state. No-fault states often 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 Surcharge?

    Most insurance carriers review your driving record at the time you purchase the policy and at every renewal afterwards. Traffic violations like speeding ticket and 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.

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