You should learn about insurance surcharge if you are covered with auto insurance. Sometimes, your insurer charges you more than usual. This happens because the insurance company levies a penalty or extra cost to your premium. And this extra charge is known as a surcharge. So, an auto insurance accident surcharge is an extra charge imposed by your insurer due to an accident you were involved with.
The surcharge can happen in several circumstances, with most of them being recent speeding tickets, besides accidents. In this article, you will learn about the surcharge due to accidents, how it works, and more. So, keep reading!
Definition of Auto Insurance Accident Surcharge
As a policyholder, you will notice that you have monthly expenses from your auto insurance. When there is an extra cost, you have to pay more than the usual monthly cost you have to spend, it means your insurer imposes a surcharge, and you have to know why.
The company will impose a cost due to a penalty usually caused by at-fault accidents or speeding. Your insurer would also do the same thing if your claim submission reached a certain number or value they assessed as excessive.
So, if you have recently been involved in an accident and were proven to be at fault, you can expect a surcharge after renewing the policy. While a surcharge by accident can be rare, beware of the most popular surcharge trigger: traffic tickets. When you see an extra charge, it will stay three to five years, depending on where you live and the company.
How Auto Insurance Surcharge Works
An insurance company will impose a surcharge due to something the policyholder did. In this case, your insurance covers the damage and injuries you cause when you are in an at-fault accident. When the victim claims your liability, the company may impose a surcharge to cover the cost that exceeds your insurance coverage.
However, the surcharge cannot happen immediately or in the middle of a policy period. The surcharge will apply when you renew your policy. If you want to flee from the surcharge by changing insurer, the new one can still impose the surcharge after reviewing your history and driving record.
The rate increase differs from one company to another. The lowest rate for at-fault accidents comes from State Farm, with a 21% increase. Surprisingly, GEICO imposes the highest rate at 73% for property damage due to at-fault accidents.
Meanwhile, another company like USAA will levy an auto insurance accident surcharge of 40%. If you choose to change your insurer after causing an accident to flee from an expensive surcharge, you must avoid changing to Allstate. The company has the most costly surcharge, which is $3,103 annually.
The difference also applies to different states. Drivers in Wyoming will get a 31% increase after causing property damage and injury. North Carolina only imposes a more expensive surcharge at 79% for a property damage accident. California drivers, meanwhile, suffer the highest increase of all states at 97% for injury accidents.
4 Things That Will Cause an Auto Insurance Surcharge
Although an accident will result in an insurance surcharge, you want to learn the others. Although you are never involved in an accident, a surcharge will remain due to the following.
1. Late Payment
Late payment is still a payment, but you won’t get away from it without consequences. Your insurer won’t cancel your coverage for this. However, they might charge a penalty for late payment. Luckily, some companies will give a grace period of 10 to 20 days if you forget your duty.
2. Coverage Gap
Late payment is one thing, but you can get away after failing to pay the premium on time, and continuing driving is another. This case can be explained with a scenario. After failing to pay your insurance, you continue driving. It means you are directly liable for any harm you do that needs medical bills or vehicle damage, which is costly. If you did this several times in the last few years, your insurer may levy a surcharge.
It is even worse if you fail to pay your surcharge. In some states, this will result in driver’s license suspension, not simply an additional surcharge. When your driver’s license is suspended for this, you have to pay the surcharges plus license-restoration fees.
3. Traffic Offence
At this point, avoid speeding and choose to drive safely. All companies will levy a surcharge for any traffic offense. Your insurer may pay for one to two traffic offenses, but not more.
4. DUI/DWI Convictions
Driving under the influence of alcohol or drugs will result in a surcharge or, worst, policy termination. You are lucky if you have a clean record and it is your first DUI/DWI; if it is otherwise, then you have to kiss your policy goodbye.
Can You Lower the Auto Insurance Accident Surcharge?
Are you feeling unlucky for an insurer charging a high cost for an accident? You can lower the cost by following these tips.
Ask for Discounts
It does seem awkward and wrong to ask for discounts after causing so much trouble with someone else’s car and/or body. But, there are possibilities that you are qualified for a surcharge discount. If you are going paperless, saving a few bucks in your bank account is possible. The other possibility is to inform your insurer that you no longer use your car for your daily commute.
After you are in an at-fault accident, talking about safe driving can be awkward. But, if you believe to be a good driver, despite the accident, you can consider choosing usage-based insurance.
This program will track your driving habits. After tracking your driving actions for quite some time, you can get the score and driving tips that show the area you need to improve. You may be qualified for a discount if you get a good score.
If you are still unhappy with the discounted price after doing all the tips, the last thing you can do is change the insurer. Try comparing the surcharges of all insurance companies in your state. Pick the one that gives you a much cheaper surcharge than your ex-insurer.
Does the explanation satisfy you, or do you still have questions regarding the auto insurance accident surcharge? Comment down below!