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What Is a Car Insurance Surcharge?

  • Cars Explained
  • Xavier Sabastian
  • 5 minutes

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Sometimes, you’ll notice a car insurance extra when you examine your car insurance charges in detail. This happens when insurers impose a cost or penalty to your premium, known as a surcharge. In most circumstances, insurers levy a surcharge due to a recent infraction, such as an at-fault accident or a speeding ticket. We’ll go over how vehicle insurance surcharges work, how long you have to pay the fee, and everything you need to know about them.

car insurance surcharge

What is an auto insurance surcharge?

A surcharge is a fee that your insurance company adds to your regular monthly payments. Because of the danger, your auto insurance company may need to raise your monthly prices temporarily. To do this, the insurer imposes a surcharge.

What is an accident surcharge?

Having an at-fault collision, being engaged in auto accidents, or filing several car insurance claims are all examples of incidents that may result in a fee from car insurance providers.

How long does an accident surcharge last?

The duration of an automobile accident surcharge varies by state and insurance company, but it usually lasts three to five years.

Why do insurance companies charge a surcharge?

Insurers often impose a surcharge as a result of something the motorist did. Typically, you (or someone on your insurance) caused an accident, violated the law, or were caught doing anything else. Some insurers impose a premium on your policy if you file a considerable number of claims in a short period. For example, If you have filed three significant accident claims in the last five years, your insurance may levy a fee.

Surcharges assist insurers in risk management

If you commit many violations in a short period, you are a higher risk driver for insurance companies to insure. Because you have a history of repeated violations, your insurer believes you are more likely to commit further violations shortly.

Some insurers more strictly enforce surcharges. For instance, they may levy a premium after only two speeding fines in three years. Because the insurance considers you are a higher risk driver to cover, your rates will be higher.

Common causes of a car insurance surcharge

If you’ve noticed a surcharge on your premium, it could be due to one of the following reasons:

Coverage Gap

If you let your automobile insurance lapse or fail to pay your premiums on time, you may have a coverage gap. A lapse in coverage is linked to risky driving behavior. Suppose you allow your insurance to lapse and continue to drive. In that case, you are directly accountable for any harm you do, which may cost you thousands of dollars in medical bills or vehicle damage. If you have had one or more gaps in coverage in the last few years, your insurer may charge you a fee.

Late Payment

Do you have a habit of paying your vehicle insurance late? If you pay your payments a few days late, your insurance company may not cancel your coverage. Most insurers include a 10- to a 20-day grace period. However, the insurer may levy a penalty for late payments.

Speeding tickets, reckless driving convictions, and other citations may result in a fee. In most cases, insurers will ignore one or two traffic offenses, but more traffic violations may result in a penalty.

DUI/DWI Convictions

Some insurers will terminate your policy if you get a DUI or DWI conviction. Others charge a fee. If this is your first DUI/DWI and you have a clean record, you may only have to pay a fee.

Multiple At-Fault Accidents

A single accident increases insurance prices by 40% to 60%. If you have a history of being at fault in accidents, your insurance premiums will be higher.

How to Avoid a Surcharge on Your Car Insurance

Surcharges on car insurance are both inconvenient and costly. If your insurance has already added a fee to your invoice, it is unlikely that you will be able to remove it. You could contact your insurance to determine why there was a surcharge.

They could have mistakenly added it to your bill. In most circumstances, however, the insurer adds the surcharge quickly after an occurrence, and the reason for the surcharge is evident.

To prevent paying car insurance extra in the future, follow these guidelines:

  • Avoid Traffic Violations: Speeding tickets, reckless driving fines, DUIs, and other occurrences can result in vehicle insurance premiums.
  • Pay Out of Pocket for Minor Accidents: Filing an insurance claim isn’t always worth it. If the accident is minor, with little damage and no injuries, it may be better to pay out of pocket rather than file a claim with your insurer.
  • Pay Your Premiums On Time: If you routinely pay your vehicle insurance premiums late, your insurer may apply a surcharge to your bill. It also increases the likelihood of a coverage lapse. Pay your premiums on time to prevent a fee, a lapse in coverage, or other problems with your auto insurance.
  • Drive More Carefully: If you have a previous traffic infraction, speeding ticket, or at-fault collision on your record, you should drive more cautiously to avoid a vehicle insurance extra.

car insurance with no surcharges

Surcharges are additional expenses added to your monthly premiums by your insurer. Insurers use surcharges to pay the additional costs of administering your insurance. Suppose you have recently committed many traffic violations, been involved in multiple at-fault accidents, or participated in other high-risk activities. In that case, your insurer may impose a fee on your coverage.

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