A car insurance surcharge is an extra charge or penalty your car insurance company adds on to your base rate. It’s a temporary increase in your monthly premium, which could be temporary or permanent, depending on your carrier and the reason for the surcharge.
The reason insurance companies add a surcharge to your bill is to compensate them for the increased cost of servicing your policy. Not just in paid claims, but also the recognition of the fact that you may be a bigger risk for future claims.
Also, it takes more man-hours for your insurance company to handle your claim. Their adjusters, claims analysts, attorneys, administrators, and customer service reps all have to be paid. The surcharge is how they pay the extra costs of higher-risk, higher-man-hours-intensive policies while minimizing the impact to other drivers in the risk pool.
Here are some of the driver record issues that could cause a car insurance surcharge:
- Too many recent claims – especially when you’re at fault
- Too many recent moving violations or court imposed “points” on your insurance.
- A chargeable accident – such as rear-ending someone else.
- An SR22 or FR 44 requirement
- Late premium payments or retuned payments
- Coverage lapses
Each of these items are within your control. They’re your responsibility to take care of. Not the car insurance company’s.
The length of time they’ll stay on your bill will vary depending on the type of surcharge. But it’s typically a matter of months or years.
For example, an SR22 surcharge will stay on your policy as long as the requirement is in place, which is typically three to five years, depending on your state. In some jurisdictions, an SR22 lapse could reset the clock back to the beginning. So you may have an SR22 surcharge on your bill for three to five years after you lapse.
So you don’t want to lapse any policies with a surcharge on it!
Occasionally, you may see a state fees show up as “surcharges” on your car insurance bill.
These would be consistent among all insurance carriers doing business in your state. So these you wouldn’t be able to reduce just by switching carriers.
The other surcharges, however, will vary from company to company. So it makes sense to shop around.
How To Fight Car Insurance Surcharges
Unless the insurance company made an administrative error, they typically don’t remove a legit surcharge just because you’re a loyal customer who’s nice on the phone.
But just because they didn’t make an admin error doesn’t mean they’re treating you fairly. They may be overcharging you on the surcharge. More likely, they may have been overcharging you for years, and you just didn’t know it.
If the surcharge is accurate, the best thing to do is to immediately shop around as many carriers as you can.
The best way too do that is to contact an independent car insurance agent, who can help you shop many different insurance carriers, all with one phone call or quote request.
Yes, your recent driving mistakes or lapses may still be an issue. But some carriers are much more forgiving of a mistake or two on your record than others. So it’s worth it to have an agent get you some quotes.
And it’s always free.
Click here to have one of our experienced car insurance professionals help you get free quotes from multiple car insurance carriers doing business in your state.
Chances are excellent we can reduce your out-of-pocket costs, improve your coverage, or both.
You could save yourself hundreds of dollars a year just by switching to a new insurance company, and perhaps. by making changes to your coverage, such as increasing your deductible.