Even though you're probably required by state law to carry some liability insurance to cover the costs of damage or personal injuries you cause in an accident, the fact of the matter is such insurance is a financial necessity for most drivers. After all, how many of us can afford to pay for major car repairs or medical bills out of our own pockets?
Regardless of whether you look at it as a legal requirement or a necessity, car insurance costs money, and like any other item in you personal budget, you'd like to keep the cost of your insurance low. Sometimes, that's just not possible, because accidents and tickets have a direct impact on your insurance rates.
A surcharge is an amount your insurance company adds to your insurance premium, which is the amount you pay for your insurance, because of some event or occurrence. Usually, you can expect a surcharge on your car insurance premium when:
- You get a ticket, or citation
- You're involved in accident and you're at fault for the accident, meaning you caused the wreck
Tickets or citations that will cause a surcharge typically have to be "moving violations." So, while a speeding ticket will cause a surcharge in almost every case, a parking ticket usually won't.
Also, a surcharge will be added if your spouse or child is covered by your insurance policy and they're the one who gets the ticket or causes the accident.
The idea behind the surcharge revolves around the:
- Assumption by the insurance company that a ticket for a moving violation, like speeding or reckless driving, makes it more likely that you're going to be involved in an accident and cause harm to yourself or others, which increases the risk that the insurance company will have to pay a claim under your policy
- The fact that the insurance company will have to pay claims under the policy, whether it's to cover property damages or personal injuries suffered by you, someone in your car, someone in the other car, or anyone else involved in the accident, and so it will recoup those payments through the surcharge
Also, you should know that you might get a surcharge even if you're not at-fault for an accident. For example, in some states, you might have to carry underinsured or uninsured motorists protection, which essentially covers your damages if you're involved in an accident with another driver who either doesn't have any insurance or doesn't have enough insurance to cover your damages. In such a situation, if your insurance company has to pay you, it's likely that you'll see an increase in your premium.
Nonetheless, in some states, the insurance laws make it illegal for your insurance company to increase your premium when you're in an accident with an uninsured driver or for your first accident that was not your fault. But, in such a state, your rate can be increased if you have a second not-at-fault accident within the policy period.
How Much & How Long?
Typically, you can expect a surcharge to be on your policy for several years, usually between three to five years. Usually, the amount will vary depending on what triggered the surcharge (was it a ticket or accident?), how much the insurance had to pay out, and the amount of your premium. That's because many surcharges are based upon a percentage of your current premium. Every insurance company has a different formula for determining the exact amount of a surcharge.
In many states, the surcharge is directly connected to the "point" system that's used by your state's motor vehicle agency (sometimes called the department or bureau of motor vehicles, "DMV" or "BMV") to track unsafe drivers and suspend or revoke their drivers' licenses. Your insurer might use the "points" connected to your license to calculate a surcharge. For example, a point system might look like this:
- 5 points for a major traffic violation, such as driving under the influence or while intoxicated (DUI/DEW)
- 4 points for a major at-fault accident, which is when the claim against your insurance is over $2,000
- 3 points for a minor at-fault accident, where the claim is less than $2,000
- 2 points for a minor traffic violation, like speeding
Sometimes, an insurance company will have its own point system that will assign a point value for all kinds of traffic-related offenses.
In either case, the insurance company usually will use some type of mathematical formula that converts your point value to a dollar amount.
Surcharges Are Almost Automatic
Every insurance company has to file its rates with the state in which it sells policies, usually with the state's department of insurance. The filing usually has to include surcharge amounts and/or how the insurance company figures out the amount of surcharges. So, if you're involved in an accident or get a ticket that would require a surcharge according to your insurance company rate filings with the state, the insurance company must add it to your policy. It can't be "waived."
There may be a way to avoid a surcharge. In some states, especially in those that use the BMV/DMV point system and particularly for speeding tickets, you might be able to pay for and take a "safe driver" or "defensive driving" course. By doing that, you might not have to pay the ticket, but better yet, the points won't be added to your driving record, and so you can avoid a surcharge.
Questions for Your Attorney
- If I get a speeding ticket in another state, will I get a surcharge?
- How much will it cost in legal fees to challenge my speeding ticket? Will it cost more than the surcharge?
- I have "full" coverage: comprehensive, collision and the state required liability insurance. I was in an accident, and my insurance company is going to assess a big surcharge. Can I drop all coverage except for the state required minimum coverage?