Can an Accident or Ticket Raise My Insurance Rates? NY Injury Attorney Answers
January 18, 2010 8:00 am NY Auto Insurance, PA Car Insurance
A question I am frequently asked is: Can my insurance company raise my premium due to an accident or traffic ticket?
The answer is YES, unfortunately.
I want to share details about this answer from the official N.Y. Insurance Department website. It’s important for drivers to understand just how the insurance companies justify charging you more and the terminology they use.
Such an increase is known as a surcharge. Surcharges are based on the fact that a driver who has previously been at fault in one or more accidents, or has a record of traffic convictions, has an increased likelihood of being involved in future accidents.
Insurers “classify” drivers according to criteria such as:
- Age
- Location
- Vehicle type and mileage
To further refine those classifications, many insurers use “merit rating plans,” a point system in which increases are applied according to an individual driver’s record (traffic convictions and accidents).
Surcharges are applied to liability (bodily injury and property damage), collision and no-fault (PIP) coverages, and are only allowed for:
- Accidents involving bodily injury, or losses to property in excess of the accident reporting threshold ($1,000), where the insured driver is at fault, or
- Convictions for certain violations which are chargeable under the Insurance Law.
No-one intends to get a traffic ticket or have a car accident. A surcharge may seem almost like a punishment, but it really a way for the insurance company to balance premiums against risk.
A surcharge is used as a tool to properly price the exposure the insurer is writing, NOT as a means to recoup payment made under a claim.
Another important point: The total dollar amount paid as the result of a claim does not affect the surcharge. For example: An insured person being surcharged for a particular accident will pay the same amount regardless if the damages were $10,ooo or $50,000.
Thanks for reading,
Jim
_________________________________________
James B. Reed, Esq.
Personal Injury & Malpractice Attorney
Ziff Law Firm, LLP
303 William St., Elmira, NY 14902
Tel. (607) 733-8866 Fax. (607) 732-6062
Toll Free 1-800-943-3529
mailto:jreed@zifflaw.com www.zifflaw.com
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January 18th, 2010 at 2:55 pm
Well Jim, good information but it does not apply exactly as written and not all the time. They are general assumptions from a government website. Here is how it works in the real world:
If, when and how much is surcharged can vary widely depending on the company you are with and THEIR rules, how long you have been with that company, and the frequency of “activity”.
You are increasingly forgiven with tenure and number of policies with one company.
Most companies will “act” if you have more than two accidents in three years or three “incidents” in five years. An incident is generally defined as any moving violation.
Some companies like Allstate will allow you to “buy” accident forgiveness that will eliminate any surcharge for one or more accidents.
Most companies don’t CARE if you are at fault or not if they pay over $1000 – it still may be chargeable. The only non-chargeable is a non-occupied, hit-while-parked incident.
The worst case scenario is not the threat of being surcharged – it is being dropped. Automatic drops can occur from DWI’s, vehicular manslaughter, or driving on a suspended license regardless of the reason for the suspension, including not paying child support or not keeping insurance in force (imagine that). Once you are dropped by one company it can take 3 to 5 years of spotless driving (and excellent credit) to get back to reasonable insurance rates.
I hope this is informative for your readers. Actual reasons for surcharges should be discussed with their agency.
January 19th, 2010 at 7:34 am
Steve:
Dynamite info as it’s always great to get the “inside information” from someone who has worked in the insurance business for many years.
You raise a good point about how every insurance company is different and that has always been one of my greatest frustrations as a practicing attorney trying to give solid advice– how the heck are you supposed to give a black or white answer to an insurance company when every company is different? Most often, I tell my clients we have to carefully read THEIR policy from THEIR company to see what it says. However, even reading the policy doesn’t always give you a definitive answer because often there are additional company policies and procedures that are not defined in the policy. That’s when I have to get on the phone and argue with claims people on behalf of my clients. As one client said to me: “that’s why you get the big bucks”. I sure don’t mind doing my job but it sure doesn’t seem that it should be so complicated but as you said that’s “how it works in the real world”!
Thanks for sharing.
Thanks, Jim
_________________________________
James B. Reed
Elmira Car Accident Lawyer
Ziff Law Firm, LLP
Mailto: jreed@zifflaw.com
Office: (607)733-8866
Toll-Free: 800-ZIFFLAW (943-3529)
Web: http://www.zifflaw.com
Blogs: NYInjuryLawBlog.com and
NYBikeAccidentBlog.com
January 19th, 2010 at 9:59 am
Hi again – funny you should bring up the “black and white” issue. I just got off the phone with a 30+ year former Allstate agent who said: “these companies don’t work in black and white, they work in various shades of grey. In all my time I have found “grey” works more often in the customers favor than not”.
I know that you may find that statement incredulous but remember – the only time you hear from people is when there is a real problem. My viewpoint is this: I insure about 2000 households who make claims of one sort or another almost 5 times a week. If I don’t call them for follow up, I would never hear from them. I only need to advocate and intervene about half a dozen times a year – hopefully so that they don’t have to call you
Point being – there’s a LOT more claim activity than we imagine and most of it seems to be OK. Also figure that this is just MY experience and there are a jillion more insurance agents out here than just me.
As an attorney once said to me – you know, people tend to think lowly of our professions but WE are the first people they come to when they are in trouble.
We ‘do good’ sometimes don’t we?
January 19th, 2010 at 10:23 am
Steve:
Absolutely you do good. Like any profession/business/person, there are both good people and bad people on both sides of the fence. The tough part for the customer, is trying to find the good person rather than the bad person. Frankly, that’s why I like blogging because it gives my customers/clients an opportunity to learn something about what I believe in and how I hope to be able to help them. Keep up the good work you do and I will try to do the same!
Jim