Even ifyou are a careful driver, shop
diligently for your automobile insurance policy, and ask your agent about
available discounts, you may end up paying more than necessary for your
automobile insurance coverage if your insurer adds a surcharge to your policy.
Some states require that insurance companies disclose surcharges to policyholders in writing; however, these disclosures may not be easily located in your policy materials.
When you are shopping for an insurance policy or reviewing your policy coverages at renewal, take the time to find out if your insurance company will impose any surcharges on your policy. If your insurance company has added a surcharge to your policy premiums or plans to add a surcharge at renewal, ask your agent how much the surcharge affects your policy premiums, and find out what steps you need to take to have the surcharge removed from your policy.
Here are some of the most common surcharges used by automobile insurance companies:
Many insurance companies will impose a surcharge if you use your motor vehicle for business use. Each company may have a different definition of business use some consider your vehicle as being used for business use if you drive to more than one job site per day. Others may define business use as carrying tools or supplies for your job in your vehicle.
If you use your motor vehicle for any other purpose besides personal pleasure or commuting to work at a single location, you should ask your agent or insurance company what activities it considers to be
business use. If your insurance company determines that your
automobile is used for business use, it may impose a surcharge of an additional 10 to 20 percent of your policy premiums. This can add a significant cost to your personal automobile insurance premiums.
Also, some insurers consider certain activities to be commercial use, rather than business use. These activities include delivery of pizza or other foods to business or residential customers, transportation of clients for a fee, and hauling landscaping or heavy equipment, among other activities. If you are using your motor vehicle for activities that
are considered commercial use by your automobile insurance
company, you will not be eligible for coverage under a private
passenger automobile insurance coverage. You will need to purchase a commercial automobile insurance policy to cover these types of activities.
FREQUENT INTERSTATE TRAVEL
If you frequently travel to another state, your insurance company may
assess a surcharge against your policy - this surcharge may amount
to 10 to 20 percent of your policy premiums.
The reason some companies levy this surcharge is because policy
limits and mandatory coverages vary from state to state, and your
automobile insurance company may be required to pay higher limits
or different coverages than those stated on your declarations page if
you are in an accident in another state. The surcharge allows the
insurance company to offset the uncertainty created by this risk.
A common scenario that may cause you to be assessed a frequent
interstate travel surcharge is working in a state different than the one
in which you reside.
INEXPERIENCED ORYOUTHFUL DRIVER
Your insurance company may impose a surcharge on the premiums
charged for a driver on your policy who does not have at least three
years of driving experience. There are two reasons for this: First,
individuals with less than a few years of driving experience are
statistically more likely to be involved in an accident than drivers with
substantial experience; second, the insurance company will have a
limited driver history on which to base its premium rates for that
An inexperienced or youthful driver surcharge may add 10 to 20
percent to your automobile insurance rates.
INTERNATIONAL DRIVERS LICENSE
If you have recently relocated to the United States from another
country and have not yet obtained a United States driver's license,
your automobile insurance company may impose a surcharge. This
can add between 10 and 25 percent to your policy premiums.
The reason many insurers impose a surcharge if you have a driver's
license issued by a country other than the United States is because
your insurer will not be able to obtain your driving record from the
country that issued your driver's license. The company will not be
able to independently verify the accuracy of the driving history you
reported on your automobile insurance application.
If an insurance company has assessed an international driver's
license surcharge on your policy, the easiest way to lower your
automobile insurance premium is to obtain a United States driver's
license. Once you have done this, notify your insurance company as
soon as possible so the surcharge can be removed from your policy.
If your insurance company must file an SR-22 to show the
Department of Motor Vehicles or the Department of Transportation
that you carry at least the minimum insurance required by your state,
the company may charge a fee for this filing. This fee is between $10
and $20. As long as you keep your policy in force with no lapses in
coverage, your automobile insurance company will charge this fee
UNVERIFIABLE DRIVER RECORD
This surcharge may be applied if your insurance company is unable
to obtain a motor vehicle report, CLUE report, or other document
showing a verifiable driving history for a person covered under your
policy. An unverifiable driver record surcharge may add 10 to 20
percent to your automobile insurance costs.