In general, insurance companies may increase a policyholder’s rates if the policyholder caused a crash resulting in bodily injury. These premium increases must comply with a “surcharge schedule” that was approved by the regulatory authority overseeing insurance practices in New York State.
What Is a Surcharge?
A surcharge is a term used in the insurance industry that refers to an increase in the rate policyholders pay on their car insurance premiums. Typically, a car insurance policy will impose a surcharge for traffic violations and car accidents caused by the policyholder. In some states, even no-fault claims paid-out to the policyholder for property damage or bodily injury can result in a surcharge.
In most car accident cases, the insurance company ends up paying for property damage or bodily injury resulting from a car accident.
Generally, a person who was injured as a result of another driver’s negligence would file a personal injury lawsuit against the at-fault driver for damages stemming from their injuries. If the at-fault driver’s insurance policy provides liability coverage, they are responsible for paying for covered losses caused by their insured.
If a car insurance policy provides uninsured or underinsured motorist coverage, the injured driver’s insurance carrier pays for their damages. The premiums you pay on your policy help fund an insurance company’s ability to honor the claims they are obligated to cover.
New York state law regulates how insurance companies use surcharges and is supposed to make sure insurance companies don’t subject policyholders to arbitrary rate changes.
New York Insurance Law § 2303 prohibits rates that are:
• Unfairly discriminatory
• Destructive of competition
• Detrimental to the solvency of insurers”
Furthermore, 11 NYCRR § 169.0 regulates “merit rating plans” which it defines to mean “systems of rules, varying by company, for imposing insurance rate surcharges and credits, based upon an individual’s past accident or violation record.”
New York law requires insurance companies to file “merit rating plans” for approval by the Superintendent of Insurance, including surcharge schedules for accidents resulting in bodily injury. However, any rate increase an insurance carrier charges due to an accident caused by someone insured under the policy must comply with the merit rating planned filed with the Superintendent of Insurance.
For example, if an insurance company wants to increase a policyholder’s premiums by $300 a month after they caused an accident resulting in bodily injury, the increase must have been part of the merit rating plan the insurance company filed with the Superintendent of Insurance. This helps ensure that insurance companies don’t impose oppressively expensive insurance premiums.
Contact the Law Offices of Sandra M. Radna, P.C. to Learn More
Although the concept of insurance is relatively simple, the regulations that govern insurance practices are astonishingly complicated. If you’ve been injured in a car accident and need advice about your rights under your insurance policy, you should consult an experienced attorney from Law Offices of Sandra M. Radna, P.C. Our legal team has handled countless personal injury claims—thus we have experience negotiating with, or litigating against, insurance companies.
We’re here to listen.
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