We all look at car insurance as a necessary evil. On one hand, simply put, it’s absolutely necessary, which is why it’s required by Pennsylvania state law. After all, driving is a privilege, not a right. On the other hand, it adds a substantial expense to the financial cost of driving and carries the potential to increase infinitely over time. Involvement in a motor vehicle accident has a negative effect on insurance rates, but there are limitations imposed by Pennsylvania law.
When rates are increased, drivers may expect to pay the higher rate for some extended period of time. It often seems unfair the length of time a new higher insurance rate is effective. It is important to protect yourself after an accident to ensure that fault is correctly determined and proportioned.
Automobile policies typically include additional premium charges, also known as surcharges that carriers apply to an insurance policy for a limited term of years if a driver is involved in certain, defined moving violations, license suspensions or motor vehicle accidents. Surcharge information is normally specified in an insurance policy’s package of endorsements.
Auto Insurers may assess a premium surcharge on policies where an insured has been convicted of at least two violations of any driving offense listed in 75 Pa. C.S. § 1535. These are typically moving violations, i.e., a violation which occurs whenever a traffic law is violated by a vehicle in motion. Examples of moving violations include speeding, improper passing, and running a red light or stop sign. A non-moving violation is usually a violation involving defective equipment or parking. Note that the amount of a surcharge may be increased if the same accident results in two convictions for driving offenses listed in 75 Pa. C.S. § 1535.
Auto insurance companies in Pennsylvania are subject to state regulations which mandate that they may not penalize their policyholders whose total claim cost over a 3-year period does not exceed a certain threshold of damage measured in dollars, which applies to any person injured or property damaged, and is measured in excess of any deductible. Motorists in Pennsylvania may not be surcharged or have their policy non-renewed if the claim(s) resulting from the accident(s) in the preceding three years do not add up to more than the current threshold amount, currently $1,550, after payment of any deductible, or if the insurance company is reimbursed for at least 60 percent of the total amount of the paid claim.
As an example, if $2,100 of damage is incurred to a vehicle, assuming a $500 collision deductible, a claim would require the insurance company to pay the remaining $1,600 of repairs. Under current Pennsylvania law, this claim would exceed the current cap of $1,550 and the insurance company could then impose a surcharge on a driver’s policy for a period of up to 3 years.
However, 75 Pa. C.S. § 1799.3(a) states that an insurance company may not cancel or refuse to renew a policy when the amount of damages does not exceed the $1,550 threshold. As long as any damages in an accident remain under this cap, an insurance carrier may not surcharge nor fail to renew a driver’s policy.