Hundreds and thousands of auto accidents occur every day

When you apply for auto insurance, companies will verify your driving record. If an accident appears on the motor vehicle report, the company will probably surcharge you, unless their company insured the other vehicle involved. What most people don’t know is that your motor vehicle report, through your state DMV, has no explanation of the accident.

So, since the auto insurance company does not know who’s at fault, they will charge you until you prove yourself innocent. –That’s right! It’s your responsibility to prove you did not cause the accident. There are a few ways to prove you are innocent.

Image result for auto accidents

First, get a copy of the police report
Hopefully, you will already have a copy. Second, get a letter from the other insurance company showing they paid a claim to you. Third, keep a copy of the settlement check. Finally, you need a copy of a letter from your attorney, if you were represented.

This will get the accident off your insurance policy with that company. If you switch insurance companies you might have to do the same thing again. Accordingly, it is in your best interests to keep all documentation relating to any accidents for a minimum of five (5) years. If you are surcharged, the rate could be up to 40% or more; depending on how many accidents you’ve had in the last three to five years. If you look in the back of your auto insurance policy, there should be a section called the Surcharge Disclosure Statement. For example, in Pennsylvania, it’s called the “Pennsylvania Surcharge Disclosure Statement”.

Every auto insurance policy in Pennsylvania should have this in the policy. If your state does not require auto insurers to put this in the policy, contact your auto insurer. This disclosure explains the auto insurance company’s system of accidents and moving violation surcharges and points.

You can use this information in several ways.
1. You can tell what percentage increase the insurance company will surcharge you for auto accidents. All companies must charge the same percentage, i.e. 40%. However, all companies don’t use the same formula in calculating that 40%. Some companies use the “base rate” which is the average amount of claims paid plus the insurance company’s claims processing fee. Others might base the surcharge on what you were paying before the accident.

For example, if the company base rate is $1000, you will pay a $400 increase ($1,000 X 40%). But if your premium before the accident was $800, you will only be surcharged $320 ($800.00 X 40%). So, it pays to know what method your company uses.
2. The disclosure states what percentage surcharge will apply in a minor or major moving violation; this could be up to 20%for minor. Major violations could be up to 45% or higher.

The surcharge disclosure can also inform you of the company’s aggregate loss threshold before an accident is considered chargeable. This means any accident over a special loss amount is chargeable.

Let’s use an example: Suppose your company’s loss threshold is $1,000 after the deductible of $500. If you had an auto accident where the damages from collision were $1,800 and your deductible is $500, your threshold is $1,300 ($1,800 – $500 = $1,300). In this scenario where the company’s threshold is $1,000, you are over the threshold by $300, making this accident chargeable.

$1,800 collision accident with your car -$500 less your deductible =$1,300 your threshold $1,000 company threshold =$300 over company threshold

This accident is chargeable
Another example:
$1,200 Collision accident with your car -$500 less your deductible=$700 your threshold $1,000 company threshold =$300 under company threshold This accident is not chargeable Most companies will consider the following accidents or occurrences nonchargeable.

  1. Auto that is lawfully parked (not including parked vehicles that roll from a parked position).
    2. Person responsible for accident reimbursed the owner or other resident operators in full.
    3. The insured has a judgment against the person responsible for the accident. (The insured sued the other person at the Court level and won a judgment against them)
    4. The insured’s vehicle was struck in the rear by another vehicle and the insured was not convicted of a traffic violation in connection with the accident.
    5. The driver of the other vehicle involved in the accident was convicted of a moving violation in connection with the accident.
    6. The vehicle operated by the insured or any resident operator was struck by a “hit-and-run” vehicle and was reported by the insured within 24 hours.
    7. Accidents involving only damage by contact with animals or fowl.
    8. Accidents involving physical damage caused by flying gravel, missiles, or falling objects.
    9. Accidents occurring when using auto in response to an emergency, if the insured was a paid volunteer member of any police or fire department, etc.
    10. Accidents resulting from first-party benefits, uninsured, or underinsured motorist.
    11. The auto insurer was reimbursed by or on behalf of the insured for at least 60% of the total amount of the claim. Paid through subrogation, settlement, or judgment. Remember every claim adjuster does not keep up with every reimbursement. You must stay on top of your claim. Once reimbursement is over 60%, your surcharge premiums should be reimbursed to you.
    12. The driver involved is being surcharged for the accident on another auto insurance policy.
    13. The driver no longer resides in the household. This could be where a couple separates or divorces.

This is important. If your spouse had an accident and they are being surcharged on another policy you must supply a copy of that policy to your company for the surcharges to be removed. A Young America Insurance’s client that was separated, but not divorced, the husband had several chargeable accidents when they were living together.

After they separated because of spousal abuse, the client purchased her own policy. Young America insurance company told the insured that they had to get a copy of her spouse’s auto policy before they would remove the surcharges from her policy. It was a terrible experience for that client.