What Is a Car Insurance Surcharge?

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A car insurance surcharge is an additional fee or penalty that is added to your car insurance premium. It is often the result of a traffic violation or an at-fault accident.

Key Takeaways

  • A car insurance surcharge is an additional fee or penalty that is added to your car insurance premium for several months or years.
  • It is usually the result of traffic violations or at-fault accidents, as well as administrative violations like frequently missed payments.
  • If a surcharge is added to your premium, you will need to pay it or find another insurer to cover you.
  • A rate hike is usually a permanent premium increase due to changes in your circumstances. It is not a penalty like a surcharge.

Definition and Example of a Car Insurance Surcharge

A car insurance surcharge is a temporary increase in your monthly premium that is assessed as a penalty. It is usually caused by something within your control, like an accident or an excessive number of claims filed. Traffic tickets are another common trigger of surcharges.

From the insurance company's perspective, any driver who has committed moving violations and received tickets is a higher risk. Higher-risk drivers are more likely to file insurance claims. For example, if you have filed multiple claims for accidents where you were at fault, your insurance company might flag you as a higher risk, and as a result, it might temporarily add a surcharge to your monthly premium until you have shown that you are no longer a higher-risk customer.

How Car Insurance Surcharges Work

Surcharges are an insurance company's way to recover the extra costs they put in to handle your claim. These extra costs can be caused by a number of things, such as claim payouts or administrative costs. They can include:

Most insurance carriers review your driving record when you purchase the policy and when you renew your policy. Behaviors that have increased the risk of insuring you, like speeding tickets, reckless driving, or driving under the influence, are noted in your customer profile. The insurance carrier will also look at any claims filed to determine whether a surcharge is warranted.

If the insurer has an automated system, the surcharge may be automatically applied. Other times, the company chooses whether or not to add a surcharge. The surcharge will stay for different periods of time, depending on the type of violation.


Car insurance surcharges come in different amounts, depending on your insurer's policies and what triggered the penalty. Extra charges can last up to five years, and your insurance premium returns to normal when the designated time has passed.

What Car Insurance Surcharges Mean for You

You can reduce the likelihood that you'll have surcharges added to your car insurance by:

  • Avoiding accidents, speeding tickets, and other moving violations
  • Paying for small at-fault accidents out of pocket, rather than filing a claim
  • Paying your premiums on time
  • Never letting your car insurance lapse

However, if the damage is done, and it's too late to avoid the surcharge, you should be aware of the repercussions so you can keep charges from getting worse.

Do I Need to Pay a Car Insurance Surcharge?

If you think your car insurance policy has a surcharge that should have dropped or should not have been applied to your account, contact your insurance agent to dispute the charge.

You can try to have a surcharge removed, especially if you are a long-term customer with few or no violations on your driving record. However, in some states, it is illegal for insurance companies to waive surcharges and fees once they have been assessed without a change in circumstances, such as the driver who had the accident no longer being on the policy.


A state-mandated fee is not within your control or the control of the insurance company. No-fault states often require you to pay extra for medical coverage, and many states assess fees after you reach a certain number of points on your driving record. These fees can be referred to as surcharges.

If the company keeps the surcharge in place, you will either have to:

  • Pay the full premium, including the surcharge; or
  • Find less-expensive insurance from another company

Either way, you will need to have some kind of car insurance in order to drive legally.

What Are the Penalties?

If you don't pay your car insurance premium, including any surcharges, your insurance may lapse and leave you uninsured for driving.

In some states, if you do not pay a surcharge assessed by your state government (often referred to as an SR-22 or Certificate of Financial Responsibility filing), your driver's license can be suspended, making it illegal for you to drive until it is restored. To have your license restored, you would then have to pay any surcharges and fees owed, including any license-restoration fees.

Alternatives to a Car Insurance Surcharge

If your car insurance premium increases, it could be due to a rate increase rather than a surcharge. Unlike a surcharge, a rate hike isn't a temporary increase or penalty. It's a fixed increase in your insurance premium. Sometimes, it is the result of an insurance company raising its prices for every policyholder.


Many companies look at your credit score before setting your car insurance premium. You can lower the cost of car insurance by improving your credit score.

Other times, a rate hike may be due to a change in your circumstances, such as:

  • Upgrading to a more expensive car
  • Moving to an area with extreme weather, heavy traffic, or other factors that increase the likelihood of accidents and claims
  • Adding a teenage driver to your policy

If you are confused about why your insurance premium has increased and can't tell whether it is due to a surcharge or a rate increase, call your insurance company. A representative should be able to explain the charges and what has caused them.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Mass.gov. "Surchargeable Incidents."

  2. AutoInsurance.org. "How Long Does a Car Accident Affect Insurance?"

  3. New York State Department of Financial Services. "Re: Surcharge on Auto Insurance Premiums."

  4. New Jersey Motor Vehicle Commission. "Surcharges."

  5. State of Connecticut Insurance Department. "What Affects Premiums."

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