How Do New York Car Insurance Surcharges Work?


Picture of New York CityThe length of time that car insurance companies will surcharge motorists depends on the reason they're being surcharged. Surcharges are usually applied for around three years, but if the reason is a serious offense, it could apply for longer.

According to regulators, the declarations page on a policy must explicitly state "the exact dollar amount of any surcharges" that are being applied and the reasons for those surcharges. 

​Inexperienced-Driver Surcharge

Inexperienced drivers often see surcharges. In most states, these drivers pay a de facto surcharge because they lack experience and are a bigger risk to insurers. But regulators in New York actually flat-out say that drivers there who have been licensed less than three years at the start of a policy period "will receive an inexperienced operators surcharge." That surcharge will usually be dropped after three years from the date the driver's license was issued.

Surcharges are also given to motorists who have car accidents and moving violations on their driving records.

​Price Hikes for Accidents

New York policyholders can be surcharged up to 40 percent of their premium after their first at-fault accident. But premiums could actually go up by more than 40 percent if the accident or ticket also wipes out any good-driver discount that was in place. This added cost will be applied to liability, personal injury protection (PIP), and collision auto coverages and is typically charged for three years after the incident. According to the New York 2011 Consumer Guide to Auto Insurance, any amount surcharged after three years of being claims-free must be refunded to the policyholder.

However, a New York insurer can surcharge a policy only if there were injuries or more than $2,000 in property damages.

Motorists who are insured with certain carriers can also get dropped as a customer for committing particular offenses and would need to seek auto coverage elsewhere.

Whether being dropped by a carrier or receiving a surcharge, motorists can usually benefit from shopping around for a new provider. Taking some time to try and find discount online car insurance or calling local agencies can save hundreds of dollars a year.

While one company may apply 40 percent surcharges for a first at-fault accident, others may surcharge only 20 percent. Finding the cheaper insurer can translate into a lot of hard-earned money being saved.

​Premium Increases for Convictions

Insurers are also allowed to increase premiums for traffic violations. According to the state regulatory code, surchargeable violations include but are not limited to:

  • Speeding 15 mph or more over the limit
  • Causing death or injury from speeding or driving recklessly
  • Driving while intoxicated
  • Filing a false claim
  • Leaving the scene of an accident without reporting it
  • Filing false documents with the DMV
  • Letting an unlicensed motorist drive your car
A toy car on a wallet full of moneyLike with accidents, some insurers weight serious violations differently than others. One company may start reducing the surcharge three years after the conviction, while others may not do so until five years have passed.