How Much Is an Insurance Surcharge in Massachusetts?

Auto insurance surcharges in Massachusetts are additional costs on a policy’s premium. These surcharges occur when a policyholder is involved in certain incidents, such as at-fault accidents or specific traffic violations. The system is designed to adjust premiums based on a driver’s recent history of incidents. Understanding how these surcharges are determined, their financial impact, and the process for disputing them is important for policyholders.

Understanding Massachusetts Surcharges

Massachusetts utilizes a system known as the Safe Driver Insurance Plan (SDIP), which is overseen by the Merit Rating Board (MRB). This system tracks driving incidents and assigns “points” to a driver’s record. The MRB collects reports of at-fault accidents and traffic violations, which are then used by insurance companies to calculate premiums.

Surchargeable events are incidents that trigger these points. For instance, a minor traffic law violation results in two points, while a minor at-fault accident incurs three points. More serious incidents, such as major at-fault accidents or major traffic law violations, carry higher point assignments. These points reflect a driver’s perceived risk and directly influence the cost of their auto insurance.

Incidents Leading to Surcharges

Various driving incidents can lead to surcharges on an auto insurance policy in Massachusetts, each assigned a specific number of points under the SDIP. Minor traffic law violations, such as speeding, failing to obey traffic lights, or making illegal turns, result in two surcharge points. These infractions indicate a deviation from safe driving practices and are reported to the Merit Rating Board.

More severe incidents, categorized as major traffic law violations, include offenses like operating under the influence (OUI/DUI), reckless driving, or leaving the scene of an accident. These carry a higher penalty of five surcharge points.

At-fault accidents are also significant contributors to surcharges. An accident is deemed “at-fault” if the operator is determined to be more than 50% responsible for the incident. For an accident to be surchargeable, it must also involve a claim payment exceeding $1,000, not including any deductible. Minor at-fault accidents, where damages range from $1,000 to $5,000, result in three surcharge points, while major at-fault accidents, with damages exceeding $5,000, incur four points.

Calculating the Surcharge Amount

The points assigned by the Merit Rating Board directly impact the financial cost of an insurance policy. Each surcharge point translates into a percentage increase on specific portions of the insurance premium. For experienced operators, defined as those licensed for six or more years, each surcharge point results in a 15% increase. Inexperienced operators, those licensed for fewer than six years, face a 7.5% increase per surcharge point.

These percentage increases apply to four specific coverage types within a policy: Bodily Injury to Others (Part 1), Personal Injury Protection (Part 2), Damage to Someone Else’s Property (Part 4), and Collision (Part 7). For example, an experienced driver with two surcharge points would see a 30% increase on these particular coverages. The exact dollar amount of the surcharge will vary based on the driver’s base premium and the insurer’s specific rating plan.

The accumulation of surcharge points can also diminish or eliminate any Safe Driver Insurance Plan (SDIP) credits or discounts a policyholder might otherwise receive. These discounts reward drivers with clean records, so their reduction or removal effectively further raises the overall premium. Therefore, surcharges not only add costs but also reduce potential savings.

Surcharge Application and Duration

Once a surchargeable incident occurs and is reported, it affects a policy at its next renewal period. However, if a new policy is initiated after the incident, the surcharge can be applied mid-term to that new policy. Insurers retrieve updated driving records from the Merit Rating Board to apply any new surcharges to the renewal premium.

A surcharge remains on a driver’s record for six years from the effective date of the surchargeable event. While the standard duration is six years, there are provisions that can reduce the impact or duration of points. Accumulating multiple surcharges from various incidents will lead to a compounded increase in premium, as each incident adds its own set of points.

The Surcharge Appeal Process

Policyholders in Massachusetts have a formal administrative process to dispute a surcharge if they believe it was issued in error. The process begins when the policyholder receives a “Surcharge Notice” from their insurance company. This notice outlines the incident that led to the surcharge and provides instructions for appeal.

To initiate an appeal, the policyholder must complete the appeal form, which is found on the back of the Surcharge Notice. This form, along with a required $50 fee payable to the Commonwealth of Massachusetts, must be mailed to the Board of Appeal on Motor Vehicle Liability Policies and Bonds. It is important to adhere to the deadline for filing, which is 30 days from the mailing date of the Surcharge Notice.

After the appeal request is submitted, the Board of Appeal will schedule a hearing and notify the policyholder of the date, time, and location. During this hearing, the policyholder has the opportunity to present their case and evidence to demonstrate that they were not more than 50% at fault for the incident. Following the hearing, the Board will issue a decision, either upholding the surcharge or vacating it if they find the policyholder was less than 50% at fault.