Transparency for surcharges
Auto Coverage
Auto insurance rates can rise sharply in the event the driver is held to be at fault. But what happens when the insurance company makes a mistake? Do the auto insurance rates fall?
Most drivers have accepted the idea that their auto insurance rates will rise if they are at fault when a claim is made. In such cases, the insurer has to meet the third party liability claims plus collision and/or comprehensive claims by their policyholder. But what happens if the insurer makes a mistake when deciding which driver is at fault? In theory, once evidence of the mistake is presented to the insurer, it should immediately return the rates to their original lower level and recover any third party payments made. But it’s not easy.
When two or more insurance companies settle a claim, they sign waivers which prevent the question of fault from being opened again. So even if one insurer is later shown to have made a mistake, it will be too late to recover any payments made.
In Massachusetts, bills have been presented to prevent local insurers from increasing rates or imposing surcharges if the question of fault is disputed. The Attorney General has just fined insurers for failing to made timely refunds. Lawmakers are determined to prevent this from happening again. Indeed, the proposed laws would force disclosure of each auto insurance company’s surcharge rules so every driver could understand how rates are adjusted. Hopefully, all other states will follow this example. The more transparency introduced into the auto insurance market, the better for all drivers.
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