An insurance surcharge is an additional cost based on rating factors, which assess the degree of risk. Insurance companies and governments may charge surcharges to cover risks or fund insurance for low-income people. Surcharges can be challenged with legal assistance.
An insurance surcharge is an additional cost on an insurance policy, usually based on rating factors. Ratings are used to assess the degree of risk associated with a given policy, and in many regions, insurance companies may charge surcharges to people with increased risks. In addition, an insurance surcharge may also be levied by the government for certain types of rating categories or to help cover general insurance costs.
In the case of an insurance surcharge charged by an insurance company, the charge is higher than other charges associated with the policy. Insurance companies are usually limited by law when it comes to the types of surcharges they can assess. For things like car insurance, insurance companies may raise rates in response to drunk driving incidents and other things on the driver’s record, which suggests that the policy is riskier than other policies. Likewise, insurance companies may assess flood, earthquake, storm and other types of surcharges on property insurance policies to help cover risks. Surcharges can also appear as health insurance for people like smokers.
A government insurance surcharge can work in several ways. Insurance customers may receive a surcharge as part of fines for a crime, usually drunk driving. In this case, insurance companies and the government collect the driver’s surcharge amount, with the government often using the proceeds from insurance surcharges to do things like subsidize insurance for low-income drivers or fund drunk driving education campaigns.
Governments may also charge companies an insurance surcharge. This is usually done when a company has more than a set number of employees, with the surcharge being used to help fund the provision of insurance for those employees and possibly others as well. In this case, the insurance surcharge is often used in regions where the government wants to provide insurance services to everyone and the government uses surcharges to generate funds that are used to provide insurance coverage to low-income people who cannot pay for themselves.
People may fight an insurance surcharge if they feel it poses an undue hardship or has been unfairly assessed. It is advisable to consult a lawyer for assistance and be prepared for a potentially protracted battle, as surcharges are often difficult to knock down, especially if they are imposed by the government.
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