Expert: Richard Hixenbaugh - 8/7/2009

Question
Can you tell me how the insurance companies go about calculating a surcharge?  I have a claim for $2500.  I don't know if it worth paying out of pocket or using my insurance and paying the surcharge.  My insurance company (allstate) said they cannot tell me the surcharge until the claim in finalized.

Answer
Hi Kathi,

There is no set method. Each company determines its own method of determining claim surcharges. For a first event the surcharge could range from 0 to as much as 40%. The only way to know what your company would do is to call your agent and pose a hypothetical situation. Tell them that you were just wondering what the surcharge would be (if any) if a claim was made for $2500.00. Do not tell them that you have actually had an event or a claim at that time. If you do, they can charge you the surcharge even if you do not make the claim but just because they know of the event.

I hope this helps
Richard Hixenbaugh