It is a personal decision whether you want to pay personally and out of pocket for the accident or if you want to turn it over to your insurance company. Now in 2008, it will be up to the rating system of your insurance carrier in Massachusetts to determine if this one accident and claim after years of a clean driving record will affect your rates or not.

This is a change over how in previous years the insurance regulator set the rates and the rating system/surcharges with the Safe Driver Insurance Plan (SDIP). For years the Safe Driver Insurance Plan set the specific credits and surcharges that your insurance company was required to apply to your premium. With the introduction of managed competition in MA as of April 1, 2008, insurance companies are no longer required to use the SDIP to determine surcharges for at-fault accidents and traffic violations and apply credits for incident-free years. Instead, insurers may choose to develop their own merit rating plans or to continue using the SDIP.

If your insurer uses the SDIP, there are incentives are given to ensure that drivers with clean driving records pay less for their auto insurance. You can read about the SDIP on the MA Insurance regulator's site. With the SDIP a minor accident is worth 3 surchargeable points. A minor accident is one that results in a claim payment of more than $500 and up to and including $2,000 for Damage To Someone Else’s Property, Collision, Limited Collision, or Bodily Injury To Others.

Four parts of coverage on a Massachusetts private passenger auto insurance policy are impacted by the SDIP. The specific coverages are:

• Part 1: Bodily Injury to Others
• Part 2: Personal Injury Protection
• Part 4: Damage to Someone Else’s Property
• Part 7: Collision

A surcharge percentage factor is used to increase the premium on each of these four coverages. For experienced operators, each surcharge point represents a 15% increase in the compulsory coverages (Parts 1, 2, and 4) and the optional coverage (Part 7) Collision. For inexperienced operators, each surcharge point represents a 7.5% increase in the compulsory coverages (Parts 1, 2, and 4) and the optional coverage (Part 7) Collision.

A credit code percentage factor is used to decrease the premium on each of these four coverages. For experienced operators, a credit code represents a 17% decrease in the compulsory coverages (Parts 1, 2, and 4) and the optional coverage (Part 7) Collision. For inexperienced operators, a credit code represents a 7.5% decrease in the compulsory coverages (Parts 1, 2, and 4) and the optional coverage (Part 7) Collision.

The SDIP can be confusing so if your insurer uses this system still for surcharges then you may want your agent to tell you how this accident would affect you, if the claim went through your policy. If your insurer does not use the SDIP for surcharges you will still want to find out their rating system so you can decide if you want to pay for this accident personally or not. If you want to keep the accident and claim off of your insurance record then you can pay for the damages yourself, it is a person choice depending upon your financial situation, etc.

Just for informational purposes here are some facts about the new auto insurance system. For years the Commissioner of Insurance set all automobile insurance rates under what was known as the fixed-and-established system. Now the Commissioner of Insurance has eliminated the fixed-and-established system and introduced managed competition into the state’s automobile insurance market for policies effective on or after April 1, 2008.

Since April 1, 2008, automobile insurance companies will set their own rates. While these rates may vary by insurance company, all rates must be approved by the Commissioner of Insurance.

Under the prior fixed-and-established market, Massachusetts law required that insurance companies apply specific surcharges for certain accidents and traffic violations and apply specific credits for clean driving records. This system of surcharges and credits is part of the Safe Driver Insurance Plan (SDIP).

Under the new system, insurance companies have the option of developing their own rules–known as merit rating plans–to determine if and how your driving record will impact your premium, whether it's an increase due to an at-fault accident or traffic violation, or a credit for clean driving. These new merit rating plans will be subject to approval by the Commissioner of Insurance. Companies may also choose to use the point system of surcharges and credits laid out in the SDIP as their merit rating plan.