FAQ ; Answers to Frequently Asked Questions About the State's New Car Insurance System

QUESTIONS AND ANSWERS

Will surcharges change?

Under the prior "fix-and-establish" system, Massachusetts law required that companies apply specific surcharges for certain accidents and traffic violations. This system of surcharges is called the Safe Driver Insurance Plan (SDIP). Under the new system, insurance companies will be permitted to develop their own rules - known as merit rating plans - to determine how they will impose surcharges for at-fault accidents and traffic violations. These new merit rating plans will need the state insurance commissioner's approval. Companies may also choose to use the existing SDIP for a merit rating plan.

Why is auto insurance so expensive in Massachusetts?

The state is densely populated, with the majority of its drivers living in urban areas where accidents are more likely to happen. In addition, Massachusetts' higher cost of living means higher costs for medical care, auto repairs and litigation. Because of the high incomes here, the average value of the cars on the road tend to be higher, too.

Will competition reduce my premium?

Although most Massachusetts policyholders will probably benefit from reduced rates under the new system, overall rates would have gone down anyway due to industry trends. The amount that you pay will depend on your individual risk factors. Examples of individual risk factors include your driving record, where you live, and other factors approved by the commissioner.

How should I shop for auto insurance?

You should determine what types of coverage you need, and how much of each coverage type you need. Once you have decided what you need, you should then get premium quotes for that coverage from several companies. Some companies sell insurance through agents, while others sell directly through their own employees. To make sure you get the best possible premium for the coverage you need, you should make sure that each of the premium quotes you receive are for the identical coverage you wish to purchase.

Once you have determined which companies are offering the best price for the coverage you need, you may wish to speak with family members and friends to learn about their claim experiences. While price is an important factor in deciding which insurance company to choose, it is not the only factor. The level of service a company provides is also an important factor to consider.

What should I do if my rate goes up?

Remember that any change to your policy will affect your premium. Changing your vehicle, adding or changing drivers, or changing your car's location may all increase your premium. Also, consider if you are classified as a high-risk driver, such as one with multiple at- fault accidents or traffic violations; those factors help drive up rates. Contact your agent or your insurance company for an explanation of why your rates have increased. Once you have learned the reason for your rate increase, you may want to obtain premium quotes from other insurance companies until you are certain you have found the lowest premium for the coverage you want.

Source: Massachusetts Division of Insurance

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