Surcharge

A surcharge is an additional charge layered on top of the base premium. In homeowners insurance there are two families. Risk-based surcharges reflect something about the home or its history, and can include a recent paid claim, a listed dog breed, a pool or trampoline, a wood stove or an older roof. Regulatory surcharges are required by the state or a state-backed entity. In some states, for example, insurers collect a surcharge to fund a guaranty association, or an assessment levied when a state-backed insurer runs short after large catastrophe losses.

The amount is a percentage or a flat dollar figure printed on the bill or declarations page. Say a prior claim adds a 10% surcharge to a $2,400 premium (hypothetical): that is $240 a year, for as long as the insurer's plan applies it, often several years. A regulatory charge may sit on top.

Surcharges can make a renewal jump larger than the advertised rate increase. Ask which charges are time-limited, which can be removed (for example by fencing a pool or replacing the roof), and whether a small claim is worth filing at all. The fees and surcharges guide explains the common items, and the policy fee entry covers the flat charge insurers add for administration.