PA Insurance Department Announces Increase in Auto Insurance Accident Threshold Cap

Pennsylvania Acting Insurance Commissioner Michael Humphreys announced the Pennsylvania Insurance Department has increased the automobile accident surcharge threshold cap to $2,100. A notice, published electronically in the Pennsylvania Bulletin today, alerts insurers writing private passenger auto insurance in the commonwealth that they may not, by law, penalize their policyholders whose aggregate claim cost over a three-year period does not exceed the accident threshold cap.

“The increase to the accident threshold cap is the second within the past two years and will protect consumers from penalty as inflationary pressures continue to impact Pennsylvania families,” said Humphreys. “Insurers cannot cancel or refuse to renew a policy, or apply any surcharge, rate penalty or driver record point assignment if a policyholder’s claims do not exceed the new cap of $2,100. This increase is another example of how the Insurance Department prioritizes consumer protections, and the department will continue to explore ways to make purchasing and carrying insurance easier, straightforward, and more equitable.”

Pennsylvania law requires the Insurance Department to adjust the amount of the threshold cap at least once every three years, relative to changes in the consumer price index for medical care and automobile maintenance and repair costs. In the past, updates typically only happened once every three years. Last year, in 2022, the department increased the cap after two years, from $1,800 to $1,900. In 2023, the department is increasing it again from $1,900 to the new cap of $2,100.

Automobile insurance companies are required, by law, to provide their surcharge disclosure plans to applicants when they apply for coverage and to their policyholders at least once a year. Consumers with questions about their insurance company’s surcharge disclosure plan can contact their local agent, insurance company or the Pennsylvania Insurance Department’s Bureau of Consumer Services online or at 1-877-881-6388.

The new accident threshold amount is effective as of July 1, 2023. Insurers should file updated rates and rules no later than April 1, 2023.