Rhode Island warns insurers on using non-chargeable accidents for auto premiums

Rhode Island warns insurers on using non-chargeable accidents for auto premiums | Insurance Business America

Motor & Fleet

Rhode Island warns insurers on using non-chargeable accidents for auto premiums

Firms asked to comply with state rules on accident history

Motor & Fleet

By
Kenneth Araullo

The Rhode Island Department of Insurance has issued a reminder to insurers regarding the state’s restrictions on using certain aspects of a vehicle’s history when determining premiums for private passenger auto policies.

The notice was outlined in a bulletin from the insurance division of the Rhode Island Department of Business Regulation, a report from AM Best said.

According to the regulator, premiums cannot be adjusted based on losses that are not considered chargeable accidents or moving violations.

State law defines an accident as non-chargeable for several reasons, including if the incident occurred more than three years ago, if the insured was 50% or less at fault, or if the vehicle was legally parked and unattended at the time of the accident.

The department has observed some insurers considering accidents outside the three-year period and using criteria beyond the chargeable accident guidelines.

Additionally, insurers are prohibited from offering “loss-free discounts” or tiers that factor in non-chargeable accidents or moving violations. State law also forbids charging higher premiums for any loss where a surcharge is not allowed. For example, surcharges cannot be applied to accidents where the claim payment is less than $3,000.

The department instructed insurers using these rating factors to stop the practice immediately. Noncompliant rating filings must be revised and resubmitted to the Insurance Department by Nov. 30.

In June, Rhode Island lawmakers passed legislation prohibiting insurers from denying policyholder requests to use original equipment manufacturer parts during repairs if the vehicle is 72 months old or newer.

According to AM Best, the five largest writers of private passenger auto insurance in Rhode Island in 2023, based on direct premiums written, were Progressive Insurance Group (31.64%), Berkshire Hathaway Insurance Group (13.4%), Allstate Insurance Group (10.74%), Amica Mutual Group (9.49%), and USAA Group (6.54%).

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