I-Team: Massachusetts Drivers In Minor Fender-Benders Hit With Shady Insurance Surcharges

BOSTON (CBS) - If you drive around Boston long enough, chances are you'll eventually cause a dent or ding in someone else's car. And those repairs at the body shop never seem to be cheap.

There is supposed to be a law in place to make sure insurance companies don't jack up premiums after minor accidents.

However, the WBZ I-Team found insurance companies still taking a detour around a 2015 law intended to prevent surcharges after fender-benders.

The state lawmaker behind the original legislation has now moved to close the loophole, but drivers should still make sure they aren't hit illegally with higher premiums after minor accidents.

In January, Zach Clifford thought he dodged a bullet when he rear-ended another vehicle along I-95 in Needham.

After the collision, Clifford did not see any evidence of damage on the front grill of his car. The other driver's bumper did not seem any worse for the wear, either.

"It's upsetting because right away, you're thinking dollar signs," Clifford told WBZ. "But it looked like it was no big deal."

However, a couple months later, Clifford was surprised to get a letter from his insurance company, Liberty Mutual, notifying him of a surcharge on his policy. The claim from his fender-bender totaled a little more than $500.

"I just thought, 'How is this fair?'" Clifford recalled.

So the recent college graduate decided to study up on the law. He discovered in 2015, state lawmakers passed a measure that raised the threshold for surchargeable accidents, from $500 claims up to $1,000.

Clifford paid $50 for an appeal, took the day off work, and traveled to the courthouse. The surcharge was removed from his record.

However, the East Walpole resident said it was a battle he and other drivers involved in small accidents should have never had to fight.

"Some people can't take the day off work. Other people might be strapped for cash. The entire thing is a headache," Clifford explained.

Stories like that infuriate Sen. Mark Montigny, who said insurance companies were taking advantage of a loophole in his 2015 legislation.

The New Bedford Democrat was inspired to raise the claim limits after a fender-bender his mom had, prompting a surcharge on her previously spotless driving record. The added hundreds of dollars in premiums easily exceed the damage on the vehicle.

"It costs more than $500 for scratches on a bumper these days," Montigny said.

Montigny said he intended the law would apply to all insurance companies. However, after the state deregulated the auto insurance market in 2008, companies were allowed to develop their own rating systems for drivers and imposing surcharges.

They interpreted that the higher claim limits passed by lawmakers only applied to companies using the state's "Safe Driver Insurance Plan" model.

"So we decided to fix it and make it completely unambiguous," Montigny said about an amendment that "closed the loophole" in July.

When the I-Team contacted Liberty Mutual about the issue, a spokesperson called it "confusing" for consumers, but maintained the company was within its rights to impose the surcharge on drivers like Clifford for his January accident.

The I-Team then asked about the updated legislation passed over the summer. A subsequent Liberty response acknowledged the minor accident threshold limit is now $1,000 before triggering a surcharge.

"There had not been explicit direction given to carriers regarding the date the entire industry must move to this new threshold, which requires significant systems and operational changes at the companies," Liberty spokesman Glenn Greenberg said. "We are working as quickly as possible to move to the new threshold for our Massachusetts customers."

Other insurance companies like Progressive also told the I-Team they will be following the new surcharge limits.

"The law doesn't say, 'Take your time.' It says meet the needs of the consumer and stop ripping them off," Montigny said. "That's what it is…they are basically ripping consumers off!"

Department of Insurance spokesman Chris Goetcheus said increasing premiums for at-fault accidents that do not meet the new criteria will be prohibited.

"The Division of Insurance will work to ensure that companies are in compliance with the new law," Goetcheus said.

But the I-Team discovered even state agencies were slow to get up to speed. The new surcharge limits had not been updated on either the Division of Insurance or Registry of Motor Vehicle websites until WBZ inquired about it.

Records show the vast majority of drivers who contested their surcharges won. In 2016, there were 21,531 cases vacated out of 30,395 appeals. The agency does not track how many of those appeals were for accidents with damage claims under $1,000.

Bottom line: If you get hit with a surcharge for a minor fender-bender, make sure you fight it.

Click here for info on how to appeal

Clifford is relived he saved hundreds of dollars in premiums by overturning his surcharge, but still thinks he should get a $50 refund for having to appeal an accident that barely required a trip to the body shop.

"It was just a big pain," he said.

Ryan Kath can be reached at rkath@cbs.com. You can follow him on Twitter or connect on Facebook.