The answer, of course, is yes, if you are in an accident, your insurance company can raise your rates. Maryland law actually contains a fairly elaborate scheme regarding premium increases, cancellations and reductions in coverage, and the rights of insured individuals to contest such actions.
As a general rule, 45 days before your insurer intends to increase your premium, they have to notify you of their intent to do so.
The notice must be written, in duplicate, and must contain, in clear language: the current and new premium, as well as the reasons for the increase. The Insurance Code provides that if the increase is for an accident, you must be provided, the name of the participants and date of loss, and “if fault is a material factor for the insurer's action, a statement that the driver was at fault”. On the other hand, if the increase is the result of a moving violation, DUI or the like, then you must be told the name of the driver, the date and a description of a violation. If the increase is due to a claims history, than you must be provided with that history, and an explanation of the reasons considered by the insurer. The insured person is given the right to contest the increase. If the proposed increase is more than 15%, then a hearing before the commissioner can be requested. Under this procedure, called a ‘protest’, if the “commissioner finds that the actual reason for the proposed action is not stated in the notice or the proposed action is not in accordance with the insurer's filed rating plan or this article, the Commissioner shall” disallow” the action. If the commissioner finds bad faith, they can award attorney’s fees.
Maryland law also provides an insurer can generally cancel, not renew, or reduce coverage, but there are some limitations on circumstances under which they may do so.
An insurer may not cancel a policy midterm except where there exists misrepresentation or fraud in an application or claim, a risk that “constitutes a threat to public safety” or an “increase in the hazard insured against” and of course, if you don’t pay, or if your license is suspended or revoked. Here again, this law provides some options to challenge a decision to cancel, not renew, or reduce coverage. The insurer must notify you 45 days in advance of their intention [10 days if you don’t pay your premium]. The required notice must recite in clear and specific terms:
- the proposed action to be taken, including for a reduction in coverage, the type of coverage reduced and the extent of the reduction;
- the proposed effective date of the action;
- the actual reason of the insurer for proposing to take the action;
You then have 30 days to file a protest with the Insurance Commissioner. The filing of a protest stays the proposed action, and the Commissioner can award attorney’s fees if the proposed action is not supported by law.