Auto Insurance Claims: surcharge for no claim, rear end collisions, dollar surcharge

Question
my daughter bumped a car that stopped suddenly in and intersection. There was no damage to the car she hit or our car. The man took all the info he needed from her and then left. He sent us a letter wanting over five hundred dollars, but at the same time notified our insurance company. They investivated but never told us of their findings and tacted on a 1000 dollar surcharge for three years to our insurance primium. No damage was done, no police report, no claim paid. Does the insurance company have the right to do that to us? Nobody was out anything and now we have to sell our car because we can't afford the insurance.

Answer
Sounds like an expensive lesson learned.

An insurance policy is a contract.  One of your duties under that contract is to report all accidents regardless of perceived damages.  You also have the duty to mitigate (minimize) all damages and promptly reporting the accident allows the insurance company to do this on your behalf.  By being allowed to investigate the claim promptly, the insurance company can document the damages before the claimant has a chance to have the vehicle repaired and in turn, try to profit from the accident.  As you violated the terms of the contract, you are fortunate that they only tacked on the surcharge and didn't simply cancel your policy.  The logic that they are using is that someone who fails to report claims is not acting in a responsible manner and is therefore, a higher risk to insure.  

If the company did not advise you of the findings, then how do you know that there was no payout?  Rear end collisions almost always result in hidden damage to the vehicle that is rear ended.  The reason is that when both cars are braking, the rear car hits the front car very low and causes damage under the flexible bumper cover.  

You can verify any claims paid through www.choicepoint.com
In some states, you may be entitled to a free report.