The New Jersey Department of Banking and Insurance is allowing three auto insurance companies to add surcharges of 10 percent to their premiums for new policyholders.

Prudential Group, Allstate New Jersey, and First Trenton Indemnity Co. won the right in recent orders from the state, satisfying insurance regulators that they had suffered significant losses from its newer customers. The surcharge will apply to every policyholder's first-year premiums.

"The three companies demonstrated pretty profoundly that there is a significant difference in the claims history between the first and second years," says department spokesperson Mary Caffrey. Prudential, in particular, showed that first-year policyholders were nearly twice as likely to get into an accident as other motorists, with the claims history of other auto insurers not far behind.

She says if the department had not granted the requests, the companies would have sought rate increases for all customers, which would have been unfair to established customers.

Allstate began imposing the surcharge on Aug. 12, 2002, and Prudential on Sept. 6, 2002. First Trenton will begin imposing the surcharge on Oct. 1, 2002.

Caffrey says she expects other companies will soon seek to impose a similar surcharge.