Some insurance companies are sending letters to homeowners insurance policy holders in North Carolina advising them if they do not pay a higher rate they will no longer have coverage on their property.
These 'consent to rate' letters often give very little time for policy holders to research alternative coverage. Many letters provide a standard 10-day period for the insured to decide on the ultimatum. North Carolina has laws in place that dictate how much an insurance company can increase rates. However, rate adjustments are about to face scrutiny in court.
In December 2014, North Carolina Insurance Commissioner Wayne Goodwin denied insurance companies' requests to raise rates approximately 25%. (According to news reports, this is far above the average rate adjustment. The prior year's average adjustment went up 7%.) The North Carolina Rate Bureau explained in news reports that the dramatic increase is a result of a higher risk of catastrophic losses.
If you are located in the Triangle-area, rest assured for the time being that as of this writing, according to Insurance Journal:
While companies asked to raise homeowners premiums in the cities of Durham and Raleigh by 25% and in Durham and Wake counties by 33%, Goodwin ordered an average 4% reduction in these areas.
However, just one month after Goodwin's decision, insurance companies have banded together and are filing to the Court of Appeals. Companies may eventually get the rate hikes they seek, but it remains to be seen.
For now, if you receive a 'consent to rate' letter with an exorbitant jump in your premium, contact the North Carolina Department of Insurance. Most companies are acting within the law, but check to make sure their premium hikes comply. Sometimes customers don't know any better. According to Kerry Hall, spokeswoman for the state Department of Insurance, "Insurance companies can increase premiums by up to 250 percent if the customer agrees."
You may not need to agree to the terms of your same company to get adequate coverage. After contacting the state department, check with an insurance broker or contact alternative companies to shop around rates.