Homeowners insurance companies in NC ask to increase rates

North Carolina Homeowners Insurance Rates

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North Carolina Homeowners Insurance RatesThe permission of policyholders is being requested for price hikes in North Carolina.

Homeowners insurance companies have been contacting their customers in North Carolina in order to request their permission for a rate increase that is extremely high in some cases.

Some property owners received letters that are asking for approval of astronomical hikes.

In some instances, the new premiums requested by the homeowners insurance companies were over 50 percent higher than the maximum approved rate in the state. An example of this scenario occurred on January 20, when a Fayetteville Allstate customer named Monika F. Smith received her letter, which asked for a rate increase to $1,330. That amount was $464 higher than the approved maximum rate by the North Carolina Insurance Department.

This homeowners insurance action has been highly controversial and has elicited anger among some customers.

That said, Allstate is well within its legal right to make a request from its customers for permission to make the homeowners insurance rate increases. State law says that while there are limits on premiums that are set by regulators, there is nothing prohibiting insurers from asking policyholders for their permission to charge more than that. Provided that the policyholder signs a “consent to rate” form, the insurers are allowed to increase their rates by as much as they want.

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The letter that Smith received from her homeowners insurance company explained that “Since the premiums we are offering are higher than the (state-approved) rates.” It added that “we are notifying you in writing and need your consent to renew your policy through your signature.” Further to that statement, it said that if Smith refused to sign her approval to the increase, “we will not be able to renew your property policy and your coverage will end on 03/14/13.”

Though these consent to rate request letters were once quite rare within the state, experts are saying that it is becoming increasingly common for homeowners insurance companies in North Carolina to issue these notices. In 2010, the Insurance Department began tracking the number of letters that are being sent to the 2.2 million policyholders in the state, so it remains too early to measure long term trends through official data.

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