Rates for homeowners policies will not be affected by this change.
North Carolina’s Commissioner Wayne Goodwin has announced that he is stepping away from his decision for slightly decreasing rates for rental insurance and other types of coverage for properties that are not occupied by their owners, due to a court battle declared by the industry.
An out of court settlement has now been reached for the case between the industry and the Insurance Department.
A compromise was reached in the settlement that fell between the 2.6 percent decrease in renters insurance that Goodwin had wanted, and the 20.5 percent average increase that insurers had requested last year. This decision will not affect homeowners policies, but is geared toward properties that are owned and are either rented out or are not otherwise occupied by their owners.
The outcome was a 13.2 percent average increase for renters insurance for owners of those properties.
That increase won’t be implemented all at once. Instead, the renters insurance rate hikes will be spread over a period of three years. Goodwin released a statement that said that “It became apparent that if we continued to fight this issue in court, there was too great a risk that dwelling policyholders would receive much larger increases, particularly on the coast.”
Goodwin also mentioned that “This agreement allows for a smaller total increase spread over three years to lessen the impact on policyholders.”
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According to Kerry Hall, a spokesperson for the Insurance Department, the North Carolina Rate Bureau, which represents the renters insurance companies and other insurers in the state, had made the argument before the state’s Court of Appeals that the ruling of the commissioner had misused the 1979 court ruling which created a set required process.
Had the court decided in favor of the industry, it would have allowed the renters insurance industry’s full proposed increase to go into effect. The settlement allowed an agreement to be reached which was a compromise between the two parties.
The commissioner also pointed out that over the last few years, renters insurance companies are stepping back out of that sector. The settlement was carefully created in order to help to ensure the availability of the coverage into the future.