5 On Your Side

'Consent to rate' insurance forms worry homeowners

Posted August 20

— Complaints and questions keep pouring in to 5 On Your Side about home insurance companies raising rates beyond the state-approved maximum.

Insurers are using a loophole in a state law to send “Consent to Rate” letters to homeowners who are coming up for renewal, and many are wondering what they can do to stop it.

State Insurance Commissioner Wayne Goodwin said he’s already received about 700 complaints this year about the Consent to Rate forms.

“There are people – tens of thousands of people – getting these letters,” he said. “They read the letters and they're scared to death – as I would imagine they should be – because they see terms and dollar signs and deadlines."

Goodwin said his office is trying to protect consumers, but he needs their help.

“I need more people to do what you're doing, and that is to ask questions, press companies,” he said. “We're pressing companies, but we're limited to what we can require companies to do"

The Consent to Rate form is allowed under a decades-old law that was intended for high-risk customers. It appears insurance companies are now using it as a way to bypass the rate-change process.

"There are other companies that said if they don't have this as a tool then they will leave the state," Goodwin said.

That would result in fewer companies, fewer options and potentially higher rates, he said.

Many of the forms show only a $1 increase, which may not seem like a big deal. But once a homeowner signs the form, the insurer can increase future rates up to 250 percent without further approval.

Goodwin said homeowners need to shop around for better rates now and don't wait until they are pressured by the letter and its deadline. 5 On Your Side has heard from many customers who found big savings by doing so.

But homeowners should not ignore the letter or their coverage could lapse, causing more problems.

As for any effort to close the loophole or change how insurance rates are established in North Carolina, Goodwin said, “I share the concerns that we've discussed here. But we need to look at all the different facets of it to make sure don't create a worse problem."

He said he wants to hear what homeowners who receive the letter are being told about it by their insurance company. Contact his office or file a complaint by visiting the Department of Insurance website.

4 Comments

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  • changedmyname Aug 26, 1:28 p.m.

    Duress..Any type of threats, intended harm or stress put upon a person in order to get them to perform an act they would not normally perform would be considered duress. A contract is not validly signed unless it is signed by each participant’s own accord and own free will.
    So I am really confused why the State Insurance Commissioner is letting this happen.

  • Gatsby Aug 26, 10:36 a.m.

    Refuse to sign and jump ship to the next Company. I did and got the assurance that if I kept car & home policy's active they would not force unfair rates on me.

  • thinkin out loud Aug 21, 2:04 p.m.

    We got one of these from Nationwide so I called my agent and asked why the rates would be so high. They said they automatically add 5% per year to the value of a home for what it would cost to rebuild. They had my home inured for $135k when it's actual value was about $100k which includes the value of the land. I had them re-value the property to what it should be and it took care of that issue.

  • 68_dodge_polara Aug 21, 10:11 a.m.

    "Many of the forms show only a $1 increase, which may not seem like a big deal. But once a homeowner signs the form, the insurer can increase future rates up to 250 percent without further approval."

    You know they aren't doing this for a dollar, so if you sign, just wait to see what the hike will be the next renewal!