5 On Your Side

NC insurance rate changes 'very frustrating,' commissioner says

Posted July 24, 2014 5:12 p.m. EDT
Updated July 24, 2014 6:29 p.m. EDT

— When something terrible happens to a house, most people count on insurance to make it right, but coverage in North Carolina is getting tricky.

WRAL’s 5 On Your Side reported Monday about “consent to rate” forms that insurance companies are sending homeowners, demanding rates higher than the maximum approved by the state.

Fuquay-Varina resident Randi Gordon said she was shocked to get one after 16 years with Travelers insurance.

"I have never had a claim,” she said. “Never, nothing.”

State law allows insurers to charge up to 250 percent above the maximum rate set by North Carolina Insurance Commissioner Wayne Goodwin if homeowners sign that consent form.

“It is very frustrating because that law was there for exceptional purposes, and now it's being used as the rule,” Goodwin said.

WRAL’s 5 On Your Side has learned most, if not all, insurance companies will send the forms out as customers come up for renewal because they don't feel the state-approved rate increases are adequate.

State Farm, North Carolina's second largest insurer, told 5 On Your Side that all customers will get a form. The company calls it "a tool that allows us to continue to make coverage available," saying if a customer feels the increase is unfair, they can shop around.

In many cases, the increase is just $1. So what's the big deal about $1? Once you sign the form, insurers can increase your future rates up to 250 percent without further approval.

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

“It’s ultimately up to the lawmakers to decide whether to change the law, but I do think this is a great enough concern by the insurance industry and of course, especially by the public, that it needs to be looked into,” Goodwin said.

So what can you do? Shop around. You can also raise your deductible and bundle your coverage to help lower your rates.