Kernersville, NC -- Despite North Carolina's insurance commissioner setting a ceiling for how high homeowners' insurance rates can go, an increasing number of policyholders are getting letters from their insurers seeking permission to push their premiums beyond the limit.
Insurance Commissioner Wayne Goodwin told WFMY News 2 his office has been hearing from a growing number of homeowners who face a tough decision: give their insurer permission to raise their rates or risk having their coverage dropped.
The letters showing up in mailboxes ask homeowners to sign "consent of rate" agreements. Essentially, you give your homeowners insurance company your permission to push your premiums beyond the commissioner's limit.
"I just think after 30 years of getting all my money every year on time at whatever [rate] they tell me, I think now I'm being told [by my insurer that] I don't count," homeowner Rick Dappen said. "And that upsets me."
Dappen and his wife have insured their house through State Farm the whole time they've lived in it. But he was shocked to get a "consent to rate" letter from the company's home office last week.
It says he'll be dropped if he doesn't agree to a $100 a year increase now and give State Farm permission to raise his rates even higher in the future.
Dappen says he feels pinched and frustrated. Commissioner Goodwin says he's worried about the practice.
"Ultimately, it is a voluntary decision by both the companies and by the homeowners," Goodwin said. "Some homeowners have indicated that they felt like they had no choice. And that's why we hope people will contact the Department of Insurance if they feel they're being pressured."
Goodwin's in a tough spot. State Farm isn't the only company doing this, and if insurers don't have this option they might leave the state.
The commissioner says he's mulling over what to do, and adds that several state legislators have contacted him about their options for intervening. But Goodwin says battling to keep car insurance premiums low is a bigger priority right now.
If you get a "consent to rate" letter, Goodwin says you should read it immediately. You should also start shopping around for alternatives and contact his office if you have questions.
For its part, a State Farm spokeswoman said in a statement that, "Our customers are our highest priority, and 'consent to rate' is a tool to offer coverage to our customers and ensure we can keep our promises to all of our North Carolina homeowners customers.
"North Carolina statutes created the 'consent to rate' tool to allow companies to adjust rates on an individual basis where the customer agrees to do so. 'Consent to rate' is only used with our customer's informed consent. If a customer chooses to not accept the offered rate, he or she has the ability to shop for an alternate option."
The spokeswoman also offered to work directly with the Dappens to help handle their situation.
WFMY News 2