Friday, January 10, 2014
Insurance is Going UP?
No matter who you are insured with, if you are in the part of heaven we call Eastern North Carolina, your homeowners insurance is going up.
Here is the slightly abridged version: it takes a while to cover all of the explanations, so if you don't like reading here is an internet star (cough*me*cough) with a video on the subject! Clike HERE for the video.
To begin, most of the coast of North Carolina is insured by through the North Carolina Joint Underwriters. In short, the NCJUA is an entity set up by the state to insure properties that others companies choose not to insure. Why won't companies insure these properties? Good question! The answer is insurance companies, like all companies, are in business to MAKE MONEY! If they don't think they can make money, then they aren't going to insure it. North Carolina, by means of the Insurance Commissioners Office, limits how much can be charged for insurance premiums, so companies have began refusing to write Wind and Hail (hurricanes and tornadoes are not mentioned in insurance policies, wind and hail is what covers them) in the 18 coastal counties of North Carolina. (The companies can do that because the state law allows insureds to purchase the wind and hail coverage from the NCJUA through what is called the Beach Plan.)
All of this sounds fine, EXCEPT, it is widely believed that there is not enough money available to handle all the potential losses. Some sources think the pool of money to pay potential losses is underfunded by 65 BILLION! Due to that small problem, a bill was passed a few years ago, NC House Bill 1305. Basically, the companies that do business in North Carolina will have to bail out the NCJUA in the event that they do not have enough money to cover the disastrous event. Therefore, companies will be responsible for an assessment based on the percentage of business they have in NC. If a company has 10% of the business in NC, they will have to pony up 10% of a BILLION dollars. The legislature realized that companies don't have that kind of money lying around so they (through the NCDOI) are allowing rates on homeowners to go up so that the companies can put money aside for this probability. This is on top of the money the companies must have to cover their own clients, as well.
Add on top of this Hurricane Irene that came along after this bill was passed. While Irene was not a big hurricane it did cause problems for some companies. NC Farm Bureau had a lot of losses near the coast and subsequently have had their ratings dropped, and in turn have cancelled thousands and thousands of policies, flooding the market with people needing insurance. This makes the other companies wary of bringing on these particular customers.
Every company went up last year, and sorry to say, it looks like it is coming again this year. I just got this email this week: click HERE.
Where does that leave you? Well, if you are insured with CHA, our companies are still the best positioned. Our companies are smaller and don't advertise, so they were less expensive to begin with and don't have quite the potential losses of the Nationwide, Allstate, and State Farms. We are constantly insuring new people everyday from these other companies as our prices are very competitive.
IF YOU AREN'T INSURED WITH US, take Dave Ramsey's advice and give us a call!
If you have any questions, give our office a call! If not, enjoy your weekend! Go outside!