Bad timing for coastal homeowners’ insurance rate hike

Published 10:59 am Wednesday, March 25, 2009

By Staff
Coastal North Carolina communities can breathe a little easier after a Wake County judge ordered the state’s new commissioner to review deductible and surcharge increases for coastal homeowners.
Thank goodness for common sense. At a time when homeowners are struggling just to pay their mortgages, it doesn’t make much sense to saddle them with insurance increases — especially when they don’t seem justified.
Superior Court Judge William Pittman ruled Friday that former Insurance Commissioner Jim Long, who died earlier this year after not seeking re-election last fall, did not follow proper procedures before approving the increases in November.
Pittman ordered the Department of Insurance, now headed by Commissioner Wayne Goodwin, to re-evaluate the process.
That’s good news for Beaufort and other coastal counties that faced 15 to 25 percent surcharges in the Beach Plan for wind protection — beyond insurance company rates. The surcharges took effect with new policies written since Feb. 1.
The ruling came as a result of a lawsuit filed originally by Dare County. The Beaufort County Board of Commissioners has adopted a resolution supporting the lawsuit and will consider becoming a party to it at its next meeting this morning.
Pittman’s decision also froze a planned rise in the deductible level to 2 percent of a home’s insured valued per occurrence. Under that deductible, homeowners with $200,000 of insured value would pay $4,000 for repairs for wind damage before insurance coverage kicked in.
The ruling, though, doesn’t effect higher coastal premiums scheduled to begin in May as part of a deal Long approved that allows a statewide average rate increase of 4 percent.
That settlement cut premiums for homeowners in central and western counties, but increased insurance rates on coastal homes by up to 30 percent in five southeast coastal counties.
Beaufort County’s increase will be smaller than that, but still substantial.
We know that the increases are smaller than the insurance companies wanted, but it still feels like we’re subsidizing our western friends.
Legislators planned to debate this week a bill that would freeze the surcharge, deductible and premium increases until next year. At the very least, the increases should be postponed until the recession eases, and while legislators are at it maybe they can determine why the state feels the increases are needed at all.