State law mandates insurance rate hikes - WECT TV6-WECT.com:News, weather & sports Wilmington, NC

State law mandates insurance rate hikes

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NORTH CAROLINA (WECT) - Insurance experts say North Carolina is the only state in the country that requires insurance companies to raise customers' insurance rates based on an insurance point system.

Under state law, your car insurance premiums automatically increase for everything from minor speeding infractions to fender benders. It's something many drivers have never heard of, but it can seriously impact your car insurance rates.

A Brunswick County man emailed our newsroom, outraged that his premiums almost doubled after a minor accident.

Bruce McKinney accidentally sideswiped another vehicle while merging into traffic over the summer. No one was hurt, but the accident caused about $1,900 in damage to his Hyundi Sonata.

McKinney said he didn't think anything about filing a claim to have it fixed, until he got a call from his insurance agent saying his monthly premium was going up around 70 percent, to about $100 a month.

McKinney told us he thought the rate hike was absurd. He told us he hadn't had any claims in 10 years, and hadn't had a ticket in 20 years. He was initially frustrated with his insurance provider, State Farm.

"They've covered every house I've owned, every car I've owned, and this is how they treat a regular client?"

When McKinney got mad, his agent explained that much of the rate increase was mandated by the state's Safe Driver Incentive Program. Depending on the nature of your traffic offense, it requires insurance companies to increase your premiums anywhere from 30 to 340 percent.

In McKinney's case, his $1,900 repair was just over the $1,800 cutoff that triggers the 45% rate hike. McKinney says State Farm has yet to explain why they hiked his premiums even higher.

Insurance providers tell us they don't like the Safe Drivers Incentive Plan either, because it causes them so much grief with customers. They say they've lobbied for years to get rid of it because it leaves them no discretion to waive rate hikes for long-time customers with an otherwise clean driving record.

The North Carolina Department of Insurance counters that the SDIP has been in effect for over 50 years, and is one reason why North Carolina enjoys some of the lowest car insurance rates in the country.

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