When Monika F. Smiths homeowners insurance company sought to increase her annual premium by more than 50 percent earlier this month, she decided to shop around for a new policy and ended up saving more than $500.
Smith, a 49-year-old secretary who lives in Fayetteville, was surprised how easy it was to find a better price than what her longtime insurer, Allstate, wanted to charge. After spending five or six hours on the phone and on the Internet on Monday, she found several insurers that undercut Allstates proposal.
The best price quote, from USAA, called for a $714.60 premium on her 1,450-square-foot house. Allstate wanted to raise her rate to $1,330.
People need to do their homework, said Smith, who added that USAAs policy has a few wrinkles that, in her estimation, makes it even better than Allstates policy despite its lower price.
While Allstate does not comment on individual customer policies, our goal is to match price to risk as accurately as we can for every customer, Allstate spokesman Daniel Groce said in an email message.
Many factors go into determining insurance rates, he continued. These factors can result in a customers rate being higher with one insurance carrier than it is with another carrier. For some customers, Allstates rates will be less expensive than other carriers rates, and for other customers, they might not be the least expensive.
Smith was featured in a News & Observer story, published on Sunday, that focused on insurance companies seeking to charge homeowners more than the maximum rate permitted by state regulators. The practice is perfectly legal if the homeowners consent to the higher rate. The insurers invariably refuse to renew the policy unless the homeowner signs the consent to rate form.
Smiths ability to find a better price after receiving a consent-to-rate request underscores the value of scoping out the market. State Insurance Department officials recommend shopping around for a better deal if simple adjustments to your policy, such as raising your deductible, arent enough to persuade your insurer to renew your policy at the lower, state-approved rate.
Many, although not all, insurers who offer homeowners policies in North Carolina are submitting consent-to-rate requests to certain policyholders. Industry insiders say the requests are on the rise because of the industrys inability to win approval from state regulators for the rate increases they feel are required to make a profit.
Many policyholders are agreeing to insurers requests to raise rates above the state-approved maximum.
The state Insurance Department reports that, in 2011, 26 percent of homeowners outside the states beach and coastal areas agreed to consent-to-rate requests. The percentages were higher still in beach and coastal areas.
Reward for switching
Bob Hanley, a 65-year-old retired high school teacher who lives in Aberdeen with his wife, Gail, a retired advertising executive, also can attest to the value of shopping for a better deal.
Last September Hanleys homeowners insurance carrier, Allstate, sought his consent to charge him $1,795 to insure his 1,800-square-foot home 31 percent above the state approved maximum.
Hanley said he was dumbfounded when he received the request because Allstate has insured his home since 1998 and he has never filed a claim.
But, he said, he ended up getting a new homeowners policy through AAA Carolinas for $860 less than half Allstates rate.
When he received the price quote, Hanley said, I almost fell out of the chair.
Moreover, AAA Carolinas was the only insurer he contacted.