Tom's Blog
Have you received a consent to rate letter? If so, you are not alone if you are a North Carolina Homeowners Insurance policyholder. However, this is definitely one of those cases where ignorance is not bliss; this letter needs to be viewed as a foreshadowing of things to come. When a North Carolina Homeowner policyholder receives one of these letters, which are being mailed out by insurance companies at a large rate, they need to understand why they are getting this particular letter; it is not by mistake.
Read between the lines
Many North Carolina North Carolina Homeowners policyholders are getting consent to rate letters from their insurance companies. Many policyholders make the same mistake and do not take these letters seriously. However, the fact is that these letters are clear indicators about your insurance company and how your relations with them is getting ready to change. Instead of signing this form right away and sending it back, you should take a few things into consideration.
The North Carolina Insurance Commissioner’s office is responsible for approving the rates charged by insurance companies in the state. They set the maximum allowed rates for home insurance and auto insurance policies. The insurance company then sets the rates they will charge policyholders based on the approved rate. These are known as state rates.
As you can see, the insurance rates you are initially charged by your insurance company, are already approved and monitored by your state’s commissioner’s office. Things get tricky when the consent to rate letter comes into play. These forms ask policyholders to allow your insurance company to charge you rates that are higher than your state’s maximum allowed rates. Once you sign this form, you are accepting the responsibility to pay higher and uncommon state rates.
Why would your insurance company do this to you?
To be clear, this is not an illegal act that your insurance company may be asking of you. You have the right to decline. However, this more than likely will affect your standing with this company if you choose to go that route. To take a deeper look into why any insurance company would choose to enact such and unpopular request. One must look at this on a macro and a micro level.
On a macro level, this usually means that the insurance company is sending these forms to all or the majority of their policyholders. Insurance companies dealing with North Carolina Homeowners policies that present great exposure to incumbent weather due of the “beach plan” insurance crisis, are more likely to send this form out.
On a micro level, in this case, this would mean the insurance company is targeting only you. The reason behind this is simple – you might be too risky of a policyholder, and they cannot afford to insure you at their regular rates. Therefore, they are asking you to accept rates that are higher than the state maximum in order for you to either stay with them as a policyholder, or to even come aboard as a policyholder.
No matter the reason behind their request, getting a consent to rate letter is not something positive. With all the fierce competition out there from other insurance companies vying for your business, this could be a prime opportunity for to test the waters but where to even start?
What You Should Do If You Receive a Consent to Rate Letter
We here at Paramount Insurance Agency are expert North Carolina independent insurance agents in your area. We specialize in consent to rate forms and can walk you through the details of the letter. If you make a decision on your own that you would like to shop your current policy, we can also do this tedious research for you, and offer you the best options for your specific needs.
