Cameron Bagherpour ~ North Carolina Insurance

Who would have thunk it?

We're finally getting lower auto insurance rates in North Carolina! Yipee! So is this cause for celebration? Not really. The final negotiated rate reduction is 0.5%. Yep, one half of one percent. Kind of a downer, huh?

So starting with policies renewing November 1st, you may see your North Carolina Auto Insurance rate come down, at least a little bit. Did you catch that? You rate MAY go down. That's because the 0.5% reduction is an AVERAGE reduction. Some might go up, some might go down. Ugh, we can't catch a break here.

But that's not the good news anyway. The really good news is that this rate reduction is RETROACTIVE back to January 1, 2009 meaning that if your insurance carrier decided to take a rate increase back then, you'll be getting a refund.

And that really is some good news.

So, you might want to compare the discovery of seedless watermelons with the 'fix' that our wise leaders in Raleigh came up with for the beach plan. As in, we have seedless watermelons now - it's done, case closed, for now and forever, with no need to look back.

Not quite.

So what did they do to 'fix' the Beach Plan? Let's take a closer look:

1) Only $750,000 of coverage will be available to Beach Plan homes as compared to $1,500,000 before.

2) The home insurance companies will have to pay the first $1,000,000,000 (Billion) of excess hurricane damages.

3) After the first $1 billion in excess storm damages, ALL NC HOMEOWNERS ACROSS THE STATE WILL BE SURCHARGED 10% ON THEIR HOMEOWNERS INSURANCE. So, yet again, the consumer is on the hook for the beach plan.

4) After that, the home insurance companies will pay the remaining excess damages.

So they essentially put a band-aid on the problem

Ok, so how bad could it be? The beach plan has reserves of approximately $1.5 billion available to pay for hurricane losses. However, a large storm could potentially wreak over $7 billion in damages, leaving over $5 billion in excess losses.

But that's the good news. If we get hit by a SECOND or THIRD storm, ALL OF THE LOSSES ARE CONSIDERED EXCESS and we will end up with bankrupt home insurance carriers across the state. Our home insurance market will closely resemble Florida's of a few years ago where there was one carrier - the state sponsored one. And that isn't an environment that anyone looks forward to.

Cameron Bagherpour
Agent
Allstate Insurance
Cary, NC
919.460.0606

Since housing prices have dropped, I've been getting more and more inquiries from homeowners about whether they should lower the amount they insure their home for. Great question.

The price that most homeowners see going down is the market value of their home. The 'market' value of the home is really the value the house and land together can fetch if it were sold to a buyer on the open market.

On your insurance policy, your home is normally insured to its replacement cost. This price is considered to be the amount it would cost to rebuild the home if it were to burn down to the ground. Remember, home insurance does NOT insure the land, only the structure.

So as you can see, market value can be dramatically different from replacement cost, or the amount it would cost to rebuild the house.

A good example of the difference between market value and replacement cost is this:

Take an average 2500 square foot home in Any-City, USA. The market value of this home in Any-City is $350,000. The replacement cost for this home is calculated to be $200,000.
Now, imagine that same home being located in Any-Rural, USA. The market value of that same home may now only be $250,000, but the replacement cost will remain the same at $200,000 because it would cost essentially the same to rebuild the home in a rural area.

So regardless of market value, if your insurance agent set your policy up correctly when you bought the insurance policy, you shouldn't need to reduce the insured amount of the home. There are exceptions to this, so seek the advice of your insurance professional to address your unique situation.

It's about time!

Effective 1/1/09, all NC auto insurance policies are required to carry Uninsured +/or Underinsured Motorist (UM/UIM) coverage. It was part of NC HB 738.

What does this mean to you and me?

Whatever your current Bodily Injury and Property Damage limits are on your auto insurance, your UM/UIM coverage must now meet or exceed those limits. You're being required to protect yourself (um/uim) to the same degree that you're protecting others (liability).

If you weren't carrying um/uim before, you must carry it now. You insurance carrier will automatically add it or increase it to match your liability limits. And no, they don't need your approval or your signature. Additionally, the cost of the UM/UIM coverage will go up as well.

I think this change is long overdue since as many as 1 in 5 North Carolinians drive without insurance.

Finally, the NC Department of Insurance has decided to take on the mounting financial problem facing North Carolina's Beach Plan. A second major carrier has withdrawn from the home insurance market and more are getting ready to follow. Our newly appointed, er, elected commissioner, Wayne Goodwyn vows to take the bull by the horns. The problem is that the only solution entails raising premiums and lowering coverages. Not good choices when you're an elected official.

But here's the good news: since the election is over, he can push through any unsavory elements and still have enough time before the next election to lower rates in other areas (like auto and non-coastal homes) in order to get re-elected.

Cameron Bagherpour
Agent
Allstate Insurance
919.460.0606
150 Cornerstone Dr. #202
Cary, NC 27519