Driving Without Car Insurance In NC Might Soon Cost You Your Car

A bill, recently introduced in the NC House of Representatives by Representative George Cleveland, referred to as house bill 602, proposes to confiscate uninsured vehicles operating on NC highways. Cleveland is frustrated with the number of uninsured drivers on our highways and wants to step up the costs of noncompliance to get drivers’ attention.  If passed into law, then these rules would take effect December 1 2013.

In NC car owners cannot renew their license plates without first proving insurance is in place on the car associated with that tag.  However, once past this hurdle, some insurance policies are later cancelled while the driver continues to operate that vehicle on the highways.  The NC State Highway Patrol issued 24,436 citations last year to drivers without insurance.  Some estimates put the number of uninsured drivers on our highways as high as 15% of the total of all vehicles on the road.

As an aside, when I first became an insurance agent in the early 1980’s, uninsured motorists insurance coverage cost the average driver about $3 per year per car.  Now, that number has skyrocketed to nearly $150 per vehicle.  Part of this explosive increase in costs has been related to the introduction in the mid 1980’s of underinsured motorists coverage, but there is no doubt that the costs of uninsured drivers in our state is something that everyone who buys insurance here has to bear. 

The bill says that the confiscated vehicle will be placed under the possession of the sheriff of the county in which the violation occurred.  It goes on further to state that the sheriff shall restore the motor vehicle to the owner, only after proof of insurance is obtained.  In addition, this bill would require the owner to pay the sheriff for costs actually incurred by the sheriff towing, processing, and storing the vehicle.  There is no mention of limitations on these fees and expenses so we could see widely differing costs for uninsured motorists from one county to the next.

One other area of consideration in this bill deals with the rights of the lienholders to a confiscated vehicle.  After all, they actually hold title to the car until the loan is paid off.  Section 3 says that the lienholder may petition the court to reclaim the vehicle for sale to satisfy the lien.  The allowance of this reclamation is up to the discretion of the court however and if the vehicle is returned to the lienholder then that party has to return to the state any proceeds of the sale over and above the balance remaining on the loan on that vehicle. 

This bill is a drastic measure and may seem a bit heavy handed but there are some additional provisions in the bill that will soften the blow for some violators.  There are exceptions that can be made for technical errors that may have led to a lapse in insurance coverage.  Also, there is a grace period that allows the driver to obtain insurance in order to avoid the vehicle being sold by the state though during that time they will not have access to their vehicle.  I think it is clear that the state of North Carolina would rather not get into the used car or car auction business so they will hope that most people will purchase insurance right away to get their car out of the impound lot.  But I think it is a useful consideration that a violator that has no insurance is not allowed to just drive off from the traffic stop and endanger others with no means of paying for the accident that he or she may cause.

You have to believe that if the bill does become law, and if its successfully force more uninsured drivers to purchase insurance on their vehicles, then over time the rest of us will see reduced uninsured motorists insurance rates.  And that is only fair.

At Clinard Insurance Group, located in Winston Salem, NC, we help thousands of families each year with their NC auto insurance.  We would love to help answer any questions you may have about this or your home insurance.  We can also help you with your life insurance and business insurance, so feel free to give us a call today at 877-687-7557.

Two Large Insurance Companies In NC Will Now Require You To Tie Your Auto Insurance To Your Home Insurance Policy

For the last several years, insurance companies doing business in NC have lost money on homeowners insurance as a group.  The rates are just too low to pay for all of the losses that occur under those policies.  After a year like 2011, when weather related losses were so frequent and so costly, insurance companies are now beginning to take more drastic action to protect their bottom lines.   Also, although the NC General Assembly slyly pushed a lot of the risks of the underfunded beach plan on to the backs of the homeowners in the state, there is still a substantial risk assessment for hurricane losses to insurance companies who write home insurance in NC.  This is just another incentive for the insurance companies to trim their book of home insurance policies.  All of this adds up to the fact that insuring homes in NC is a good way to lose money quickly.  And we are now beginning to see the various strategies that the insurance companies are employing to protect themselves from home insurance losses.

Recently, two of the 5 largest home insurers in NC announced that they are changing their rules to require that their policyholders also buy auto insurance from them or the homeowners policy will be cancelled at the next renewal.  Between these two insurance companies is it estimated that about 72,000 households will have their home insurance policies cancelled in 2012.

Your first question may be if it is legal to require auto insurance to go with a homeowners insurance policy?  The answer is that this is perfectly legal if morally questionable.  The NC Department of Insurance does not regulate the underwriting rules that each insurance company uses.   There is little doubt that in most cases you will be better off if you combine your home and your auto insurance with the same insurance company since you will generally receive discounts for doing so.  But there are many cases where the insurance company may not be willing to write your auto insurance either because they don’t like your driving record, your claims record or even the type of car you drive.   If this happens to you, then you are going to find it much more difficult to find insurance for your home at the low rates you have been used to in the past.

So where do I think the NC homeowners insurance market is headed?  Well, already we see much tougher underwriting guidelines for home insurance.  Many companies will not write a new home policy without the auto insurance.  Of course most are currently willing to leave their stand-alone home insurance policies on the books for now, but that could change and this would mean even more cancellations and nonrenewals for NC home owners.   If you have a large insurance account with several late model cars and a high value home, then you shouldn’t have much trouble finding home insurance, unless you have a poor claims or driving history.  But homeowners rates are going up and will continue to do so for the near future.  The rates that most people are paying today will seem like a real bargain 2 years from now.  Many insurance companies raised their homeowners insurance rates in December and we are likely to see even more rate increases next year.   In contrast, South Carolina home insurance rates are nearly twice what they are in North Carolina.  Our weather systems and home values are similar so I think you can expect steady increases in your NC home insurance rates until they are nearly twice what they are now.  Of course some of this is dependent on the NC Department of Insurance which sets the maximum rates that can be charged for home insurance.  If over time, those maximum rates are not high enough to allow insurance companies to make a profit on homeowners insurance, then you will begin to see a lack of availability in the marketplace which could leave some home owners with no insurance options at all.

If you have a bad insurance claims history or a bad driving record, there are still some good options available to you for your home insurance There are several insurance companies in NC who will write stand-alone homeowners insurance policies without the auto insurance being included.  Over time there will be less and less of these options as the home insurance marketplace begins to tighten up and consumers flock to and then overrun the last  companies to take action to reduce their homeowners policy count.  But for the short run, there is still plenty of availability if you have a good, independent insurance agent who can shop the marketplace for you.

The uncertainty in the home insurance market just serves to underscore how important it is for you to find and establish a relationship with a professional, independent insurance agent that can protect you from the market place gyrations that can create havoc with your insurance budget.    At Clinard Insurance Group, we insure thousands of households all across North Carolina and our homeowners insurance market is healthy and open for business.  If you received a homeowners nonrenewal letter from your insurance company, or if you need any help with your home or auto insurance then please, give us a call, toll free at 877-687-7557.  We will be glad to help you and with us you will have your own, personal insurance agent who is professional, kind and will get to know you and your situation.  We will take as much time as you need to make sure that you fully understand what you are buying and that you are happy with your choices.  And you get all of this and still save money.  You save twice, once on price, once on advice.  Call us now at 877-687-7557.