Over $1M in Insurance Payments to Be Returned to NC Residents

Miscalculations of insurance rates and surcharges are leading to the return of more than $1.05 million worth of premiums to home, auto and dwelling-fire policyholders in North Carolina, state Commissioner Wayne Goodwin announced on Tuesday.

According to the commissioner’s office, more than 11,000 residents were overcharged between 2006 and 2009. The companies that will be issuing the refunds are SAFECO and American States Preferred.

NC Insurance Refund ChartThe majority of policyholders that were overcharged had home insurance policies through those insurers, but the largest chunk of cash is going back to the auto coverage policyholders. A total of $631,080 will be refunded for 2,462 car insurance policies. That’s an average of $256 per policy.

According to the commissioner’s office, issues with the two insurers’ rating practices were discovered through a market conduct exam that looked at new business from 2006 to 2008.

The commissioner’s office says it has initiated the return of hundreds of millions to consumers in just the past three years through regulatory actions.

This particular exam showed that “there were issues stemming from the incorrect calculation of the Safe Driver Insurance Point (SDIP) surcharge and use of incorrect editions of base rates,” according to a release from the department.

North Carolina’s SDIP surcharge system is just one of a number of features that set the state’s coverage regulation system apart from the rest of the country.

Through the SDIP system, the general public can see just how much their premiums will go up if they are involved in certain types of accidents or are convicted of certain moving violations. Incidents are assigned a point value ranging between one — for things like minor crashes — and 12 — which is reserved for incidents like driving while impaired and hit-and-run accidents.

Drivers with one point on their records will see a 25 percent increase from their base rates, and high risk auto insurance liabilities with 12 points will have to pay a 340 percent surcharge because of their histories. There is a corresponding increase for each point added to a record.

No other state puts the increases that come with certain types of incidents in such black-and-white terms.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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