Car Insurance Law Gives Some Sticker Shock

By Author: Elle Perkins
Total Articles: 36
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New provision requiring protection against uninsured drivers is bringing a spike in premiums for thousands.
Retired airline pilot Steve Glasgow of Charlotte opened a letter from his car insurance company in January to find an unpleasant $184 surprise.

That was the increase for keeping the part of his car insurance that covers him if he is hit by an uninsured or underinsured driver.

In today's economy, Glasgow said, this is a big deal.

Tens of thousands of North Carolina drivers are discovering jumps in their auto insurance premiums because of a law that took effect Jan. 1. A Charlotte lawmaker, though, is drafting a bill that likely will dial down those price hikes, at least in future years.

The leading insurance companies in the state support the change.

Many car owners in North Carolina may have seen an increase in their bill this year because of a statewide rate increase, but thousands of drivers also saw a spike because of a new law regarding coverage against accidents with uninsured or underinsured drivers.

Nobody was thinking of the consequences, said ...
... Sen. Dan Clodfelter, a Charlotte Democrat.

The legislature passed a bill last year that, among other steps, required drivers to have coverage on their auto policy for uninsured and underinsured motorists. That coverage protects drivers from medical expenses and other costs if they are hit by an uninsured driver.

All car owners in North Carolina are required to have insurance and can't renew their vehicle tags without it, but some let it lapse in between license renewals. About 12 percent of car owners in North Carolina don't have insurance, according to Kristin Milam, spokeswoman for Insurance Commissioner Wayne Goodwin.

With the poor economy and as job losses and layoffs increase, we are anticipating that people may drop their auto insurance coverage to pay other bills, Milam said, which would mean even more uninsured and underinsured motorists on the streets.

The new law, however, also requires that car owners have the same level of coverage on their uninsured motorist provision as they do on their liability coverage. In other words, the maximum payout would be the same whether it's to the policy holder for injuries from being hit by an uninsured driver or to another driver when the accident is the policy holder's fault.

Glasgow, who had a policy with AIG when his premium increased, maintained a lower dollar amount of coverage for uninsured motorist protection.

The levels of need should be determined by the individual, Glasgow said, not the state or the insurance company.

Glasgow contacted Clodfelter last month about the premium increase.It's unclear how many car owners saw a rate increase because of the requirement for equal levels of coverage. About 70,000 customers of Nationwide, the largest auto insurer in the state, got bigger insurance bills because of the law, said Susan Valauri, director of government relations for Nationwide in North Carolina. The average increase was approximately $22 for the year, with the largest jump being about $120 for the year.

Glasgow likely saw such a sharp price increase because he had a high level of coverage on his liability auto insuranceand the minimum level of coverage on his uninsured motorists provision.

Valauri said more than 99 percent of the company's N.C. customers already had uninsured motorist coverage, and 91 percent maintained an equal level of coverage with their liability insurance.

It's not a big deal for the vast majority of drivers, Valauri said. For those other customers it may have been a very big deal for them.

Valauri and representatives from other companies are working with the legislature to ensure the law allows customers to choose different levels of coverage.

Clodfelter expects to introduce his bill in the coming weeks.

By Mark Johnson
www.charlotteobserver.com

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