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“Why have my insurance bills gone up?”

It’s one of the most common questions we get asked when clients receive their renewal offers and see that their premiums have risen despite not having made any changes to their coverage. This can be due to any number of reasons – the easiest of which to comprehend are claims for accidents, or speeding tickets that may have been acquired during the previous year.

However, a common culprit for premium increases that most people don’t know about is something called a “recoupment charge,” which may appear on your policy labeled as “NCRF Clean Risk Allocation.” It can sound complicated but we’ll explain it to you as best we can.

As you probably know, North Carolina requires every driver to carry liability insurance, no matter how high of a risk they may be to insure. Because everyone needs coverage by law, insurance companies are not permitted to turn away high risk drivers who are seeking the required coverage. To prevent any one company from taking on too much risk, in 1973 the North Carolina Reinsurance Facility (NCRF) was created to ensure that all eligible drivers are able to purchase a policy.

The goal of the NCRF is to distribute losses proportionally across all member companies to offset the high-risk policies that some companies may take on. Insurance companies may pass, or cede, certain high risk policies to the NCRF to avoid the potential losses. The amount of state drivers covered by the NCRF can hover around 25 percent, and when many of those drivers prove to be the risks they were thought to be, the NCRF loses money. Because the NCRF typically operates at a deficit each year, the “recoupment charge” was created by the North Carolina Rate Bureau (NCRB) to help balance this out. This charge is added to all North Carolina auto policies with all companies. It increased from 4 percent to 9 percent in October 2016, and was again increased to 11 percent on April 1, 2017.

How is this rate calculated? Again, there a number of factors. One of the main reasons is inflation. The cost to repair vehicles damaged in accidents has increased dramatically, while medical costs have risen for accident injury victims. The population continues to grow in North Carolina, and with more people comes more accidents and claims.

Here are some facts from the NCRB:

-In 2015, the most recent year available, fatalities increased 8.1 percent from 2014, injuries increased 11.8 percent and reported crashes were up 11.1 percent.

-Mileage driven in 2015 was up 13 percent from the average of the preceding five years.

-Inflation in 2016 has increased vehicle repair costs by 2.4 percent and total medical care costs by 3.8 percent.

-The NCDMV estimates that there were 7 percent more crashes in 2015 due to distracted driving and 13.2 percent more alcohol related crashes.

All of these factors are considered when there is a rate increase, and clients will start to see those rate increases reflected in the premiums as renewal dates come around.

Here at Brown-Phillips, we’ll certainly do anything we can to help you offset these increases by finding other ways to reduce your premium. Are you interested in reducing your coverage or raising your deductible? Are you able to pay your premium in full as opposed to installments? Would you like to bundle the policy with a homeowner’s or renter’s policy? Sometimes these things can enact discounts that could help counteract the rising costs.

On the bright side, it’s also key to note that in spite of these changes, North Carolina drivers still enjoy the fourth-lowest auto insurance rates in the entire country. Thanks again for the chance to review and service your insurance needs.


Most people don’t think about license plates on a daily basis, but here at Brown-Phillips, we do! Unless you’re stuck in traffic behind someone with a clever saying or a special design, you probably pay no mind to those required rectangles of tin. When it comes to insurance, however, those little buggers can cause quite the headache if you’re not familiar with the rules.

We’ve been getting a lot of questions lately about license plates and what the DMV requires when you possess them. This link (https://www.ncdot.gov/dmv/vehicle/plates/) provides all of the necessary information in detail so be sure to visit that, but here are a few guidelines as it relates to insurance.

If you bought a new car or have just moved to North Carolina, you won’t be able to get plates until you provide proof of liability insurance (from a company licensed to do business in NC) for the vehicle in question with the following minimum requirements:
-$30,000 – bodily injury, one person
-$60,000 – bodily injury, two or more people
-$25,000 – property damage
-Uninsured motorist bodily injury coverage, uninsured motorist property damage coverage, and in some cases, underinsured motorist bodily injury coverage.
-If your vehicle is financed, your lien holder will likely require additional coverage like collision and comprehensive.

Once you’ve got an insurance policy with those requirements, you’ll need to provide proof via one of these four documents:
-Form DL-123 from your insurance agent
-Vehicle insurance policy reflecting your name and the issue and expiration dates
-An insurance binder
-An insurance card with your name, the policy number and the issue and expiration dates

If you’ve traded in a vehicle, you don’t necessarily have to get new plates for the replacement vehicle – you can transfer the plates from the old one. First, contact your insurance agent to notify them of the change so they can endorse the policy (and provide an updated document of proof). Then you can submit the form and pay the transfer fee of $20 at your local DMV office.

If you’ve sold the car (and are not replacing it), if it was totaled and salvaged due to a claim, or if you are moving out of North Carolina, you must surrender the plates. This is not to be taken lightly. In all three of those scenarios, you will be cancelling your insurance coverage as it exists in North Carolina, but it is important not to do that until you are ready to return your plates to the DMV. North Carolina law requires you to have liability coverage in effect on your vehicle DURING THE ENTIRE TIME IT IS REGISTERED AND THE LICENSE PLATE IS IN YOUR POSSESSION. Even if you are keeping your vehicle but putting it into storage or do not plan to use it for an extended period of time, you must surrender the plate before cancelling your liability insurance coverage.

Cancelling your liability insurance before returning the plate incurs a civil penalty as outlined below. There is some leeway here if you’ve moved out of state – you obviously need the plate to drive to your new home – but once you’ve registered your vehicle in your new state, you must mail in your plate ASAP to: NC Division of Motor Vehicles, 3148 Mail Service Center, Raleigh, NC 27699-3148.

Lapse of Insurance Coverage
If you change insurance carriers or you have a lapse of coverage (including a cancellation for non-payment of premium), your insurance company is required by law to notify the DMV. At that time, the DMV is required to send you a Form FS 5-7 Notice, to which you must respond within 10 days. If you have not had a lapse of coverage (i.e. you have a new policy with another company that started the same day your other one cancelled), simply enter your new information and return the form within 10 days.

If there has been a lapse in coverage or you don’t respond in time, your license plate may be revoked for 30 days and you will have to complete the following steps to re-license:
-Provide proof of insurance coverage Form FS-1 (via your agent)
-Pay a civil penalty fee of 50.00, 100.00 or 150.00 (depending on how many prior lapses you’ve had)
-Pay a 50.00 service fee
-Pay appropriate license plate fee.

All of that is a major hassle for you, and it can be avoided by simply a.) paying your premium bills on time; and b.) surrendering your plates before you cancel your insurance coverage if you get rid of a vehicle or move. You may have been rid of your actual vehicle for months, but as long as you have the DMV’s license plates, that insurance policy needs to be active or they will hunt you down for those fees.

If you’ve read this far, we’d like to thank you by ending things on a light note! Here’s a gallery highlighting some of the funniest and/or most inappropriate license plate requests that have been rejected by the NCDMV: http://www.wral.com/news/local/image_gallery/13455295/

Tax Day and Insurance – How Do They Relate?

Tax day is approaching! Hopefully, you’ve got your taxes filed and out of the way already, but we know there are plenty of procrastinators out there. Luckily for you, the deadline is April 18 this year, so you’ve got a few extra days to play with.

If you’re trying to take advantage of every credit or deduction you can, you might find yourself wondering about the various insurance policies you hold and how the premiums and/or benefits affect your taxes. While there are no black and white answers and every case is different, here is a simple article that provides some nice rules of thumb: How Does Insurance Affect Your Taxes?

By all means, any questions regarding your specific situation should be directed toward a tax professional. Generally speaking, though, the short answer is if your insurance policy is personal in nature – whether it’s your daily auto, your homeowner’s or even your life insurance – the premiums are not tax deductible. At the same time, any payments you receive as part of a settled claim, or – heaven forbid – that a beneficiary receives as the result of your death, are not taxable.

This can all vary if your policies are related to a business, so again, consult your tax professional. Happy filing!