Judge Blocks Some North Carolina Beach Plan Price Hikes, Orders Redo

March 25, 2009

A Wake County judge has ordered new North Carolina Insurance Commissioner Wayne Goodwin to reconsider deductible and surcharge increases for coastal homeowners in the state insurance pool called the Beach Plan.

Wake County Superior Judge William Pittman ruled Friday that former Insurance Commissioner Jim Long did not follow procedures before approving the increases in November. Pittman ordered the Insurance Department, now headed by Commissioner Wayne Goodwin, to redo the process.

The Insurance Department said it was reviewing the judge’s order.

The judge’s ruling blocks surcharges the Beach Plan can charge for wind protection beyond insurance companies’ rates from rising from 15 percent to a maximum 25 percent. The surcharges took effect with new policies written since Feb. 1.

Also frozen is a planned rise in the deductible level to 2 percent of a home’s insured value per occurrence. That means a homeowner with $200,000 of insured value would have to pay $4,000 for repairs anytime there was wind damage before insurance coverage kicked in.

The ruling doesn’t effect higher coastal premiums scheduled to begin in May as part of a deal Long struck allowing a statewide rate increase that averaged out to about 4 percent. That settlement cut premiums for homeowners in central and western counties, but increased insurance rates on coastal homes by up to 30 percent in five southeast coastal counties.

Coastal governments and trade groups have also challenged the rate increases in court.

Legislators planned to debate this week a bill that would freeze the surcharge, deductible and premium increases until next year. Goodwin last month said the legislation risked making policies less available and more costly for all state residents.

Topics Legislation North Carolina Pricing Trends

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