North Carolina auto insurance rates predicted to rise. Here’s why

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North Carolina has some of the lowest car insurance rates in the country, according to Insurify data. But many Tarheel drivers will see their car insurance rates increase by a total of 9% by the end of 2024, thanks to a settlement between the state’s insurance commissioner and the organization that represents North Carolina’s insurance industry.

Currently, the average annual cost of a full-coverage policy in North Carolina is $1,512, Insurify data shows. Minimum-coverage policies average $648 annually. With the coming increases, those averages could rise to $1,648 for full coverage and $706 for liability-only policies.

Details of the settlement

Earlier in 2023, Insurance Commissioner Mike Causey announced a settlement between the state and the North Carolina Rate Bureau (NCRB). Under the settlement, auto insurers can increase rates for new and renewing policies issued on or after Dec. 1, 2023, by 4.5%. In 2024, they’ll be able to increase rates by another 4.5%.

The NCRB had requested a 28.4% increase in February. Under state law, insurers must submit requests for rate increases to the Department of Insurance.

In a press release announcing the settlement, Causey’s office said the settlement will save drivers about $1.6 billion over the next two years compared to the increase the bureau initially sought. Additionally, the settlement heads off a potentially long and costly administrative battle between the department and the bureau, the commissioner’s statement said.

Why North Carolina rates are rising

Inflation and the rising cost of auto parts have pushed car insurance costs higher across the country in 2023, according to a recent Insurify report.

Causey said a growing number of accidents and fatalities are also contributing to car insurance rate increases in North Carolina.

The number of accidents in the Tarheel state increased just 0.8% in 2022, according to the North Carolina Department of Transportation. Speed was a factor in nearly 24% of 2022 fatalities in the state. The National Highway Traffic Safety Administration estimates fatalities in the state increased 3.5% in the first half of 2023.

“However, the number one cause of accidents and this, rate increases, [in North Carolina] is distracted driving,” Causey said. “It is unlikely that we will see rate decreases in the future unless some of these trends change. Drivers and driving habits impact rates the most, in addition to increased repair costs due to excessive inflation.”

What’s next

New and renewed policies taking effect after Dec. 1 will be subject to the rate increase. Drivers are likely to see an additional 4.5% increase in 2024, as the settlement between Causey and the bureau splits a 9% increase over two years.

State law requires auto insurers to file auto rates with the department by Feb. 1 each year.

This article originally appeared on Insurify and was syndicated by MediaFeed.

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