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What is this fee on my auto insurance bill called the N.C. Clean Risk Allocation?

Merton Vance

In a roundabout way, it is a surcharge that holds down insurance costs for good drivers and increases rates for people with bad driving records.

Under state law, the N.C. Rate Bureau must set rates based on individual driving records. It does that through the Safe Driver Incentive Plan, which basically rewards safe drivers and penalizes drivers who have traffic convictions or accidents in which they were at fault.

Insurance companies assign points to individual policies, based on the SDIP guidelines.

In 1973, the legislature created the North Carolina Motor Vehicle Reinsurance Facility, an insurance pool to provide coverage to high-risk drivers that insurance companies declined to cover on their own. The cost of operating the facility is shared by the insurance companies, based on the proportion of car insurance coverage they issue in the state.

The reinsurance facility sets its own rates for high-risk drivers. But insurance companies can choose to assign policies for other drivers to the reinsurance pool for various reasons. If a driver is assigned to the reinsurance pool and is a “clean risk” driver with at least two years of driving experience, no traffic convictions or at-fault accidents, the reinsurance facility charges the driver the same rates that the driver could get through a regular insurance policy.

Here’s some additional information, from the Consumer Services Division of the N.C. Department of Insurance:

“NCRF has operated at a loss every year since its inception, and is allowed by North Carolina law to recoup operating losses by applying a ‘Loss Assessment Recoupment’ or ‘Allocation Surcharge’ to all North Carolina drivers’ automobile insurance policies. In addition, the law provides that all North Carolina drivers must pay a ‘Clean Risk Recoupment’ or ‘Allocation Surcharge.’

“This latter surcharge reflects (on an aggregate basis) the difference between the premiums that the NCRF-covered clean risks actually pay, and what they would have to pay to make the NCRF’s clean risk classification self-supporting.”

“Without the SDIP, approximately 75 percent of the drivers in North Carolina (particularly those who are clean risks) would be paying higher automobile insurance premiums. Conversely, drivers with traffic convictions and at-fault accidents would be paying lower premiums. Ultimately, the SDIP requires higher-risk drivers to pay higher premiums.”

For more information, go to these websites:

North Carolina Rate Bureau: www.ncrb.org/ncorg

North Carolina Department of Insurance: www.ncdoi.com

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7 Responses to “ What is this fee on my auto insurance bill called the N.C. Clean Risk Allocation?”

  1. On June 4, 2011 at 12:15 am Kevin Rose wrote:

    The issue is that NC wants to continue to insure unsafe drivers. Revoke their driving privileges INSTEAD of continuing to ensure unsafe drivers. Trying to spoon feed me this drivel about a surcharge ultimately saving me money is laughable. Do not mistake peoples apathy for a lack of intelligence. You bloated beurocrats are about to wake up the silent majority and that’s real bad news for you.

  2. On February 23, 2016 at 3:42 pm Rod Sylvis wrote:

    Why is the NC gov’t. Involved in providing insurance to those rejected by the insurance companies and then penalizing every other insured by placing a surcharge on them? Who are you people serving? Someone who is elected to represent the constituents should wake up and represent them, not just collect a pay check. Very disgruntled.

  3. On July 21, 2016 at 12:51 pm Brenda wrote:

    You may not like paying recoupment fees but without it and the Insurance Commissioner regulating rates, NC would NOT have the lowest rates in the South. In fact, NC has the 7th lowest rates in the country.

  4. On September 23, 2016 at 10:37 am Marisol Romero wrote:

    Revoking a license will provoke people to make bad decisions like driving without a license and without insurance.
    In NC you carry uninsured and underinsured coverage unless you waive that coverage, which you must sign a document for. Uninsured and underinsured is for when you are in an accident that wasn’t your fault but the other driver doesn’t carry enough liability or non at all.
    But, unin/underins coverage does not come into play if you experience a hit and run. Most likely if the person who hit you doesn’t have insurance/license they might try to flee.
    So, in the end I’d rather give everyone the opportunity to continue driving even if they are a bad driver as long as they continue to carry insurance and they too pay these surcharges.
    Insurance is intangible, but you need it. You don’t use it everyday but just one event could cost you thousands of dollars that without insurance you’d have to pay all of it yourself.

  5. On February 28, 2017 at 11:32 pm Cynthia d cole wrote:

    This seems unfair. My insurance goes up because I am a safe driver and lower risk. So if I think about it, I don’t cost the company more money by driving badly, so they cannot go up on my policy to make up for it. No matter how it get spun I am coming up short. I don’t like this notion.

  6. On August 1, 2017 at 9:48 am Donnie Terrell wrote:

    So you make low risk drivers pay a mandatory fee to help keep our rates down. That sounds very odd. Basically you are saying to be able to charge me less you are going to impose this mandatory fee to make me pay more? To save me money we are increasing your bill? Why not make the high risk driver’s pay this fee? Is this fee mandatory? Is it charged to all drivers?

  7. On December 27, 2017 at 5:19 pm S. Dimartino wrote:

    This is a NC SCAM, I am 70+ yrs and my wife is 70 yrs, good driver records, our insurance just got jack $223.00 per year to pay for scum bag bad drivers, I think this is another way of forcing NC Residents to pay for the ILLEGALS, get their butts out of the State

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