You may have heard of – or even been asked to sign – what is called a Consent to Rate (CTR) form as it pertains to your auto or home insurance. The more you read about it, the more confusing it can sound, so we’ve tried to simplify it for you.

North Carolina has a Rate Bureau that sets the rates for all the insurance companies in the state for auto and property. The Rate Bureau sets a “suggested” rate for physical damage (your comprehensive and collision coverage). This suggested rate is similar to a Manufacturer’s Suggested Retail Price (MSRP) that you come across when buying a new car. Though there is a sticker price for the car, the dealer can sell it for a different amount that best suits their business.

This is kind of how it works with an insurance company. If they charge a rate that is beyond the suggested amount, then they must retain the CTR form with your signature to continue charging said rate. Their rates may be higher for any number of reasons but it usually relates to the amount of risk a driver presents based on their driving history, location or vehicle usage. While the state suggests the rates for physical damage, they don’t actually offer physical damage coverage (they only deal with the required liability coverage when they are ceded a policy) and therefore, insurance companies argue that the state’s suggestions don’t accurately reflect the risk involved.

The CTR form is usually included among the other paperwork that needs to be signed when a new policy is started, but it may arise at renewal time if you’ve had any claims or tickets during the previous term, or if you’ve added coverage that you didn’t previously have.

It’s not against the law for insurance companies to charge rates that are higher than the Bureau’s suggested rates, but it is against the law for them to do so without your acknowledgement. That is why the insurance companies are so strict when they send you this form. If you do not sign it in a timely fashion, they will remove the physical damage coverage from your auto policy, or even cancel the policy altogether in the case of homeowner’s insurance.

The language on a CTR form can sound intimidating. After reading it, you might ask, “Why would I agree to let them charge me more than the state says they should?” It’s a legitimate question, but there are two key things to keep in mind.

For one, you already agreed to the rate when the company provided you a quote and you decided to move forward with it. If you hadn’t already decided that quote was reasonable for your needs, you wouldn’t be getting the CTR form. Signing the form is just the formality of acknowledging the rate that the company quoted in the first place and finalizing the contract.

Secondly, signing the form does not mean the insurance company will immediately start charging you more. Your rates will not increase during a policy term unless you make change requests that alter the coverage in some way. Of course, your rates may rise at renewal time, but that is common for all policies and is oftentimes for other reasons as described here.

To make a long story short (and to put it bluntly), you don’t have much of a choice when it comes to signing the CTR form. If you want maintain the coverage on your vehicle or home without interruption, you need to sign the form (continuing with the premium you already agreed to!). If you don’t sign it, the insurance company will remove your coverage (not because they want to, but because they have to) and your property won’t be fixed in the event of a claim. Your third choice is to go shopping for a new insurance company, but the CTR is a state-wide mandate and even if you find cheaper insurance, your savings might be offset by the fees you will incur with the current company by cancelling early, as described here.

Again, your premium will not change from what you were quoted upon signing the CTR form. If it does once your renewal date rolls around, give us a call and we will review your file to make sure you are with the best company for your needs.

Many folks may be traveling to see their moms this Mother’s Day weekend and if not, the upcoming Memorial Day weekend is the official kickoff to summer vacation season. Before you hit the road to wherever you’re headed, make sure you’ve had proper maintenance done on your vehicle. Keeping up with routine maintenance items is a key factor in avoiding unnecessary accidents and indirectly, higher insurance premium costs.

To ensure a poorly maintained vehicle doesn’t contribute to an accident, our friends at National General have put together a few ways you can keep your cars in top condition.

Tires
According to the National Highway and Traffic Safety Administration, 9% of all car crashes in the United States were preceded by some sort of issue with the tires of the vehicle (e.g. tread separation, under-inflation, or blowouts). Properly maintained tires improve gas mileage, stopping ability and handling of the vehicle.

Check the air pressure in your tires (including the spare) at least once a month. This will also give you the chance to check for cracks in the sidewall and the amount of tread on the tires. Rotate your tires every 6,000 miles, or as often as the vehicle’s manufacturer recommends. A periodic alignment of the tires will ensure even wear and extend the life of your tires. Check your owner’s manual for specific information about tire pressure, rotation and alignment.

Brakes
Fewer accidents are completely attributed to failure or degradation of brakes than tires, but poorly maintained brakes still contribute to thousands of accidents every year. When brake pads wear down too far, they can damage the rotors, leading to costly repairs and possible brake failure. Inspect the pads and rotors for wear annually. Take your vehicle in for repairs if you start hearing squeaking or scraping, your vehicle veers to one side or the brake pedal pulses when braking. These are signs of worn brakes and will lead to diminished braking capability.

Windows and lights
Clear visibility gives you the extra time needed to react in an emergency situation. Keep your windows (both inside and outside), mirrors and lights clear of obstructions and as clean as possible. Try to walk around your car once a month to check that all of your lights still work. You should also change your wiper blades every six months, earlier if they begin streaking. If you are having trouble seeing the road at night, there is a possibility that your headlights are out of alignment. Luckily, this is generally a cheap and easy fix.

Fluids
A fluid leak can cause the steering wheel or brakes to stop working or even cause the entire engine to suddenly lock up or overheat. Check the following fluids to keep a vehicle running smoothly and prevent an unexpected mechanical failure while on the road:

Engine Oil – Check once a month – Contrary to popular belief, most modern vehicles don’t require an oil change every 3,000 miles. Check the owner’s manual for the recommended frequency. Because oil lubricates all of the moving parts of the engine, if not changed at the recommended interval, the engine could seize and cause catastrophic damage.

Brake Fluid – Check during oil change – Typically needs to be changed every two years. If there is a sudden drop in brake fluid levels from a leak, the brakes will no longer work. If unchanged for a long period of time, the entire braking system could be damaged from rust, overheating or corrosion.

Power Steering Fluid – Check once a month – Check the owner’s manual, but most models do not require power steering fluid be replaced, but a leak can cause the steering wheel to stop responding.

Coolant – Check twice a year – Generally needs to be changed every two to three years. Coolant keeps a car from overheating during the warmer months and freezing during the colder months. Never check coolant levels when the engine is hot.

Transmission Fluid – Check once a month – Transmission fluid should be changed according to the manufacturer’s guidelines. Transmission fluid will only be low if there is a leak and should be taken to a mechanic immediately if low in order to prevent damage to the transmission.

In addition to preventing potential accidents, routine maintenance can also save thousands in expensive repairs. Safe travels!

“I canceled my insurance policy and never missed a payment – why is the company still sending me a bill?”

This is a common question, and one in which there is no fault in asking. The answer is more than likely what is referred to as short rate cancellation.

Short rate cancellation is a financial penalty incurred when the insured cancels an insurance contract prior to the expiration date of the contract. This allows the insurer to keep a percentage of unearned premium to cover costs, as outlined in the language of Part F of the NC auto policy.

The key word to remember there is contract – that’s what an insurance policy is. When you break a contract early in any walk of life, there is usually a penalty. A simple comparison to make is when you are signed up with a cell phone company and try to switch over to a new company. There is usually a fee that must be paid to the current provider to get out of that plan.

There is no specified penalty for this method of cancellation – it all depends on how far along into the policy term you are when you request the cancellation. When using the short rate method, it basically means that more of the premium becomes owed at the beginning of the policy term and is not divided out evenly among the days you had coverage. A rough approximation of the penalty is usually akin to one month’s premium early on in the term, though this decreases the further along you get in the term.

If you are ever thinking about cancelling a policy early and are curious to know what your short rate penalty will be, you can get an estimate by using this calculator: http://www.ifitsinsurance.com/short-rate-calculator.html

That calculator is just an informational tool, however. The official penalty amount is ultimately calculated by the insurance company (not the agent!). On the flip side, they also calculate any refund you may be due if you happened to have paid ahead or in full.

Certain companies, like National General, have exceptions to the short rate method when cancelling early. For example, if the reason for cancelling is that you are moving out of state, being deployed by the military, or your vehicle is deemed a total loss due to an accident, the policy will cancel on a more traditional method known as pro rata. This means that the refund and/or premium due is calculated on a proportional basis – any premium you may have paid in advance will be fully refunded based on the days you had coverage.

It’s also worth pointing out that if an insurance company cancels your policy for any reason – even for unpaid bills – it will be on a pro rata basis. There is no penalty in that case, other than the fact that you no longer have insurance. There are also no penalties for cancelling at the renewal date.

So what is the moral of the story? Make sure you shop around, and that you are happy with the insurance policy before signing the contract. It’s not like a pair of pants that don’t fit – you can’t just exchange it for a new pair. We are always here to help at Brown-Phillips, so don’t hesitate to ask.

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/Pages/default.aspx 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 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!

March Madness is in full swing! Following an exciting “Sweet 16,” we understand that you’re probably locked into the basketball action and focused on your brackets! Our own Brian Phillips sure is – his alma mater, South Carolina, advanced to the Final 4 in both the men’s and women’s tournaments! However, we realize there’s another “Sweet 16” that’s even more important – when your fledgling teen driver-to-be is ready to hit the road.

First things first: your child must obtain a North Carolina Driver Education Learner Permit. To do this, the applicant must:

• be at least 15 years of age at time of issuance;
• provide proof of identity and date of birth;
• show proof of enrollment in a DMV-approved driver education program by surrendering the certificate of driver education form (CDE) provided by the school, properly filled out and dated no sooner than three weeks prior to the start of class;
• successfully pass the standard vision screening test.

We get asked this a lot but you’ll be happy to know – liability insurance is NOT required for your teen during the learner permit phase. Why pay extra until you have to, right?

Soon your teen will be an expert (or so they think) and it will be time to move on to the big leagues. The applicant is eligible for an operator license upon:

• One year of driving under a driving permit
• And being at least 16 years of age;
• Providing proof of identity and date of birth;
• Successfully passing a standard vision screening test;
• Successfully passing a sign test, a written test and a driving test.

This is where we come in! Your child WILL need proof of liability insurance to take the driving test – this is known as the DL-123 form and it is provided by us here at Brown-Phillips. The form is only valid for 30 days so there is no need to add your child to your policy too far in advance – we can make the addition and send the form in a matter of minutes. Just give us a call the day before your child is scheduled for the test.

As you are probably well aware, adding an inexperienced driver to your policy is not cheap, but it is the law, so get your money’s worth and make sure your teen is trained as much as possible before they hit the road. We’ll be here to get you the best rates possible – fill out your quote request online or call us at 919-874-0405.

The first question is: what is a deductible? A deductible is the amount of money you have to pay before your insurance comes in and takes care of it.

Let me give an example. You just got into an accident and you make a claim. You have a $1000 deductible and the accident is going to cost $6000. For that accident, you have to pay $1000 out of pocket and the insurance will pay the remaining $5000 that is owed.

However, there are pros and cons of high deductibles and low deductibles.

With a high deductible, your insurance premium is lower. The higher the deductible, the lower the premium. This is great for paying bills because less is owed to the insurance company each month. However, if you get into an accident or make a claim, you have to pay more. Claims such as busted windshields cost less to fix than your $500 deductible so you would have to pay that entire amount owed.

With a low deductible, you would not pay as much for each claim or accident. Meaning that if you got in that $6000 crash with a $100 deductible, all you would need to pay is $100 and the other $5900 would be taken care of. However, your insurance premium would be much higher to get those low deductibles.

It’s a tough decision. To pay more a month or to not pay more a month?

That is the question.

Happy Friday! Have a great weekend!

Here are three dreaded words by every child in America after a beautiful and wonderful summer of shenanigans: BACK. TO. SCHOOL.

With back to school comes dorm move in days, school supply shopping, transportation arrangements, and a lot of driving. (Our office is located in Wake County and traditional schools begin on the 29th!)

Brown-Phillips is going to help you with a variety of tips to get you through this back to school season.

Tip #01: Compare prices!

There are many different stores in which school supplies can be bought (ex. Wal-Mart, Target, Office Max, etc.) Compare prices of items like binders, notebooks, pencils, and more in order to save every penny you can. Also make sure to check the condition of last year’s school supplies! You may find that you have plenty of highlighters for the year and can cross that off the list.

Tip #02: Check around for textbooks.

Textbooks for your classes can be found through many sources. Online, campus bookstores, the library, etc. If you have a roommate with the same class, maybe you could share a textbook. There are also websites such as Chegg where you can compare prices for different textbooks so you don’t pay those high prices.

Tip #03: Follow ALL school zone instructions.

Did you know that more children are killed near schools than anywhere else? Don’t double park because it can block the vision of vehicles and children. Don’t drop off or pick up children across the street from the school. Don’t block crosswalks. Never pass a school bus. There are a lot of don’ts but they’re important to remember! Also, carpooling with other children can help limit the number of cars and therefore making carpool much safer.

Tip #04: BE MOVE IN DAY READY!

Here are a few links with great tips:

http://www.lehighvalleystyle.com/August-2012/A-Crash-Course-in-College-Moving-12-Tips-to-Get-You-On-Your-Way-the-Right-Way/

http://www.nbcnews.com/feature/college-game-plan/ready-college-move-day-ten-tips-help-parents-teens-prepare-n622106

Tip #05: Enjoy the year!

Time really does fly by and whether your kid is in kindergarten or their senior year of college, make sure to appreciate this time. Get your kids pumped up to go to school with after-school activities or simply talking about their classes.

Have a great Friday and, to all of you Wake County folks, happy last weekend of summer!