Some homeowners in North Carolina will see their homeowner’s insurance get more expensive this year because of a change in fire ratings, but according to insurance company officials, the rate hikes aren’t because of public policy, but because of GPS technology.
How does GPS affect insurance rates? Well, when insurers calculate premiums, one of the factors they consider is the distance to the nearest fire station. Traditionally, that determination has been made using maps, but recently, maps have been eschewed, in favor of more accurate measuring systems.
Because of this, some policies that were originally based on property being within a specific rating area (typically five miles away from a fire department for the best pricing) are now being rewritten because those properties are found to be outside the premium pricing area. Since more distance means that it takes longer for the fire department to arrive, insurance companies perceive a greater risk and charge more.
What can North Carolina homeowners do? They can petition the state insurance department, or they can speak to their insurance agent, but unless the state disallows the use of GPS, rates are likely to continue to change based on new numbers.