North Carolina Reinsurance Facility (NCRF)

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North Carolina drivers are required to carry auto insurance, and all insurance companies in the state are required to write policies for all drivers. This can be a tricky situation when someone is considered a high-risk driver. The state established the North Carolina Reinsurance Facility (NCRF) to address that problem.

Any insurer in North Carolina can send policies to the NCRF. This is called "ceding" the policy. Although the company writes the policy, by giving it up to the NCRF, they no longer get the plan premiums. Instead, the premiums — and the risks — are shared by all insurance companies that participate in the NCRF.

As a result, rates for high-risk drivers through the Facility are often 35% higher than what they would be through the voluntary market. If your policy is ceded to the NCRF because of your risk profile, you’ll want to focus on improving your driving record, so you can get a policy at a lower rate through the voluntary market in the future.

What is the North Carolina Reinsurance Facility?

The NCRF was created in 1973 to ensure that all drivers can purchase auto liability insurance, despite their risk profile. According to the NCRF, it covers about 25% of the drivers in the state, making it one of the largest of its kind in the United States. The Facility’s goal is to share losses across all member insurers to help offset the high-risk policies.

All companies eligible to write auto insurance in North Carolina are required to be part of the NCRF and must not turn down any eligible high-risk drivers. The only reason an NC auto insurer may refuse to insure a driver or cancel a high-risk policy is if the driver either is not registered with a valid license in NC or has failed to pay policy premiums on time.

How NCRF membership works

The NCRF allows insurance companies to cede any number of policies, not just those covering high-risk drivers, to the organization. By passing these higher-risk policies to the NCRF, the auto insurance carriers give up the plan premiums. The benefit they gain is that the risk is distributed to other member companies through the NCRF.

North Carolina insurance companies share the losses and expenses of policies ceded to the NCRF in proportion to the total amount of auto insurance they write in the state.

How do drivers get their policies into the NCRF?

You can't choose whether or not your policy is sent to the Facility. Insurance companies just file a cession notice with the NCRF, and your policy transfers over within 30 days.

Clean risk drivers

Your car insurance policy could be transferred to the Facility even if you aren't a high-risk driver.

In 1979, the state established a "clean risk" category for the NCRF. By definition, you are considered "clean risk" if you have at least two years of driving experience, with neither traffic violations nor at-fault accidents on your record.

Car insurers can cede these "clean risk" policies to the NCRF in order to help balance out the high-risk losses. If you are not a high-risk driver, you will be charged regular, voluntary market rates — not the 35% higher figure.

The change was meant to allow the NCRF itself to become more financially self-sustaining, as the Facility continues to operate at a loss.

In addition to adding low-risk policies to the NCRF pool, the state passed legislation allowing insurers to charge all drivers a recoupment surcharge. This is a percentage of your liability premium, and it appears under "NC Recoupment Fee" on the policy.

North Carolina Reinsurance Facility coverage limits

The NCRF limits the coverage type as well as the range of the liability insurance coverage amounts eligible to be ceded. However, you are still bound by the NC financial responsibility requirements.

The only exception to the maximum limits is if you must maintain higher liability coverage limits because you have an "excess liability" or a personal "umbrella" insurance policy.

NCRF minimum requirements
NCRF maximum limits
Umbrella policy exceptions

Bodily injury (BI)

$30,000 per person/$60,000 per accident$100,000 per person /$300,000 per accident$250,000 per person /$500,000 per accident

Property damage (PD)

$25,000 per accident$50,000 per accident$100,000 per accident

Uninsured/Underinsured BI

$30,000 per person/$60,000 per accident$1,000,000 per person and $1,000,000 per accidentN/A

Uninsured/Underinsured PD

$25,000 per accident$50,000 per accidentN/A

Coverage for collision and comprehensive are typically not accepted by the NCRF. However, depending on your insurer, they may still allow you to purchase the coverages at their own risk. Otherwise, if you want these coverages, you must find a company in North Carolina that writes "nonstandard" insurance. That company may ask you to sign a "consent to rate" form, explicitly agreeing to pay rates higher than what is filed with the NC Department of Insurance.

NCRF policy premiums

In North Carolina, auto insurance premiums are set based on many factors, including your driving record, where you live, the make and model of your vehicle, how you use your vehicle and your age. Although policies for high-risk drivers ceded to the NCRF are roughly 35% higher than they otherwise would have been, premiums are still calculated using the same factors.

North Carolina allows insurers to assess the NC Recoupment Fee on all auto insurance policies every year. The surcharge is based on the recoupment percentage established for the current period. The current recoupment fee is 5.35%, and it is applied to your liability coverage premiums. The recoupment fee is not considered part of your premium.

Getting auto insurance in North Carolina as a high-risk driver

Drivers can contact any licensed auto insurance company or agent in North Carolina to inquire about high-risk insurance. They’ll tell you the available coverage options, premiums and payment plans. Your insurance company must notify you that your policy has been ceded to the NCRF only if your premium is higher than what it otherwise would have been in the voluntary market. Since insurers have the liberty to decide which policies to cede and which not to, you should shop around for insurance companies before making a decision, especially if you found out that one insurer is ready to hand your policy over for higher premiums.

North Carolina’s Department of Insurance also cautions that it’s wise to pay your premium on or before the due date to avoid the risk of cancellation. There is no grace period for automobile insurance. If you miss the due date, your insurance company notifies the NC Department of Motor Vehicles, which sends you a liability insurance termination notice.

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