Auto insurance rate hikes to take effect on January 1 may cost the average driver more money - money they will recoup if the North Carolina Insurance Department wins its bid to keep rates low in the court of appeals.

“The position of the Department of Insurance, and my own position, is that we must keep insurance rates affordable for all individuals and small businesses,” North Carolina Insurance Commissioner-elect Wayne Goodwin said Tuesday. “They are required to purchase insurance on their vehicles, so we support lower insurance rates and affordable insurance for them.”

He explained that current Commissioner Jim Long held a hearing process concerning the recommendation of the N.C. Insurance Rates Bureau to raise rates by approximately 13 percent, and found that rates should be cut by approximately 16 percent.

The Rate Bureau then appealed that decision in the N.C. Court of Appeals, and counter-proposed a rate increase of 9.4 percent.

Goodwin said that the way the law is written, until the court rules the companies can charge the 9.4 percent increase, but everything collected above the amount ordered by Commissioner Long must be kept in escrow accounts and refunded to policyholders should the court uphold his recommendation.

He said that his obligation as insurance commissioner is to seek affordable, accessible insurance at all times, and to ensure that there is a competitive insurance market made up of solvent companies that can pay claims that are made.

“Given what’s been happening on Wall Street and in the economy, the question of solvency is ever more vital,” Goodwin said. “We want to make sure that the insurance that people pay can help them when they have an accident.”

Goodwin also pointed out that North Carolina’s insurance rates have hovered between the sixth and eighth lowest rates in the country, and have been the lowest in the South.

“I think it’s important to realize that we pay very reasonable rates due to the work of Mr. Long and the insurance department,” he said.

N.C. Insurance Department Director of Public Information Kristin Milam explained that though companies can charge last year’s rate, plus 9.4 percent, not all will.

“Some companies have filed for deviations, to charge less, and of course, they can’t charge more than that,” Milam said.

She provided a chart showing that for a person taking a full policy out on a 2008 Ford Taurus, with no inexperienced drivers, who drives less than 10 miles to and from work and has no points on their license would pay $931.96 a year in Richmond County under the old rate guidelines.

With the 9.4 percent increase proposed by the rate bureau, that number would jump to $1,094.84, while the rate cuts recommended by Long would reduce the price to $821.90.

Russ Dubisky, of State Farm Insurance Agency, said that State Farm is one of the companies seeking a deviation.

He said that statewide, the company is increasing its rates by 1.3 percent, pointing to “countless” reasons for the need to increase them, including the frequency and severity of accidents, statutory changes and the rising price of medical costs.

The statutory changes that he spoke of concern N.C. House Bill 738 which goes into effect on Jan. 1, and will require policyholders to purchase uninsured and underinsured motorist coverage, among other changes.

“We as a company are trying to remain competitive and offer the best coverage for the most affordable rates that we possibly can,” he said.

A press release from the company pointed out that even with the increase, its rates will remain 20.8 percent lower than they were 11 years ago, and that overall premium changes will vary depending on the coverage they carry, where they live and the kind of car that’s insured.

Linda Mcinnis is an independent insurance agent and the manager of Richmond Insurance Agency in Rockingham. She described an independent agent as someone who works with several different insurance companies rather than one.

“I don’t see a need (for rate increases),” she said.