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Homeowners Insurance Rates are Increasing in North Carolina: How Much?

In a news feature from our friends at the Insurance Journal (insurancejournal.com), we have learned that North Carolina’s insurance commissioner has embarked on a mission to decide whether to allow homeowners’ insurance rates to rise by as much as 35 percent, with some insurers requesting even higher rate increases if their customers consent to it.   

Many policy holders have been outspoken in their criticisms of the insurance industry’s request for a rate increase; some have claimed that rates have doubled in the past 15 years.  Well, in the relatively short time that we have been licensed in North Carolina (coming soon upon our 9th year), rates that we have seen have been relatively flat with the exception of a meager state-wide 7% increase last year and increases in coastal wind insurance pools.

Also at play in all of this:  For over 30% of the homeowners insurance written in North Carolina, the insurers currently request that policy holders voluntarily sign a consent form.  The North Carolina insurance rate statutes allow insurance companies to charge more than the state-approved rates if the policy holder agrees in writing – thus, the consent-to-rate terminology. If the customer doesn’t consent to a slightly higher rate, the company can and likely will not renew – or may cancel – the affected policy.  

Like in California, the department of insurance in North Carolina has been acting strenuously to keep a lid on insurance rates – some say artificially, forcing many large insurance carriers to place a moratorium on new business or to require customers to sign these consent forms, effectively allowing the increase in the premiums.  Or companies, in some cases, have quit doing business in NC.

And now, for clarification and a needed realty check:  The words “as much as”, when the critics speak of 35% rate increases, generally refer the highest and worst case scenarios, whereas most consumers will receive substantially less premium increases (likely less than 14%) on what continue to be extremely low rates as compared to other states in the region. 

So, there is no need to sell your properties in North Carolina or to move to Tennessee (their rates are much higher, anyway). Your status should be acceptable unless your property is in a Tier 1 coastal area and subject to severe wind and rain damage; and even then, though these properties might take a hit, in terms of significant increased rates, high winds happen there and it has to be weighed in to the rate make process and claims modeling projections.

So, it will all work out in the end.  No one will be happy; people will pay more, companies won’t get the rates they want, and perhaps that’s the best outcome as that usually results in the best deal possible.  The only thing that remains, is, How Much?

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