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Cost Is Rising For Homeowners Insurance NC Homes Need

By Mike Heuer

State officials recently approved boosting by an average 7 percent the rates on homeowners insurance NC homes need for their protection from the many perils that can cause damage and destruction in the state where man first flew an aircraft. Beginning this summer, rates went up by an average 7 percent after the state’s insurance commissioner agreed to allow property and casualty insurers to boost rates.

The 7 percent jump less than half what insurers had requested when the filed paperwork seeing an average 17.7 percent rate increase on homeowners insurance NC residents need to protect their homes. Insurance premium increases, whether for homeowners insurance, auto insurance, life insurance or health insurance, must be approved by the state insurance department and cannot be excessive in nature.

While the 17.7 percent rate increase request was determined to be excessive, it likely was not the actual aim of property insurers in the state. Many times, property and casualty insurance companies as well as others will seek increases much more than they expect to be approved in order to give some room for negotiation. The rate increase is the first approved since 2009, when many homes across the nation faced foreclosure after many homeowners defaulted on their loans and chose not to continue insuring their foreclosed homes.

Insurers in 2009 sought a 19.5 percent rate increase but settled for a 4 percent rise instead. As in 2009, the insurers sought a rate increase state officials deemed excessive and unnecessary. But they were allowed a greater increase this time.

“Homeowners insurance is a very complex issue. We face a great challenge in making sure that it is not only affordable but available to consumers across the state,” said North Carolina Insurance Commissioner Wayne Goodwin in a statement. “I feel this settlement helps strike that balance, and I am pleased that the increase will be significantly smaller than what insurers originally requested.”

State officials said the rise would mean a home valued at $150,000 would cost an average $574 per year to insure. Although the average rise in homeowners insurance rates will be 7 percent, the amount will vary greatly depending on where a home is located. Rates will rise by less than 3 percent in many areas, but the nearer the Atlantic coast, the more sharply they will rise. Homes located along the coast face an up to nearly 20 percent rate increase, which greatly boosts the price to insure homes along the flood-prone areas that can be hit by hurricanes, tropical storms and a great deal of wind damage.

Worse, many of those homes still need to be protected with flood insurance at private insurers do not underwrite flood protection in North Carolina, particularly along the coast. Instead, flood insurance must be purchased from the National Flood Insurance Program, which has been rewriting flood-plain maps across the nation and boosting rates for flood insurance protection based on a home’s likelihood of suffering flood damage.

If a home has suffered repeated flood damage or is located at or below the traditional flood plain, the rates will rise sharply unless potentially costly mitigation efforts are taken, such as raising homes on pilings.