Haris Ashley
North Carolina's home insurance market is facing a crisis due to rising costs, increased risk of natural disasters, and a changing climate. In 2024, insurance companies requested a staggering 42.2% average statewide rate increase for homeowners' insurance, with some areas facing hikes of up to 99.4%. While the final settlement allowed for a more modest increase of 7.5% per year over two years, the trend of rising insurance rates in North Carolina is undeniable. This increase in insurance premiums is driven by several factors, including the increasing frequency and severity of catastrophic storms, inflation, escalating building costs, and the growing costs of disaster recovery due to climate change. The impact of these rising insurance costs is significant, affecting home affordability, rental rates, and the state economy, with more and more North Carolinians choosing to go without insurance.
| Characteristics | Values |
|---|---|
| Reason for increase in insurance rates | Hurricanes, wildfires, and other extreme weather events have caused heavy losses for insurance companies |
| Insurance companies' request | An average statewide increase of 42.2% |
| Dare County Board of Commissioners' opinion | Strongly opposes the increase, stating that it would make homeownership unaffordable for many and lead to increased rental rates |
| Settlement | The average statewide base rate will increase by 7.5% on June 1, 2025, and 7.5% on June 1, 2026 |
| Public comment period | Required by law; public input was taken through written and email submissions, as well as virtual and in-person forums |
| Consent to Rate clause | Allows insurers to charge up to 250% more than the maximum rate allowed by the state; the percentage of policies with this clause increased from 41% in 2018 to 55% in 2024 |
| Rate of North Carolinians without homeowners insurance | Jumped from 5% in 2019 to 12% in 2024 |
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What You'll Learn
- The North Carolina Rate Bureau requested a 42.2% increase in insurance rates
- Extreme weather events have caused heavy losses for insurance companies
- Inflation in the construction industry has increased building costs
- Home insurance rates in Dare County could increase by 45.1% for beach communities
- Commissioner Mike Causey negotiated a settlement for a 7.5% increase in base rates
The North Carolina Rate Bureau requested a 42.2% increase in insurance rates
The North Carolina Rate Bureau (NCRB) requested a significant increase in insurance rates, sparking concern among residents and raising questions about the affordability of homeownership in the state. The proposed 42.2% surge in insurance rates has multiple underlying factors, which have contributed to the steep rise.
The primary reason for the requested increase is the
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Extreme weather events have caused heavy losses for insurance companies
In North Carolina, Hurricane Helene and subsequent wildfires caused widespread damage and financial losses for insurers. The state has also been affected by other extreme weather events, including catastrophic storms that are increasing in frequency and severity. These storms have resulted in escalating building costs and an increased likelihood of storm-related losses and damage.
As a result of these extreme weather events, insurance companies in North Carolina have requested significant increases in homeowners' insurance rates. The North Carolina Rate Bureau, which represents insurance companies in the state, initially requested an average increase of 42.2% in homeowners' insurance rates statewide. This would have resulted in a substantial increase in the cost of homeowners' insurance policies, with some areas facing increases of up to 99.4%.
The proposed rate increases have been met with opposition from residents and local governments, who argue that the increases would make homeownership unaffordable for many and lead to increased rental rates. After negotiations, Insurance Commissioner Mike Causey announced a settlement with the Rate Bureau, with an average statewide base rate increase of 7.5% in 2025 and 2026, capping the increase in any territory at 35%. This settlement is intended to balance the need for insurance companies to remain solvent and able to pay claims, while also keeping insurance rates affordable for homeowners.
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Inflation in the construction industry has increased building costs
The North Carolina Rate Bureau has requested an increase in homeowners' insurance rates, with an average statewide increase of 42.2%. This has been negotiated down to an increase of 7.5% in 2025 and 7.5% in 2026. The rate increases are due to a number of factors, including the increasing costs of disasters and disaster recovery, driven by climate change and inflation in the construction industry.
Inflation in the construction industry has been driven by a number of factors, including increases in the cost of materials and labour. For example, the price of lumber has risen significantly in recent years, which has increased the overall cost of construction projects. Labour costs have also increased, as the demand for skilled workers has outpaced the supply. This has resulted in higher wages for construction workers, which has been passed on to consumers in the form of higher prices.
In addition, the increasing frequency and severity of natural disasters, such as hurricanes and wildfires, have also contributed to the rise in insurance rates. These events have caused extensive damage to homes in North Carolina, resulting in costly claims for insurance companies. With the increased likelihood of storm-related damage, insurance companies have had to re-evaluate their actuarial models and increase rates to compensate for the higher risk.
The rate increases have been met with opposition from residents and local governments, who argue that the higher insurance premiums will make homeownership unaffordable for many. In particular, essential workers such as teachers, first responders, and medical personnel may struggle to afford the increased costs. However, insurance companies argue that the rate increases are necessary to remain profitable and continue providing coverage in the state.
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Home insurance rates in Dare County could increase by 45.1% for beach communities
The North Carolina Rate Bureau has requested an average statewide increase in homeowners' insurance rates of 42.2%. This proposal, if approved by the North Carolina Department of Insurance, would see rates in Dare County increase by 45.1% for beach communities and 33.9% for inland areas. This would result in a significant rise in the cost of homeowners' insurance policies, with an increase of $1,312 for beach communities and $602 for inland areas, based on $200,000 in coverage.
The Dare County Board of Commissioners has expressed strong opposition to these proposed increases, stating that they would make homeownership unaffordable for many first-time buyers and current homeowners, particularly those in essential professions such as teaching, first response, and medicine. The Board has requested that the rate increases be denied or that a hearing be scheduled.
As home values in Dare County continue to rise, insurance premiums will also increase exponentially. This will force many homeowners to choose between paying higher premiums or opting for higher deductibles, which would result in smaller insurance claim payments. This could have a significant impact on residents' ability to recover from storm damage or other disasters.
The North Carolina Rate Bureau's proposal follows a similar request in November 2020, which resulted in a settlement for an overall average rate increase of 7.9%. A public comment period is required by law, and residents have been encouraged to express their concerns and opposition to the proposed rate increases.
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Commissioner Mike Causey negotiated a settlement for a 7.5% increase in base rates
In January 2024, the North Carolina Rate Bureau (NCRB) filed a request with the North Carolina Department of Insurance for a 42.2% average statewide increase in homeowners' insurance rates, with proposed increases of up to 99.4% in some areas. This request came after a 2020 filing by the NCRB, which resulted in a settlement with Commissioner Mike Causey for a 7.9% average rate increase.
In response to the 2024 proposal, Commissioner Causey announced that the Department of Insurance had settled its legal dispute with insurance companies, and negotiated a settlement for a 7.5% increase in base rates, to be implemented in two instalments of 7.5% on June 1, 2025, and June 1, 2026, respectively. This agreement also prohibits the NCRB from requesting another rate increase before June 1, 2027.
Commissioner Causey stated that this settlement would save North Carolina homeowners approximately $777 million in insurance premiums over two years, compared to the requested rates. He also highlighted that the settlement ensures insurance companies have adequate funds to pay claims, given the increasing costs of natural disasters and reinsurance due to national catastrophes.
The proposed rate increases by the NCRB were met with opposition from residents and county officials, who argued that such increases would make homeownership less attainable and more difficult to afford for many. Additionally, there were concerns about the impact on rental rates in areas with a housing shortage for essential workers.
While the settlement negotiated by Commissioner Causey resulted in a significantly lower rate increase than initially proposed, it still represents an added financial burden for homeowners in North Carolina, who are already facing challenges due to rising costs, heightened risk of natural disasters, and a changing climate.
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Frequently asked questions
There are several reasons why homeowners insurance is increasing in North Carolina. Firstly, insurance companies have experienced significant losses due to extreme weather events, such as hurricanes and wildfires, leading them to re-evaluate their financial models. Additionally, the state's insurance department agreed to a rate increase of 7.5% in 2025 and 2026 to ensure insurance companies have adequate funds to pay future claims.
The "consent to rate" clause allows insurers to charge customers a premium that is up to 250% higher than the state maximum rate. This clause has been included in North Carolina insurance regulations since 1977 and has contributed to rising insurance rates in the state.
Rising insurance rates can have a significant impact on North Carolina residents. For some, it may become unaffordable, leading to a decision to go without insurance. This trend, known as "going bare," has been on the rise in the state. Additionally, higher insurance rates may make homeownership out of reach for many first-time buyers and current homeowners, especially those in essential professions such as teachers and first responders.
