Beach House Insurance Costs in One State Could Double if Insurers Get Their Way
- The Average 401(k) Balance Rose 19% Last Year. How Do You Compare?
- What Is the EV Tax Credit, and Who Qualifies?
- A Record Number of Americans Are Spending More on Housing Than They Can Afford
- As Used Car Prices Fall, Here’s How to Get the Best Deal
- You Can Now Renew Your Passport Online (but It Still Costs $130)
- Why Most People Don't Trust Their Car Insurance Companies
- Home Prices Just Reached a Record High — but Sellers Aren't Happy
- 10 Strategies Parents Are Using to Pay for Their Kids' College
- It's a Bad Time to Buy a House, According to Basically Everyone
- Here’s Where Home Equity Increased the Most in the Last 5 Years
For a while earlier this year, homeowners in North Carolina were facing possible home insurance price hikes averaging over 40% statewide — and rates that could double for some beach houses.
Those drastic premium increases are on hold for the time being, after a broad outcry from the public. Regulators rejected an industry filing that would've increased rates for home insurance in the state by 42.2% on average, but it looks like the final rate increase amount could be up in the air until the fall.
The state Department of Insurance received 24,000 emails opposing the rate hike proposals, which were as high as 99.4% for some coastal areas.
Homeowners "used terms such as 'incomprehensible,' 'outrageous' and 'absurd' to describe the insurance companies’ proposed average statewide 42.2% increase," Barry Smith, a spokesperson for the state insurance department, said in an email.
Residents said the proposed insurance rates would cripple their budgets. Homeowners told local media outlets they're worried about having to take extra work or being forced to move if steep hikes go into effect.
State regulators say they haven't had any recent discussions with the N.C. Rate Bureau about a possible compromise on the rate increase. The Bureau is pushing for higher rates on behalf of insurance companies, arguing that inflation and the threat of hurricanes justify the proposed increase.
Smith says a hearing on the issue is now scheduled for Oct. 7, and North Carolina Insurance Commissioner Mike Causey, who has described the Rate Bureau's initial proposals as “excessive and unfairly discriminatory," will have 45 days after that to issue an order.
Jarred Chappell, chief operating officer at the North Carolina Rate Bureau, says "negotiations are another normal part of the filing process," but he wouldn't comment further on the status of the matter.
The battle over insurance rates in North Carolina is emblematic of what’s happening all over the country, especially in areas where there's increased risk of severe storms, flooding or wildfires. The national average annual cost of home insurance was $2,377 in 2023, and experts are forecasting home insurance prices could see double-digit increases in 2024. Homeowners insurance prices are lower than that in North Carolina, averaging $2,110, according to a recent report from Insurify, an online insurance marketplace.
To make matters worse, a destructive hurricane season is forecasted this year, and Insurify says that could drive prices up down the line even more in coastal areas. "Insurance companies would collect data on the damages. Then, insurers would assess the data, factor it into risk models, and propose new rates," the report said.
Home insurers leave states or request rate increases
While insurers are pushing for higher rates across the country, some home insurers have pulled away from writing policies entirely in states like Florida. The availability of home insurance is also limited in two other coastal states in the southeast: South Carolina and Georgia, according to insurance firm Matic.
North Carolina insurers note that there hasn’t been a rate increase since 2020, when an 8% hike was enacted. Since then, construction costs including materials and labor have gotten much more expensive. Costs for covering claims as well as reinsurance for catastrophes have also soared.
The insurance industry argues that rate increases are needed to account for higher claims costs and restore profitability margins for insurance companies.
The rejected rate hike proposals in North Carolina were some the most aggressive requests in this wave of insurance premium hikes. In California, regulators are reviewing a request from Allstate for a 39.6% rate hike. In Florida, home insurance premiums increased by an average of 35% at renewal during the period from May 2022 to May 2023, according to insurance marketplace Policygenius. Meanwhile, Farmers was approved for homeowners insurance rate increases of more than 25% in Illinois and Texas last year.
More from Money:
7 Best Homeowners Insurance Companies of 2024
How High Could Home Insurance Rates Jump This Year? Here's What Experts Predict