Impact of North Carolina’s Record Hurricane Year on Homeowners and Insurance Rates
Hurricane Florence caused significant damage when it came ashore to the Carolinas last September. North Carolina felt the brunt of the devastation, with nearly 36 inches of rainfall and storm surges reaching 10 feet. The National Oceanic and Atmospheric Administration estimates total damage at $24 billion, mostly as a result of flooding.
This record hurricane season could lead to major home insurance rate increases in North Carolina later this year. In December 2018, the North Carolina Rate Bureau proposed a homeowners insurance rate increase of 17.4%. If passed, the increase would go into effect in October 2019. This isn't the first time the rate bureau has requested an increase. Last year, the bureau proposed an increase of 18.9%, but only 4.8% was approved.
The proposed rate increase should come as no surprise to North Carolina residents. It is common for home insurance carriers to look for ways to minimize future losses and costs associated with a high-loss year. The damage caused by Hurricane Florence resulted in $2.5 billion in insurance claims. When insurance carriers pay out higher-than-average claims, they usually go to their reinsurers for financial assistance. In this case, the rate bureau says their net reinsurance costs increased—likely due to increasing risk and because carriers have had to use reinsurance.
Current Home Insurance Rates
North Carolina homeowners currently pay an average of $984 on home insurance premiums annually, which is slightly below the national average of $1,083. If the proposed rate passes, homeowners should expect premiums to increase by an average of $171 annually. This increase would move the state's rates above the national average to $1,155 per year.
Tips for Lowering Home Insurance Premiums
The final impact of the rate increase depends on a few factors: the final approved rate, the insurance carrier and the homeowner's loss history. If North Carolina homeowners face costly increases, the following techniques can help lower home insurance premiums.
Adjust your deductible. A deductible is a set amount policyholders agree to pay before the insurer pays to fix covered damage. Most homeowners have a $500 deductible, but if you can afford to increase it to $1,000 or $1,500, you could save on your premiums. Since North Carolina is a coastal state susceptible to hurricanes, most homeowners likely have a separate deductible for wind damage. Increasing this deductible will also result in a discount on annual home insurance premiums.
Shop around. Every insurance carrier has a unique set of underwriting guidelines. To get the best deal, request quotes from multiple companies each year, for flood insurance as well as home insurance. Compare more than one quote to make sure you have the best coverage at a cost that fits your budget.
Make home improvements. In states subject to natural disasters such as hurricanes, it can pay off to invest in certain home improvements that make a house less susceptible to storm damage. Consider adding storm shutters, hurricane-resistant windows and an updated roofing system that can better withstand wind damage. Depending on the age of the home, it may make sense to upgrade heating, cooling and water systems so they are less likely to break and cause more damage during a storm.
Improve home security. Some insurance carriers offer discounts for installing home security cameras, deadbolts and sprinkler systems. Discounts can vary from 5% to 25% depending on the company.
Ask about other discounts. It never hurts to ask about additional discounts. Many insurance carriers offer discounts for multiple policies or even for holding certain memberships.
Audit coverages and limits. The cost to rebuild your house and replace your belongings may change over time. Be sure your insurance policy covers the current cost to replace your home and personal items.