The NC Insurance Commissioner, Mike Causey, announced on November 10, 2020 that the NC Rate Bureau (NCRB) has requested an increase on NC home insurance rates. The requested increase is 24.5% statewide. The proposed rate hike would go into effect on August 2021. If accepted by the NC Department of Insurance (NCDOI) all NC home insurance writers would be obligated to comply and increase their rates.
Before you get too concerned, it is worth noting that the actual rate increase will probably be settled much lower. The final rate increase cannot be implemented without the approval of the NC DOI. Typically in these rate hike requests the NCDOI will negotiate the rates lower than suggested. The last time this has taken place was in 2018 when the NCRB requested a rate increase of 17.4% and it was negotiated down to 4%.
It is tough to say how much lower the 24.5% will be whittled down to. I personally don’t see it going any lower than a 6% hike and it will likely be higher than that. The primary factor in the need for a larger rate increase is due to the increased wind and hail claims in North Carolina. Most notably the number of roof replacements stemming from such losses. Some of these claims are from legitimate storms but most, I fear, are not.
I have been saying for a decade that there are entirely too many roofs being replaced on older roofs that are attributed to wind and hail losses. The true cause of the damage to these roofs though is often just normal wear and tear. In most cases, the claims come from roofs 15-20 years of age or older. I often joke that wind and hail somehow never seems to find its way to newer neighborhoods with roofs less than 10 years old. I suspect that we will only trend with higher rates until a decision is made on rectifying this problem.
Insurance companies and the NC DOI really need to determine their stance on this. A distinction should really be made on the causation of the damage to a roof. Is it wind and hail? (a covered peril) or is it normal wear and tear? (not a covered peril). If we are using our home insurance policies as a form of warranty than we have to expect higher insurance rates.
To put some perspective on this, you can compare it to needing to replace your hardwood floors. If you have not updated them in 25 years, you can expect some wear and tear and when it comes time to replace them you wouldn’t expect to be able to file a claim for that loss.
With continued rate increases on home insurance, there has never been a more important time to have an independent insurance agent working for you. Aside from state mandated regulations raising home rates, you can expect carriers to have fluctuations in their rates over a several year span as well. You need an agent that will keep a watchful eye on your policies and be there to step in and move it to another carrier if your current company gets out of line on their home insurance premiums.
Over the years last 15 or so years I have seen the best rates shift from Farmers to Hartford to Bankers to Heritage and now to Homeowners of America. That is a generalization of course. These are the companies that have been the most competitive across the board during this timeframe. We also see companies like Travelers, State Auto, Kemper, and Universal Property and Casualty win a good bit on premium too.
It is so important to have an independent insurance agent as your advocate not only on rates, but also on making sure you are adequately covered. You just can’t trust one individual insurance company to have your back year after year. Let us know how we can help by reaching out to us at 704-494-9495 or by emailing us at email@example.com. You can always reach me directly at firstname.lastname@example.org as well. I would be happy to discuss this topic further with you or answer any other questions you may have.