Local rental properties face major hike to insurance rates

By on March 22, 2018

 The North Carolina Rate Bureau has submitted a filing to the state Department of Insurance to greatly increase insurance rates for fire and wind policies that cover second homes, vacation rental or year-round rental houses.

While the filing reflects decreases in the fire rate, the extended rates to cover wind and hail damage are proposed to jump 58.3 percent in mainland Dare, Currituck and Hyde and 38.5 percent for the Outer Banks sections of the counties.

A public hearing on the proposed increase is set for Friday in Raleigh, the same day the comment period comes to a close.

“Fire rates are typically much lower than wind rates, sometimes as little as seven percent of the total rate,” said Willo Kelly, government affairs representative for the Outer Banks Home Builders Association and Outer Banks Association of Realtors.

“This filing will have tremendous impact on dwelling and dwelling wind-only policies written through the N.C. Insurance Underwriters Association, commonly referred to as the Coastal Property Insurance Pool,” Kelly said.

Written comments on the proposal can be emailed to 2018DwellingandFire@ncdoi.gov.

After the public comment period closes on March 23, the Department of Insurance has 50 days to respond to the Rate Bureau. If Insurance Commissioner Mike Causey does not act, the new rates will become effective on October 1.

Causey can negotiate a settlement on the filing, which in years past has resulted in less than the Rate Bureau’s proposed increases. He has the option to deny the filing which would result in a hearing/trial being held.

In early January, Causey denied a request for increases of homeowners policy rates reaching 25 percent along the coast and scheduled a hearing for July 23.

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Recent posts in this category

PappyB

Dave, You are correct regarding the data, however the data doesn’t tell the entire story. For example, we have increased our deductible in an attempt to lessen the increases over the years. We pay near $2900/year w/ a $1000 deductible. With only a 20% increase ($580/yr), we couldn’t raise our deductible high enough to compensate for the increase, without becoming self-insured. We will be forced to raise $700+ to cover property management commissions, local, state & federal taxes.

Dave

The lack of fact based comments is disturbing. The insurance companies will be asked to provide experience based data (claims) to support the increase. If they can’t, it will be reduced or denied.
This happens every year, and most often it is greatly reduced.
It has nothing to do with tourists, second homes, affordability. Its just the facts as far as claims data and reserves to support future claims. Risk goes into this too, but the risk should be supported by claims data.

As a family member that owns several homes free and clear, most of are ready to roll the dice. We will double rents, or sit empty.

Don

Mike: Nice try, but Cooper has nothing to do with this. As Greg Hamby says, it’s the Rate Bureau (i.e., the insurance lobby) that comes up with proposals for increases, which they do every few years or so. Hopefully, Causey will deny or amend (lower) what they’re asking for, as has been done in the past.

Gloria

Also will affect second-home owners, many of whom intend to eventually retire in the Outer Banks. But those folks have a choice: too many targeted attacks on their home owning choices might make them sell and move out of the area.

surf123

The reason is because the houses are vacant the vast majority of the time. Empty houses cost more to insure everywhere. @Rick, it has nothing to do with voting as it applies to second home owners who may or may not live in NC. The increase will be nowhere near the requested amount. The insurance companies throw out a ridiculous number and then lower it and then have a hearing.

This is a ridiculous proposal. To hike by this percentage hurts all local visitor oriented businesses. It is a profit grab by the NC Rate Bereau who represent the Insurance underwriters. The NCDoi should dismiss it in its entirety.

Julie Gouv

So once again beach owners subsidize the insurance risk of the entire state? This absolutely OUTRAGEOUS!! Our wind policy alone costs $4400, plus fire it’s over $6000/yr. Great way to even further depress property values in OBX. It’s the real reason values have still not recovered. Buyers are going elsewhere.

Mike

Thank you Mr. Cooper!

PappyB

Comment period ends today! What was the length of the comment period and when was it first publicized?

Robbie206

The real eastate boom may come to a screeching halt…….especially on the mid to lower priced homes…..at least for second homes….!!,

Rick

@Matthew, Why? Because renters don’t vote.

Matthew Schmuck

This will only cause rates to increase for those vacationing for a week or working during the summer season. Rent is already high. Why target rental properties to increase insurance profits?

HSHOBX

53%. With rental prices already as high as they can be, this is going to really hurt local renters as the costs will be passed along to them.