Homeowner insurance rate increase proposed, nearly double in some areas

On Jan. 3, the North Carolina Rate Bureau requested that the N.C. Department of Insurance increase homeowners insurance rates by an average of 42.2 percent.

If the NCDOI agrees to the increase, the proposed rates will become effective Aug. 1. But, if the department does not agree to the increase, the rates will either be denied or negotiated with the NCRB until a settlement is reached.

While the proposed increases in some counties are as low as 4.3 percent, the beach areas of Brunswick, Carteret, Pender, Onslow and New Hanover counties would be subject to an increase of up to 99.4 percent. Orange and Chatham counties' insurance rates would go up 25.1 percent, and Durham County would increase by nearly 40 percent.

Stephanie Watkins-Cruz, the director of housing policy for the North Carolina Housing Coalition, said inflation and climate change are part of the reason why home insurance premiums are going up. Since coastal areas are more prone to natural disasters, she said, some insurance companies are pulling out completely and will not insure clients.

“On the homeownership side, a few things can happen," she said. "You have your monthly mortgage. You also have a monthly insurance plan. Imagining that 99.4 percent — it’s astronomical, essentially doubling the bill that people are used to."

Watkins-Cruz also said the proposed insurance rate hike could particularly affect affordable housing rental properties and their developers. 

She said developers who are already tasked with financing a long list of costs have to figure out how to afford the new cost increase without jeopardizing affordability.

“It can be easy for people to try and ignore the affordable housing crisis if they're not experiencing it,” Watkins-Cruz said. “However, this is one of those issues that is really going to hit widespread, it’s going to be very widespread in its impact.”

Sarah Viñas, the director of the Affordable Housing and Community Connections department in the Town of Chapel Hill, said 60 percent of renters in Chapel Hill are cost burdened, meaning they spend more than 30 percent of their income on rent and utilities.

If there are increases in costs for maintaining rented homes, those can be passed on to tenants in the form of rent increases, she said.

The Chapel Hill Town Council approved funding in this year’s budget to support low-income homeowners with their property taxes — which Viñas said is meant to address the disparate impact of costs on low-income residents.

Russell Pierce, the executive director of Housing for New Hope in Durham, said there has been a significant increase in property values, which affects the cost of rentals. He said that an insurance increase — considering how many people are cost burdened — could put people at risk of losing their housing.

Pierce said Durham has a high percentage of residents who rent and a disproportionate number of renters are people of color. He said the insurance increase would exacerbate cost issues for communities in Durham that have already been affected by gentrification and rising housing costs.

“We're seeing very high eviction rates here, predominantly among people of color," he said. "And so, when we're looking at something like this, it’s a small thing in a way, but at this point, very small things can have big impacts because people are already so vulnerable."

Two public comment forums will be held on Jan. 22 to allow the public to address the proposed rate increase. Community members can also submit written public comment until Feb. 2. Watkins-Cruz said this is the part of the process where people should engage; send comments and data on how the change would impact, or is already impacting, housing costs.

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