North Carolina Approves 13.2% Dwelling Fire, Extended Coverage Rate Hike

November 27, 2012

North Carolina Insurance Commissioner Wayne Goodwin and insurance companies have come to an agreement that allows for a statewide average increase of 13.2 percent for dwelling fire and extended coverage policies, spread over a three-year period.

Insurers, represented by the North Carolina Rate Bureau, had requested a 20.5 percent increase, varying by coverage and territory, in January 2011.

Goodwin said the difference between the requested and settled rate increase represents approximately $54.4 million in savings for policyholders over four years.

Prior to this settlement agreement, insurers were in the process of appealing to the North Carolina Court of Appeals a 2011 decision by Goodwin that ordered a small decrease in dwelling rates.

“It became apparent that if we continued to fight this issue in court, there was too great a risk that dwelling policyholders would receive much larger increases, particularly on the coast. This agreement allows for a smaller total increase spread over three years to lessen the impact on policyholders,” said Goodwin.

“The decision to settle on these rates was not taken lightly,” Goodwin added. “In recent years, more and more insurance companies have been dropping or refusing to offer these policies. Genuine concerns about insurance availability were also a factor in arriving at this settlement.”

There are approximately 400,000 properties in the state covered by dwelling insurance, compared to more than 2.2 million covered by homeowners insurance, which are not part of this settlement.

The last rate increase for dwelling insurance went into effect in 2006.

Details of the Settlement

According to the state insurance department, the 13.2 percent dwelling property insurance settlement provides that:

  • An average 4.7 percent rate increase, varying by territory, will be applicable to new and renewal policies effective March 1, 2013.
  • An average 5.7 percent rate increase will be applicable in all territories for new and renewal policies effective March 1, 2014.
  • An average 2.4 percent rate increase will be applicable in all territories for new and renewal policies effective March 1, 2015.

Dwelling insurance policies are not homeowners insurance policies; dwelling policies are offered to non-owner occupied residences including rental properties, investment properties and other properties that are not occupied full-time by the property owner. They offer fewer coverage options and are sold to cover properties that would not qualify for a standard homeowners policy.

Dwelling policies typically consist of two parts: the fire portion of the policy covers damage caused by fire; the extended coverage portion of the policy generally covers damage caused by wind, hail, fire, smoke, riot, civil commotion, and aircraft and vehicle damage.

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