North Carolina Coastal Home Insurance Rates
Beautiful North Carolina coastal beach homes on the inter-coastal canal water at low tide.
North Carolina is a fantastic place to live with plenty of cultural activities, beautiful beaches, world-class cities as well as great restaurants and shopping.
The only disadvantage to living in North Carolina, particularly if your home is located in coastal area is the cost of homeowners insurance.
The average premium for a standard homeowners insurance in North Carolina is $2,325 per year, or about $194 per month, according to Nerdwallet which is higher than the national average of $1,820 per year.
The cost of coverage is much higher in coastal areas such as:
Following is a quick overview of everything you need to know about coastal insurance in North Carolina.
High Risk Areas Are More Expensive
Coastal property is always more expensive to insure, and North Carolina is no exception. Homes located on the North Carolina coast often suffer wind, flooding, and hailstorm damage due to severe weather and hurricanes.
Hurricane Florence hit North Carolina in 2018 and ended up causing $16.7 billion in damages which included 74,563 structures being flooded. Roughly 140,000 North Carolinians registered for disaster assistance after the storm.
As repair and rebuilding costs have gone up, many insurers have removed wind and hail damage from their covered perils for a standard homeowners insurance policy which means many homeowners need to carry a separate windstorm policy to be fully protected.
These exclusions typically only apply to homes in coastal areas, more inland homes are fully protected by a standard homeowners policy.
If your home is located in a coastal area, check your policy and contact your agent regarding coverages and any questions you have about policy exclusions. Finding out about an exclusion of coverage is not something you want to find out about after your home has been damaged or destroyed by a storm.
In coastal areas it can be difficult to find wind and hail coverage in the private market pushing homeowners into the FAIR Plan or Coastal Property Insurance Pool which used to be called the Beach Plan. These are the North Carolina insurers of last resort.
What a Windstorm Covers
If you are unable to find a standard homeowners policy that offers wind and hail damage you will need to get a windstorm policy or rider to fully protect your home.
Windstorm insurance protects your home from damage caused by high winds. These policies typically cover damage from hurricane force winds, hail, tornadoes and any other severe weather. In many cases the policy will only kick in once winds are over 35 miles per hour.
A windstorm policy offers coverage for your home as well as your personal belongings and any outbuildings, sheds and other detached structures, including swimming pools.
It is important to remember that windstorm coverage, like a standard homeowners policy, doesn’t cover flood or storm surge damage. If you live in an area that is prone to flooding you will need to put a flood insurance policy in place to fully protect your home.
Windstorm coverage may be available in the private market and if you can find a private market policy it will often have better coverage and a lower premium than a policy from the Beach or FAIR plan. However, there are coastal areas where finding a private market policy may be difficult and your only option may be a high-risk pool policy.
The Fair Plan
In North Carolina, there are two high-risk insurance pools, and the location of your home will determine which one you will need to purchase a policy from to protect your home. Both high-risk pools require all insurance companies that write policies in the state to share the risk of insuring coastal property owners who cannot find coverage in the private market.
High-risk insurance policies are available to homeowners in North Carolina as well as businesses and rentals. A windstorm policy protects against wind, hail and fire damage in most situations.
In North Carolina the FAIR plan is administered by the North Carolina Joint Underwriting Association (NCJUA) and it mainly covers non-coastal areas such as Durham, Asheville and Greensboro.
Coastal areas on the other hand are protected by the Coastal Property Insurance Pool which covers areas such as Morehead City, Nags Head and Manteo. The Coastal Property pool is managed by the North Carolina Insurance Underwriting Association (NCIUA).
There are limitations to both high-risk plans and if private insurance is available in your location, you should purchase coverage in the private market.
Here are a few limitations of the North Carolina high-risk pools:
- Cost: In most cases, high-risk pool policies will be more expensive than a policy purchased in the private market. While rates will vary, policies tend to be 10 to 20% more expensive.
- Actual Cash Value: With a high-risk pool policy your personal property will be protected at actual cash value which means depreciation will be taken into account when putting a value on your possessions if you make a claim. This can leave you responsible for major costs to replace your personal property.
- Coverage Limits: High-risk pool policies have coverage limits. Both the FAIR plan and the Coastal Property Insurance Pool put residential limits of $750,000 on their policies and personal property is capped at 40% of the building coverage.
- County Limits: The Coastal Property Insurance Pool requires that your property be located in one of the following counties: Beaufort, Brunswick, Camden, Carteret, Chowan, Craven, Currituck, Dare, Hyde, Jones, New Hanover, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Tyrrell and Washington.
High-Risk Policies Have High Deductibles
Policies purchased from one of the North Carolina high risk pools typically come with a percentage deductible for certain damage that will be much higher than a flat deductible. Private market policies may also have a percentage deductible.
With most policies there are two different deductibles. One deductible will be a standard fixed deductible ($1,000 is a common deductible amount) which applies if the damage to your home is caused by fire, vandalism or burglary while the second deductible will only apply to wind and hail damage.
The wind and hail deductible is typically a percentage deductible which means you have to pay a percentage of your total coverage amount as a deductible.
As an example, if you have $400,000 in home insurance and the wind and hail deductible on the policy is 2% you would have to pay $8,000 out-of-pocket for a wind or hail related claim before your insurance policy would cover the balance. Percentage deductibles often range from 1% to 5%.
If you are shopping for a new homeowners policy, make sure you verify the coverage limits and the deductible type before purchasing a policy.