North Carolina Residents Could be First for Private Flood Insurance Policy

09 Apr
Beautiful sunset view of Front Street in Beaufort, the third-oldest town in North Carolina, located in Carteret County

North Carolina residents could be some of the first in the country to have a state backed private flood insurance policy as an alternative to the Federal Emergency Management Agency’s National Flood Insurance Program.

Insurance Commissioner Mike Causey recently said that the state Department of Insurance is working with the N.C. Rate Bureau (NCRB), an organization that represents insurance companies in the state, to develop the new flood policy options.

The NCRB recently sent a letter to insurance companies stating that it was in the process of developing rates, rules and forms for residential flood insurance policies.

“The Rate Bureau’s private flood insurance program is intended to provide a long term, quality flood insurance solution for the state of North Carolina that is accepted by lenders and offers residential flood insurance coverage equal to or greater than the current NFIP policy,” said the letter.

A standard North Carolina homeowners insurance policy doesn’t cover damage caused by flooding which means homeowners must purchase a separate flood insurance policy to fully protect their property. While North Carolina does have private insurance companies in the state offering flood insurance products, most homeowners purchase coverage from the National Flood Insurance Program (NFIP).

Homeowners that have a government backed mortgage on a home that is in high-risk area for flooding according to FEMA’s flood maps are required to buy flood insurance. In coastal areas such as Carteret County these policies can be quite expensive, resulting in some homeowners forgoing flood insurance. 

According to Mr. Causey, roughly 143,000 of the state’s approximately 4 million homeowners held a flood insurance policy through FEMA. While that number is higher than when Hurricane Florence hit the state in September 2018, it still leaves a large number of North Carolina residents unprotected from flood damage.

“When Hurricane Florence hit, the total number of flood policies in this state with the Federal Emergency Management Agency was less than 135,000,” he said. “…That told me that 98 percent of the people in North Carolina had no flood insurance. That is a huge problem.”

According to Mr. Causey, if the Department of Insurance manages to negotiate a deal with the NCRB, North Carolina would be among the first states to offer private flood insurance policies. Currently, only Florida offers private flood insurance policies although a number of states are looking into the possibility. 

“We believe that sometime later this year we’ll be able to offer private flood insurance policies to people in North Carolina that are far superior to anything under the federal program,” Mr. Causey said during the recent meet and greet. “These wouldn’t have any limits, hopefully the premiums would be a little better.”

The goal of offering private flood insurance in the state is to offer another option to homeowners, hopefully driving residents to purchase flood insurance, particularly in coastal areas that are most at risk. 

“My message to everybody is if it rains where you live, you need flood insurance,” he said at the meet and greet “We’re all in a flood zone, it’s just a matter of whether you’re in a high-risk flood zone or low risk.”

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