What causes North Carolina home insurance to go up?
A homeowner in North Carolina was greeted with a nasty surprise this year, a 41% increase in his insurance premium.
On average, homeowners in North Carolina saw a rate jump of 7.5% on June 1st due to a settlement reached by the North Carolina Department of Insurance but this certainly doesn’t explain a 41% increase.
Doug Corkhill is a resident of Swain County in North Carolina. “We look out at 14 miles across the valley to the crest of the Great Smoky Mountains National Park,” Corkhill said in a recent Wral News article.
Corkhill claims to have never seen his insurance numbers go up so fast and so high. “I made no changes, they made no changes, the house hasn’t moved, so it just was startling,” Corkhill said in the Wral News article.
Corkhill’s USAA premium went from $3,027 a year to $4,278, which is a shocking 41% increase. Corkhill has never made a claim on his 5-year-old home.
WRAL News checked rate changes for Swain County, where Corkhill lives, rates and found that rates in his area had not increased at all.
“Something’s not right here,” Corkhill said in the recent Wral News article.
On Corkhill’s behalf, Wral News reached out to USAA to inquire about the situation. USAA provided the following statement.
“While we cannot share specific details on a policy due to member privacy, USAA’s goal is to provide insurance that is competitively priced to cover expected losses and expenses.
“Repair costs and home values have increased significantly in recent years, which has impacted insurance rates for consumers across the country. We regularly work with members to conduct an annual policy review to ensure they maintain the proper coverage, while also taking advantage of all available discounts, including connected home discounts that have become increasingly popular.
“At USAA, we’re committed minimizing the impact to members while maintaining financial strength, excellent service and value — just as we have for over 100 years.”
Yet USAA wasn’t being entirely honest. Corkhill had at one point agreed to “Consent to Rate”, which he only discovered upon his premium increase. This clause is something all insurance companies can write into policies within North Carolina.
Consent to rate lets insurance companies raise rates up to 250% more than the maximum rate allowed by the state. In Corkhill’s case, the state max is $2,354 but under the clause he signed he can be charged up to $5,885.
“This company is saying to that policy holder, we will insure this house, but in order to insure this, this is the premium we have to have to do it,” said North Carolina Insurance Commissioner Mike Causey in the recent Wral News article.
Consent to rate has been the law in North Carolina since 1977.
The policy hasn’t gone unchanged however. Before 2019, insurers had to get homeowners to sign an annual document agreeing to consent to rate premiums every year. This, supposedly cause problems for insurance companies.
“In too many cases, homeowners had their homeowner’s policies canceled because they were not aware. They didn’t get the letter, and they failed to sign the consent to rate,” Causey said in the Wral News article.
In response, the legislature changed the law. In 2019, insurers don’t need annual signatures anymore. They only have to put a warning in bold print on renewal forms.
Causey, claims this revision works better.
WRAL asked Causey if it really is better for consumers given that insurers can now raise premiums without explicit consent each year.
“Well, [insurers] have explicit consent, because when [homeowners] buy the policy, they sign that this is a consent to rate,” Causey said to Wral.
Since the law change, insurers have jumped at the chance to join consent to rate. In 2018 only 41% of companies used consent to rate, in 2024 the number is 55%.
“I don’t mind that they raised my rate,” Corkhill said about his insurer in the WRAL article. “But it seemed excessive.”
“I’ve heard their messages loud and clear, but at the same time, as commissioner, I’m required to try to keep a healthy insurance market so the insurance companies don’t pull out because that would be harmful to consumers,” Causey said in the Wral News article.
The North Carolina Rate Bureau, which negotiates rates with the state on behalf of insurers has this to say about the Consent to Rate policy,
“Consent to Rate has been part of North Carolina’s insurance regulations since 1977 because the General Assembly recognized that risk varies so widely from property to property that it can’t always be covered by charging the base rate. Most states have a law like this. In North Carolina, data on consent to rate is collected by the Department of Insurance, so the bureau does not have detailed information on its use, but we believe it’s likely that the number of consent to rate policies crept up in recent years in part because the base rate has not increased on par with the rapidly growing costs of disasters and disaster recovery – costs driven in part by climate change and in part by inflation in the construction industry.
“It’s important to strike a balance: Rates must be affordable, but if regulations suppress them too far below market rates, insurance carriers won’t want to write policies in North Carolina. That reduces competition and – in a worst-case scenario – makes coverage difficult or impossible to come by. Since property insurers are not required to offer coverage in North Carolina, consent to rate provides a mechanism for people to obtain a policy when an insurance company may otherwise decline to take on the risk at the base rate. Thankfully North Carolina has a competitive market: More than 100 carriers write property insurance here, and customers can shop for the price and coverage that best fits their needs.”
The consumer does reserve the right to say no to consent to rate. However, if the customer declines, the insurer can drop them. Many homeowners may be able to find a better rate by shopping with other insurance carriers.
Customers are also able to raise their deductible to lower the cost of their premiums.
It is essential to make sure you’re taking advantage of all discounts, bundling opportunities and to read the small print in order to help lower your insurance bills.