North Carolina Homeowners Face Rising Insurance Premiums Amid Settlement Agreement
North Carolina homeowners will soon see their insurance premiums rise following a recently announced settlement between the state Insurance Department and the insurance industry. The increase will be gradual, averaging 15% statewide by mid-2026. While the new rates are lower than what the industry initially proposed, the settlement demonstrates the growing pressures on insurers as they deal with inflation, costly natural disasters, and other challenges.
Understanding the Settlement and Its Impact on Homeowners
The settlement reduces what could have been a much steeper hike in premiums. Initially, the North Carolina Rate Bureau, which represents insurers across the state, pushed for an overall average increase of 42.2%, citing higher costs associated with building materials, stronger storms, and skyrocketing reinsurance expenses. However, after a formal hearing and input from witnesses, Insurance Commissioner Mike Causey negotiated to limit the increase.
Starting June 1, 2025, homeowners will see an average statewide increase of 7.5% in base rates, followed by another 7.5% increase a year later in 2026. While the percentages average out statewide, the impact will vary from region to region. Coastal areas like Carteret and Brunswick counties, which have been hit hardest by hurricanes in recent years, are bracing for higher increases. By contrast, many mountainous regions will experience more modest jumps in their rates.
Why Are Insurance Rates Going Up?
It’s not just one reason driving these rate increases—it’s a mix of several cost pressures that create a perfect storm for homeowners and insurers alike.
Firstly, inflation has hit the construction industry particularly hard. Rebuilding after natural disasters has become increasingly expensive due to rising costs for materials like lumber, concrete, and steel. This drives up the payout costs for insurers, which in turn leads to higher premiums for policyholders.
Secondly, North Carolina has seen its fair share of extreme weather over the past decade, including high-impact hurricanes like Matthew in 2016 and Florence in 2018. These events have resulted in significant property losses, leaving insurers scrambling to fund claims payouts.
Lastly, reinsurance—a kind of insurance for insurers themselves—has become more expensive. Reinsurance helps companies cover catastrophic losses, but as disasters increase in strength and frequency, reinsurance prices have gone up dramatically, further raising costs for the industry.
Regional Disparities in Rate Hikes
Not all homeowners will feel the increase in the same way. Coastal counties, where residents have endured powerful storms and serious flooding, are being hit hardest. Some areas will see base rates climb by a combined total of more than 30% over the next two years because of their higher risk.
On the other hand, less storm-prone areas like Buncombe, Watauga, and Yancey counties in the western part of the state face much smaller increases, averaging 4.4% in 2025 and 4.5% in 2026.
City residents in places like Raleigh and Charlotte fall somewhere in the middle. For example, Charlotte will see a rise of 9.3% in 2025 followed by another 9.2% in 2026.
What Homeowners Need to Know
For homeowners, this settlement comes as a mixed bag—while the double-digit increases may pinch household budgets, they’re far better than the 42% jump the industry had initially sought. Additionally, the agreement includes a pause on further rate hikes until mid-2027, offering some stability in the years ahead.
However, there’s no escaping the fact that these increases will add pressure, particularly for families already struggling to afford housing costs. Those living in high-risk areas may bear the brunt of the hikes, as insurers continue to assess these regions as costlier to cover.
Interestingly, North Carolina also relies on a unique “consent-to-rate” system, which allows insurers to negotiate much higher premiums for high-risk properties. While this has kept insurers from pulling out of the state entirely, homeowners covered under these consent-to-rate policies—who made up 40% of the market in 2022—could see even steeper premiums that go beyond the agreed-upon rate hikes.
How Homeowners Can Prepare
Although the rising costs are troubling, there are ways homeowners can act now to keep their expenses in check. Reviewing insurance policies annually, shopping around for competitive rates, and bundling insurance products can help reduce costs.
It’s also a good time to explore home improvements that could qualify for discounts. Adding hurricane-proof shutters, reinforcing roofs, or elevating homes in flood-prone areas may lower risk-based premiums. Additionally, taking inventory of your home’s contents and making sure you’re not over-insured on certain items could help eliminate unnecessary costs.