NC Landlords: Brace for a Massive 68% Dwelling Insurance Increase

The Breaking News: What Exactly Was Filed?

Here are the specifics of what the NC Rate Bureau has requested:

The two-year phase-in is designed to soften the blow, but let's be real: a 68.3% cumulative increase is massive no matter how you slice it. Let me put this in perspective with a real-world example:

Critical Distinction: Dwelling Insurance vs. Homeowners Insurance

Before we go any further, let's clear up what this rate filing actually affects. The proposed 68.3% increase applies to "dwelling" policies—not standard homeowners insurance.

Here's the difference:

Dwelling Insurance (DP-3 Policies)

Dwelling insurance is designed for non-owner-occupied residential properties, including:

• Rental properties where you're the landlord and someone else lives there
• Investment properties that you're fixing up or holding for appreciation
• Vacation homes that you don't use as your primary residence
• Properties in transition (between tenants, under renovation, etc.)

Dwelling policies typically cover the structure itself, but they're more limited than homeowners policies. They usually don't include liability coverage for tenants or personal property coverage (those are add-ons).

Homeowners Insurance (HO-3 Policies)

Homeowners insurance is for your primary residence—the house where you live. This filing does not directly affect standard homeowners policies (though as we'll discuss later, there may be indirect market effects).

Homeowners policies are more comprehensive and include liability coverage, personal property protection, additional living expenses if you're displaced, and more.

Why Such a Massive Increase? The Forces Behind the Filing

A 68% rate increase doesn't happen in a vacuum. The NC Rate Bureau has cited several factors driving their request, and while it's easy to be angry about rising costs, it's important to understand the underlying reality:

1. Construction Cost Inflation

The cost to repair or rebuild a property has skyrocketed in recent years. According to the Rate Bureau's filing:

• Lumber prices have been volatile but remain elevated compared to pre-2020 levels
• Labor shortages in the construction industry have driven up wages
• Supply chain disruptions continue to affect availability of building materials
• Specialized materials (roofing, HVAC, electrical) have seen 30-50% price increases since 2020

When insurance companies pay claims, they're paying 2025 prices to rebuild properties that were insured at 2020 valuations. That math doesn't work indefinitely.

2. Increased Severity of Weather Events

North Carolina has experienced several major weather events in recent years:

• Hurricane Florence (2018): $17 billion in damages across NC
• Hurricane Dorian (2019): Significant coastal damage
• Hurricane Ian (2022): While it primarily hit Florida and South Carolina, NC coastal areas were affected
• Increasing hail events: Particularly in the Piedmont and western NC
• Ice storms and winter weather: More frequent extreme cold snaps

Rental properties are particularly vulnerable because they're often older buildings, and tenants may not maintain them as well as owner-occupants would.

3. Coastal Risk Concentration

North Carolina's coast is a beautiful asset, but it's also an insurance risk. The Rate Bureau notes that coastal properties face:

• Higher wind and storm surge exposure
• Saltwater corrosion and deterioration
• Increased frequency of named storms
• Rising sea levels affecting flood risk

Many vacation rental properties are in these high-risk coastal zones, driving up the average cost of dwelling insurance claims.

4. Litigation and Claims Costs

While North Carolina isn't as litigious as states like Florida or Louisiana, claims costs have risen due to:

• More sophisticated attorney representation in property damage cases
• Assignment of benefits (AOB) fraud
• Increased frequency of "non-weather" perils (fire, vandalism, theft in vacant properties)

The Approval Process: What Happens Next?

The Rate Bureau's filing is just step one in a multi-month process. Here's what happens from here:

Step 1: Public Comment Period

The North Carolina Department of Insurance (NCDOI) will open a public comment period. Property owners, landlord associations, consumer advocates, and other stakeholders can submit written comments about the proposed increase.

How to participate: Visit the NC Department of Insurance website and look for information about public hearings and comment submission.

Step 2: Department of Insurance Review

The NCDOI will analyze the Rate Bureau's actuarial data, claims history, and justifications for the increase. Commissioner Mike Causey and his team have the authority to:

• Approve the increase as filed
• Approve a reduced increase
• Reject the increase entirely
• Call for additional hearings or data

Step 3: Negotiations and Hearings

Based on historical precedent, the NCDOI will likely negotiate with the Rate Bureau. In fact, there's strong reason to believe this 68.3% request won't be approved in full.

Historical context: In July 2023, the NC Rate Bureau filed for a ~50.6% dwelling insurance increase. After negotiations and review, only about 8% was ultimately approved.

That doesn't mean we can relax. Even if the final approved increase is only 20-30% instead of 68%, that's still a substantial hit to rental property economics.

Step 4: Final Decision and Implementation

The NCDOI typically issues a final decision several months after the filing. If approved (even partially), the rate changes would go into effect on the proposed dates:

• July 1, 2026: First phase increase
• July 1, 2027: Second phase increase

This means policies renewing after these dates would be subject to the new rates.

What This Means for Rental Property Owners in NC

Let's talk about the real-world implications of this rate filing. If you own rental property in North Carolina, here's how this could affect you:

Impact #1: Compressed Cash Flow

Rental property investing is all about cash flow. The typical rental property owner looks at this formula:

Monthly Rent - (Mortgage + Insurance + Taxes + Maintenance + Vacancy Reserve) = Net Cash Flow

When your insurance jumps by $68 per month (using our earlier example), that's a direct hit to your bottom line. For many landlords operating on thin margins, this could turn a break-even property into a money loser.

Impact #2: Rent Increase Pressure

To maintain profitability, many landlords will need to pass these costs on to tenants through rent increases. However:

• Existing leases may prevent immediate increases
• The rental market in your area may not support higher rents
• Tenant turnover costs money too

You're caught between a rock and a hard place.

Impact #3: Property Divestment Decisions

For landlords with multiple properties, this rate increase might trigger difficult decisions:

• Should I sell properties that are now marginally profitable?
• Should I convert rental properties back to owner-occupied homes?
• Should I exit the rental market entirely?

These aren't easy questions, and they have ripple effects throughout local housing markets.

Impact #4: Barriers to New Investors

If you're considering buying rental property in North Carolina, higher insurance costs fundamentally change the investment math. Properties that looked attractive at $1,200/year in insurance look much less appealing at $2,000/year.

What You Should Do Right Now

Don't wait until July 2026 to address this. Here are the concrete steps you should take immediately:

Action Step 1: Review Your Current Policy

Pull out your dwelling insurance policy right now and check:

• Your current annual premium
• Your renewal date (if it's after July 1, 2026, you'll be affected by Year 1)
• Your coverage amount and deductible
• Your insurance company (is it a Rate Bureau member?)

Action Step 2: Get Competitive Quotes NOW

Don't wait for your renewal. Start shopping for alternative coverage immediately. Here's why:

• Not all carriers participate in the Rate Bureau, and those carriers may have different pricing
• You can lock in current rates before the increases take effect
• You might discover you're overpaying even before these increases

What I recommend: Call an independent agent (like me) who can quote you with multiple carriers at once. This saves you time and ensures you're seeing a true competitive comparison.

Action Step 3: Consider Policy Adjustments

There are ways to reduce your premium that might make sense in light of these increases:

• Increase your deductible: Moving from a $1,000 deductible to $2,500 or $5,000 can reduce your premium by 15-25%
• Remove unnecessary coverage: If you're paying for coverage you don't need (like contents coverage for a fully furnished rental), drop it
• Improve your property's insurability: Roof replacements, electrical upgrades, and security systems can sometimes lower rates
• Bundle policies: If you have multiple rental properties, bundling them with one carrier may qualify for multi-policy discounts

Action Step 4: Analyze Your Rental Portfolio

Take a hard look at the economics of each rental property you own:

• Calculate your cash flow with the proposed insurance increases
• Identify properties that will become unprofitable
• Consider strategic sales of underperforming properties while the market is still strong

Action Step 5: Engage in the Political Process

Your voice matters. The NCDOI needs to hear from property owners about how this increase would affect you:

• Submit written comments during the public comment period
• Attend public hearings if they're scheduled
• Contact your state legislators
• Work with landlord associations or real estate investment groups to organize collective advocacy

Action Step 6: Communicate With Your Tenants (If Appropriate)

If you anticipate needing to raise rents, start having those conversations early:

• Explain the insurance cost increases you're facing
• Give tenants maximum notice (even if your lease doesn't require it)
• Consider phasing in rent increases rather than one large jump

Common Questions About the NC Dwelling Insurance Increase

The Bottom Line: Don't Wait, Act Now

A 68.3% dwelling insurance rate increase proposal is unprecedented in North Carolina's recent history. While the final approved increase will likely be lower, even a 25-30% increase would dramatically affect rental property economics across our state.

The landlords and property investors who will weather this storm best are the ones who take action now:

• Shop for competitive quotes with independent agents who have access to multiple carriers
• Explore non-Rate Bureau insurance companies that may not implement these increases
• Optimize your policies (higher deductibles, appropriate coverage limits, multi-policy discounts)
• Analyze your rental portfolio to identify properties that may become unprofitable
• Engage in the public comment process to make your voice heard

As a North Carolina property owner myself and an insurance agent who's been serving our community for over 20 years, I'm here to help you navigate this challenge. You don't have to accept whatever rate increase comes your way. There are alternatives, and I can help you find them.

Let's talk about your options before your renewal date arrives and you're locked into higher rates.