Coastal Flood Insurance on the Rise

Coastal Flood Insurance on the Rise

  • Debbie Hooker
  • 06/21/24

Protect Your Home and Assets with Flood Insurance

Floods can occur anywhere, and just one inch of floodwater can cause up to $25,000 in damage. It's important to note that most homeowners insurance policies do not cover flood damage. Flood insurance is a separate policy that can cover buildings, their contents, or both. Protect your most important financial assets — your home, your business, and your possessions — with flood insurance.


Proposed Insurance Rate Increases in Coastal North Carolina

Property owners in coastal areas of the Cape Fear region could soon face significant insurance rate increases. The bureau has proposed a 99.4% increase for beachfront properties in New Hanover, Brunswick, and Pender counties in the Wilmington area, as well as Carteret County, including Emerald Isle. Additionally, beach areas along the Outer Banks could see a 45% increase.


Rate Hikes Near the Intracoastal Waterway and Inland Areas

Areas near the Intracoastal Waterway in the Wilmington area could experience proposed increases of 71.4% closer to U.S. 17 and 43% farther inland, based on ZIP code. Increases in other parts of the state are also substantial but less severe than for coastal homeowners in Southeastern North Carolina. Coastal areas between Morehead City and the Virginia state line could see policy rates rise by about 25%. Farther inland, Duplin and Lenoir counties might face a 71% increase, Triangle homeowners nearly 40%, and the Charlotte and Asheville areas 41% and 20%, respectively.


Historical Context of Rate Increases

This proposed increase follows a request from the insurance industry just over three years ago for an average increase of 24.5%. That request led to a settlement with the state, resulting in an average rate increase of 7.9%.


Factors Driving the Proposed Increases

Several factors contribute to the increasing cost and risk of insuring coastal properties:

  1. Climate Change: The increased risk and uncertainty brought on by climate change play a significant role. Warmer weather is enabling more powerful hurricanes to threaten coastal areas along the U.S. Gulf and East Coasts. The changing climate, which allows tropical systems to hold more moisture and travel farther inland, is also expanding the traditional hurricane season into early spring and early winter.

  2. Rising Property Values: The rising value of coastal property is another factor. In New Hanover County, nearly a dozen homes have sold for more than $6 million, with most sales occurring in the past few years. Even more "affordable" properties have seen their values surge before and during the pandemic years. According to Zillow data analyzed by Stacker, Wrightsville Beach was the North Carolina community with the fastest-growing home prices, averaging nearly $1.35 million in March 2023, with prices up 8.6% over one year and 82% over five years. Many other Tar Heel communities seeing significant property value increases are clustered on or near the state's barrier islands.


In a nutshell, we consulted one of our trusted mortgage lenders, Terry Hoyle with Primis Mortgage, who collaborates with numerous insurance agents. His explanation of the rising rates is highly informative!

"Absolutely, it's no secret that insurance has increased over the last 5 years give or take. While there are many factors for rate increases specifically to coastal areas, a lot has to do with more severe storms and rising sea levels along the coast of the United States. That factored in with the loss of insurance carriers to help combat high insurance premiums, have left coastal regions in a very hard insurance market.”

Terry Hoyle warns buyers against neglecting to purchase flood insurance and explains how to navigate this process.

“The best thing a buyer can do is have an insurance professional run a flood insurance rate for them prior to making any decisions on a property. There are just too many factors that go into rating flood insurance and it's a house by house basis.  I would encourage all your clients to purchase flood insurance. If you look back at Hurricane Florence in 2018 we saw widespread flooding in a lot of areas that had never flooded before. Most of those neighborhoods were not in a flood zone that would deem high risk and for that reason a lot of homeowners didn’t have flood insurance. I truly feel the best thing that anyone, mortgage industry or real estate, can do is have their clients speak with an insurance professional so they know exactly what their costs for insurance are going to be. This way there are no surprises at closing!!"

In light of these factors, it's more important than ever for property owners, especially in coastal areas, to consider the benefits of flood insurance to safeguard their investments.  Andy Bovender and his team can help you find your perfect coastal home. With an expert understanding of the local real estate market and a passion for the coastal lifestyle, the Andy Bovender Team at Compass is ready to guide you through every step of the flood insurance process. Contact the team today to begin your journey to living your dream coastal life.


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