Hello and welcome. This is Nolan with DiscoverNCHomes and Nolan’s News and as always, thank you for having us. I’ve been asked quite a few times over the last, I’d say six months, about insurance rates and why they have increased so much. And it really got me thinking, cause I could not answer that question.
So I did a little bit of research, actually talked with a few local insurance brokers and there’s a few reasons why they have gone up so much. So, if you haven’t noticed, if you’re living here, this past year, premium could have gone up as much as 40%. And also a number of carriers have dropped folks in North Carolina too, which is interesting.
But 40% is a huge increase. So I did some research and there are three main reasons why insurance rates have have gone up.
So, number one, it’s a combination of storms that have happened in North Carolina and outside North Carolina over the past probably five – eight years. I think they have finally caught up to us. Talking with some agents, there have literally been billions and billions of dollars in claims. So obviously somebody needs to pay for that, which is gonna be the end user. And unfortunately, I guess fortunately-unfortunately it’s kind of sad because the storms in other parts of the country directly affect North Carolina. So it’s not just our storms, because we’ve been relatively safe and quiet, but other parts of the country have affected us.
Number two, it’s a no-brainer: inflation, obviously across the board over the last, I’d say at least year, maybe more. All goods and services just had an exponential, seems like increase. So that has played a big part of it.
But number three, one that kind of got me thinking and also just to be wary of and look at your insurance policy, is the cost of new construction. Before inflation, because of a shortage of materials, new construction has skyrocketed. It’s almost doubled what it costs with certain builders, semi-custom and custom to build a new house.
So that has been a reflection in your insurance rate because your home that might have had a replacement cost of $300,000, may have gone up to $400,000 – $450,000 to rebuild your home if it were wiped out to zero. So really pay attention to that in your premium. Make sure your replacement cost is where it should be, and if you need help with that, I would be more than happy to assist. But that is a factor that I didn’t really think about, and you really do need to look at your replacement costs.
So just to recap, we’ve got obviously inflation number one, storms happening all over the country in the past 10 years have caught up with us, and then the cost of new construction has also driven our insurance rates up.
If you have any questions, please let us know. Contact me anytime and we’ll talk to you soon.
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About Nolan Formalarie
Nolan Formalarie has been in the North Carolina Real Estate Industry for over 8 years and enjoys every minute of it. He is involved in every aspect of the industry including selling and purchasing residential property, home watch services, property management, association management and construction.
