Questions about Outer Banks insurance are often the first thing buyers ask me when they start their home search here. Yes, homes can be insured for just about all types of events. It can be expensive and it can be fairly reasonable depending upon the property. This blog will provide you with some of the basics of insuring a home here. It’s likely we’ll go into more detail about each of these types of policies in the near future.
Different Environment Different Insurance
This coastal area has different risks compared to many mainland areas. Everyone has seen the pictures of some past hurricane where flooding or wind caused damage. As a result, insurances are handled differently than inland areas. Here most owners carry three types of policies. They carry a homeowner’s policy, a wind and hail policy and a flood policy. I’ll outline the different policies below.
This policy will be very similar in cost to a mainland insurance policy. Typically, that policy will insure you against a fire, theft, liability and other acts but excludes wind, hail and flood hail damage…more on those below. If you are renting your home then you may need a policy that is slightly different and slightly more expensive than a primary residential policy. Weekly rentals are often written under a standard homeowners’ form (HO3). Otherwise there is no difference.
Wind and Hail Insurance
Because hurricanes frequently make landfall on the coast of North Carolina, the state has separated out wind and hail insurance. The state controls those rates and makes them a little higher than what they should be. Those excess funds are set aside so that if a big hurricane hits the coast that they’ll have enough money to cover the losses. Recently we’ve found that those policies run about $1.30 per square foot of heated living area. In other words, a new 2000 square foot home might pay between $2,500 and $3,000 a year for wind and hail insurance.
The Federal government subsidizes the cost of flood insurance in many areas of the Outer Banks.
Meeting the preferred rate guidelines results in lower premiums. The vast majority of homes that meet the preferred rate guidelines can receive coverage for less than $1,000 a year. Older homes that don’t meet those guidelines can be more expensive. Pre-firm non primary homes are not actuarial rated and will experience an increase each year until the premium reaches the actuarial rate.
The Outer Banks insurance market is constantly changing. Insurance companies raise or lower their rates based on how much business they want here. Also, most of your coverage is based on replacement cost so it is important to make sure you are insured for what it would realistically cost to rebuild your house. It is a good idea to check policy every few years to make sure you are properly covered and competitively priced. You can also check out more information on Outer Banks Insurance in the Frequently Asked Questions section of our web site.