Currently, property owners from the entire state of NC pay higher insurance premiums in order to subsidize insurance premiums for coastal policies. Moreover, the wind insurance payout fund that these premiums pay into is far too small to cover property damage from a single category 3 hurricane or a series of weaker storms. As a result, NC requires all insurance companies operating in the State to cover wind damage costs above what the premiums can handle. Astonishingly, even insurance companies that do not offer wind insurance are burdened by this policy. As a result, they must hike up their premiums to provide for such an event.

This policy recently caused Farmer’s Insurance to leave the NC–a move that leaves fewer insurance companies to divide the costs above what premiums can handle. Other insurance companies are threatening to leave the state, yet still the NC Insurance Commission refuses to set coastal rates at appropriate levels.

A more sensible policy is to set wind insurance rates at levels adequate to fill a fund with enough money to handle a Cat 3 hurricane. Those who responsibly chose not to live on the coast (or build second homes there) should not pay to subsidize coastal homes. Higher premiums will lead to fewer living on the coast and less demand for hardened structures to protect irresponsible building.