Alternatives to the FAIR Plan in North Carolina

North Carolina, with a population of over 10 million people, sits on the Atlantic coast and is exposed to a wide range of natural risks. The state experiences a humid subtropical climate in the east and a more temperate climate in the mountains to the west, creating a variety of potential challenges for homeowners. Hurricanes, tropical storms, severe thunderstorms, and flooding are the most significant weather-related threats in the state. On average, North Carolina sees more than 30 tornadoes each year and has been directly impacted by some of the costliest hurricanes in U.S. history such as Hurricane Helene.

Because of this exposure, homeowners insurance claims in North Carolina can be substantial after major weather events. For example, Hurricane Florence in 2018 brought catastrophic flooding and widespread damage, leading to billions of dollars in insured losses. Hurricanes Matthew, Isabel, and Fran are other reminders of how vulnerable North Carolina can be to storm-related destruction. Coastal and low-lying areas are especially high risk, but inland flooding and wind damage are also common.

In addition to hurricanes and flooding, North Carolina’s varied geography presents risks from wildfires in drier mountain regions and occasional winter storms that can bring ice, snow, and freezing temperatures. While less frequent, these events can lead to frozen pipes, roof collapses, and other costly insurance claims which lead to thousands of non-renewals every year in North Carolina.

Due to this broad spectrum of risks, some homeowners in the state have difficulty finding coverage in the standard insurance market. To ensure that homeowners in high-risk areas still have access to basic protection, North Carolina established the North Carolina Joint Underwriting Association (NCJUA), often referred to as the state’s FAIR Plan. This program provides last-resort coverage for properties that cannot obtain insurance elsewhere. However, FAIR Plan policies typically come with higher premiums, limited coverage options, and exclusions compared to standard homeowners insurance.

For most homeowners, it is preferable to secure coverage in the private market whenever possible. The good news is that North Carolina still maintains a competitive insurance marketplace outside of the FAIR Plan, and many insurers are willing to write policies in the state. Working with a specialist or agent familiar with high-risk homeowners insurance can make a significant difference in finding better protection than the FAIR Plan alone can provide.