Wake County judge has cleared the way for homeowners insurance rates to drop in nearly three dozen western North Carolina counties and soar along the coast starting Friday.

Superior Court Judge Ronald Stephens on Wednesday signed an order dismissing an effort to stop the deal negotiated between insurance companies and state regulators from taking effect. The judge's decision on a petition by Dare County and other coastal communities allows the mix of rate increases and savings to go ahead, Insurance Department spokeswoman Kristin Milam said Wednesday.

"This is an issue that effects everybody in North Carolina, not just the folks who see an increase or see no change" in insurance premiums, Milam said.

The decision means homeowners policies that are written or renewed beginning Friday for properties in five coastal counties, stretching from Sunset Beach to Morehead City, will jump 29.8 percent. The Outer Banks counties of Currituck, Dare, Hyde and Pamilco would see policy premiums jump 22 percent, a big jump but a bargain compared to the doubling of rates that insurance companies originally sought.

But the deal struck between former Insurance Commissioner Jim Long and the North Carolina Rate Bureau, which represents insurers, also allowed homeowners rates in 32 western counties to cut their premiums. Premiums in Gaston and Union counties would fall 6 percent, and in most other western counties by 1.2 percent.

Robert Outten, Dare County's attorney and assistant manager, said the collection of about 20 coastal communities that opposed the rate increases would carry their fight to the state Court of Appeals. The municipalities argued that the Insurance Department approved the rate increase before coastal residents knew insurers had requested them, and that the agency should have held public hearings.

"We don't think they followed the proper procedures," Outten said.

The rate changes taking effect Friday include policies written by both private insurance companies and the Beach Plan, the state's property insurance provider for coastal properties.

Part of the reason for the much higher insurance rates along the coast, as well as big jumps in deductibles and surcharges that took effect in February, is that insurers fear big losses if the state is struck by a major hurricane. The Beach Plan now covers about 170,000 coastal properties worth about $72 billion, but commands the resources to cover just a fraction of that amount.

The Beach Plan would charge insurers hundreds of millions of dollars in assessments to pay claims. The companies would likely pass along some of those to homeowners outside of the coastal area. But the companies worry that the assessments aren't limited, meaning the health of the companies could be threatened.

A proposed fix to the Beach Plan's problems could be introduced in the Legislature as early as Thursday.

Last month, a different Wake County judge ordered the state's new insurance commissioner, Wayne Goodwin, to reconsider deductible and surcharge increases for homeowners covered by the Beach Plan because Long's approval did not follow procedures.

Copyright 2009 by The Associated Press. All rights reserved.