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Hurricane season: Forums help sort out insurance options

By Jackie R. Broach
Coastal Observer

Grants from the S.C. Department of Insurance are available for coastal homeowners looking to make their homes safer and lower their insurance costs in the process.

Since 2007, more than 2,000 of the grants have been awarded in coastal communities through the department’s S.C. Safe Home program. Homeowners in Georgetown and Horry counties have received more than 785 grants totaling more than $3.6 million to strengthen their properties, said Ann Roberson, a spokesperson for the department.

It’s one way the department is working to mitigate the rising cost of wind and hail insurance for coastal properties.

“It is a known fact that stronger homes are less vulnerable to the damaging winds associated with hurricanes and other severe storms,” Roberson said. “Less damages result in fewer claims and losses.”

Fewer losses in turn result in lower rates.

South Carolina has been held up as a model for how hurricane-vulnerable states should deal with making sure wind and hail insurance is available on the coast, “but I don’t know if people can afford to pay these premiums,” said S.C. Sen. Ray Cleary.

A rate hike of nearly 10 percent was approved in May for homeowners insured under the wind pool, which guarantees the availability of insurance coverage to the state’s coastal homeowners through the S.C. Wind and Hail Underwriting Association. The wind pool insures more than $17 billion in property along the coast.

“People need to know what’s going on and what to expect, and what they possibly can do to help the situation,” Cleary said.

To help them get that information, he has arranged two area insurance forums for Sept. 15. The events will feature David Black, director of the Department of Insurance, and Smitty Harrison, director of the wind pool. Details are still being finalized, but a forum from 9-11 a.m. is planned at the Waccamaw Higher Education Center in Litchfield, with another following from 2-4 p.m. at the old Air Force base in Myrtle Beach.

Cleary organized a similar forum in Murrells Inlet in 2006, attracting about 500 people angry about skyrocketing insurance costs after Hurricane Katrina in 2005. The wind pool was expanded the following year to deal with increasing reluctance from insurers to cover coastal properties.

“I think there’s a lot of confusion out there” about the wind pool, Cleary said. “People will call and say, ‘I thought when they changed the line they were trying to lower rates,” he said.

But the expansion was only to ensure coverage was available, not to get homeowners a better price. However, the Coastal Property Insurance Reform Act of 2007, which created the Safe Homes program, helped address issues of cost.

Incentives created in the act will be discussed during the forums.

Areas of confusion and misinformation about the wind pool will also be addressed.

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Cleary hears regularly from residents who tell him they were insured by a private agency, but when they were moved into the wind pool the agency couldn’t insure them anymore, he said. Actually those residents were always in the wind pool. Many companies have just opted to stop offering insurance on some areas of the coast.

“Even if you’re in the wind pool, the companies have the authority to write insurance for you,” Cleary said. But companies don’t always tell customers that.

That’s the biggest misconception about the wind pool, according to Cleary. The second biggest is “people don’t understand that if you are in the wind pool, often times they will require you to get flood insurance.”

That’s another lesson insurance companies learned from Hurricane Katrina.

There are still lawsuits pending over homes destroyed in Katrina. Wind and hail insurers don’t want to pay for damages, because they say it was caused by flood. Flood insurers don’t want to pay because they say the damage was caused by wind and hail.

“A lot of people miles inland didn’t have flood insurance,” Cleary said. “They can only claim wind and hail, and the companies say, ‘We aren’t paying.’ ”

Hurricane-vulnerable states use different methods for ensuring that coastal residents have access to wind and hail insurance. Florida handles the problem with an enormous state-run insurance company called Citizens Property Insurance, but many speculate that system could financially devastate the state if it gets hit too hard by a hurricane.

North Carolina subsidizes its pool to decrease the cost of wind insurance for coastal property owners, Cleary said. That state also has a law that prevents insurers from “cherry picking” the areas of the state they want to offer coverage in. If a company offers coverage in one part of the state, it must offer coverage statewide.

Cleary doesn’t see a similar system as likely for South Carolina. “The senators in the upstate and the western parts of the county may feel our pain, but they don’t want to see costs go up for their constituents,” he said.

To learn more about Safe Home grants or to get an application, visit scsafehome.sc.gov.

Homeowners who complete retrofits to their property are encouraged to contact their insurance agent to see what mitigation discounts they might be able to get for making the improvements.

“We have learned that homeowners that have completed retrofits according to the guidelines set forth [in the Safe Home program] have seen as much as a 24 percent savings on their property insurance,” Roberson said.

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