Understanding SC Wind Insurance

Wind Damage

I must admit living in Charleston, SC is very nice, but lets face it living in a coastal city can be very expensive as compared to living inland. There are inherent risks to living in a coastal town and the biggest one is the risk of a hurricane and who wants to lose their home? No one. When hurricane Katrina hit LA, State Farm lost $$ billons of collected premium over 58 years in just 8 short hours. Truth is insurance companies do not ever want to pay out from a catastrophe, but they have to and they know it. SO in order to compensate for an inevitable occurrence of a hurricane the only thing they can do is increase premiums, or have higher premiums to stuff their pockets in the event of a loss. A dollar and eleven cents ($1.11) is paid out in wind claims for every dollar ($1.00) collected in premium.

Most companies that write in the eastern coast of the US have an allotted amount of policies they are allowed to write as determined by their powers that be. If they have exceeded that amount and/or feel they have more policies then is safe for their solvency; the only way they can reduce their exposure is to increase your premiums and hope you go elsewhere, or cancel you.

Luckily South Carolina has been one of the smarter states by carefully devising a plan to ensure the coastal residents have sufficient hurricane coverage. The SC Dept of Insurance has worked tirelessly to devise a system for keeping adequate carriers interested in offering insurance in the state.

There are two types of coastal insurance carriers. Those who include wind coverage and those who don’t, and the truth is that there are very few insurance companies that care to write insurance on the coast and include wind coverage. Wind coverage alone will make up 80%+ of your premium expense.

If your home is in what’s called the “wind zone” then you will be required to specifically have wind coverage. Just because your home isn’t in the “zone” doesn’t mean you are not out of harms way when a hurricane comes. This just means that you won’t have to have a carrier that offers wind coverage specifically and your traditional hazard policy will coverage the damages, however usually with a higher deductible.

If your home or business is in the wind zone then either you have to find a carrier that offers wind coverage OR you will have to get separate coverage from the SC Wind & Hail Underwriting Association. A non-state agency but a separate organization designed by the state comprised of insurance companies that write in SC that contribute a portion of their earnings to a “pool” of money used to cover the residents that reside in the coastal areas. The SC Wind Association is even further insured by many domestic, and international re-insurance companies in the event it goes insolvent and is unable to cover all filed claims.

When buying a home you need to ask your real estate agent to see if the homes they are showing you are in one of the two wind zones, because it could dramatically increase your monthly expenses. Also, you should ask if the home is in a flood zone, because that too is an additional coverage separate from traditional hazard or home owner’s coverage.

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