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Coastal insurance takes another hit
By Scott Miller
Staff Writer
State Farm Insurance is cutting wind and hail coverage to its coastal South Carolina homeowners beginning in March.
The company will exclude wind and hail coverage from 2% of statewide policies up for renewal this year, company spokesman Bruce White said recently.
Customers will receive notification 95 days before renewal date, he said, declining to release how many customers were affected.
All homes losing coverage are within the boundaries of the S.C. Wind and Hail Underwriting Association, commonly referred to as the wind pool.
The wind pool is a state-mandated, insurer-funded source of wind and hail coverage for homeowners who can’t get it from private companies because of loss history, proximity to water or other risk factors.
Rates rose 35%
“We pretty much take all comers,” said Smitty Harrison, executive director of the wind pool. “We don’t really care what your loss history is or how close you are to the water.”
Coverage through the wind pool typically costs more than coverage through the private market, however. The pool increased rates an average 35% in October.
Through the wind pool, the owner of a $250,000 home would pay an average premium of about $2,133, according to figures from the S.C. Department of Insurance. Information on rates from private companies is unavailable for proprietary reasons.
“The wind pool is designed to be a higher-priced market to match the higher risk,” said Allison Dean Love, executive director of the S.C. Insurance News Service.
The wind pool insures about 33,660 homes, which Harrison estimated to be about 15% of the homes within the association’s boundary.
‘Market of last resort’
In Charleston County, that boundary includes portions of James Island, Johns Island, Wadmalaw Island and Edisto Island, as well as Edingsville Beach, Kiawah Island, Botany Bay Island, Folly Island, Seabrook Island and Morris Island.
In Beaufort County, Lady’s Island, Coosaw Island and Morgan Island are within the wind pool boundary.
State Farm, meanwhile, insures about 25% of the state market, but it’s unknown exactly how many homes the company insures within the wind pool boundary or throughout the state.
The wind pool, meanwhile, is the “market of last resort,” Love said.
“There’s more than 100 homeowner insurance companies in the state of South Carolina,” she said, saying customers losing coverage can get it elsewhere. “There are new companies coming into South Carolina to do business.”
Many of those companies, however, may not provide wind and hail coverage either. State Farm and its competitors have scaled back coverage for homeowners who live along the coast for the last several years, especially in the wake of Hurricane Katrina, which devastated the Gulf Coast in 2005.
Scott Miller is a staff writer with the Business Journal. E-mail him at smiller@setcommedia.com.
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