There's no telling if any of the six to 10 hurricanes forecast this year will hit coastal South Carolina, but this is certain: It's going to cost more to insure homes against the potential danger.
The 'wind pool' — the state's insurer of last resort for coastal wind and hail insurance — will raise rates by an average of 9.8 percent.
'We had actually asked for more, 18.9 percent,' said Smitty Harrison, executive director of the S.C. Wind and Hail Underwriting Association.
The wind pool provides coverage as a fallback for property owners who can't get private coverage, and insures more than $17 billion in property along the coast. Most barrier island residential properties are insured against wind damage through the pool.
The wind pool rate increase has been approved by the S.C.
Department of Insurance, which also approved rate hikes for State Farm, the dominant Charleston-area home insurer, and others. The wind pool increases will kick in when policies come up for renewal after Sept. 1, while State Farm's rate increases of about 3.5 percent in Berkeley, Charleston, and Dorchester counties will take effect with new policies after June 15 and renewals after Aug. 15.
'It's a hard decision to give a rate increase,' Department of Insurance Director David Black said at a recent public hearing in Charleston. 'It's the hardest thing you can do.'
And paying the premiums can also be a hardship.
'I don't know anyone whose (property) taxes are as high as their insurance,' said Richard Ellis of Mount Pleasant.
'I don't know why people don't complain more,' he said. 'People would be outraged if their taxes went up 10 percent.'
Ellis said the cost of his homeowner's insurance policy with a for-profit insurer just increased by 10 percent. His home east of Rifle Range Road is in the wind pool area, but wind pool rates would be even more expensive.
This fall, wind pool premiums will rise by up to 11.4 percent for properties in Zone 1 in Charleston, Colleton and Georgetown counties. Zone 1 is primarily the barrier islands.
Rates will rise by 3.3 percent for properties in Zone 2, which includes Mount Pleasant east of U.S. Highway 17, most of James Island and a large swath of Johns Island and Edisto.
'It's the nature of the beast, living on the coast,' said Mount Pleasant Mayor Billy Swails, who is also a State Farm insurance agent.
'The hurricane models are now more accurate, and companies know what they could lose in a catastrophe.'
With families still suffering from the recession, job losses, stagnant wages, falling real estate prices and higher costs for necessities, such as fuel, rate increases are sure to be unwelcome. But they are nothing like the rate increase seen several years ago, when insurers reduced coverage in coastal areas and wind pool premiums in 2007 shot up by 35 percent.
Since then, wind pool rates increased just once, by 1.6 percent in 2009.
Insurers say it costs more to insure coastal property, although real estate prices have been falling for about four years, because the cost of construction materials, such as copper pipe and roof shingles, has been increasing, while hurricane modeling suggests that risks are greater than had been thought.
'The cost of your property may have gone down because of market values, but if you talk to anyone who had experienced a total loss of their home, you cannot rebuild the home for the assessed value,' said Bruce White, a spokesman for State Farm.
Harrison said the wind pool needs more money because the cost of reinsurance has increased. Reinsurance is insurance that the wind pool buys, worth about $1.3 billion, so that it would have enough money to cover claims in a catastrophe.
'When the major disaster occurs, we'll have the money to pay for that,' Harrison said.
And, of course, that's what people expect when they buy insurance.
Hurricane insurance will cost more
Insurance-related tips for hurricane season:
Review your property insurance policy, especially the 'declarations' page.
Know your deductible, which is the amount of loss that the homeowner must pay. For hurricane damage, a 5 percent deductible means the homeowner is responsible for 5 percent of the property's value, not 5 percent of the claim.
Consider flood insurance if you don't already have it. Flooding (including storm surges from hurricanes) is not covered in standard homeowner's insurance policies. It may be purchased through insurance agents from the National Flood Insurance Program.
Inventory household items now to speed up claims processing after the storm. Make a list, and take photos or video.
Store important documents, including your inventory and insurance policies, where they will stay safe and dry.
Develop an emergency plan. Determine escape routes from your home and establish a meeting place. Stock non-perishable emergency supplies and a disaster supply kit with enough food and water for three to seven days.
If you are given an order to evacuate, do so. Contact a friend or family member and let them know where you can be reached. Remember to shut off your water and electricity and to lock up your home.
Storm shutters and other retrofitting can help protect a home from strong winds. A well-maintained home will help ensure that roofing, windows and doors are secure.
In a storm event, protect your property by covering all windows with plywood or shutters, moving vehicles into the garage when possible and placing grills and patio furniture indoors. Make sure to secure watercraft.
Source: The Property Casualty Insurers Association of America
Reach David Slade at 937-5552.