Hurricane Section 2011

'Storm-free' doesn't necessarily mean lower homeowners insurance rates

Many factors, including reinsruance, influence policy prices

May 26, 2011 

  • Beaufort County has avoided a major hurricane for a long time, but homeowners still need to check their insurance policies each year. Here are some things to know:

    • Homeowner policies usually have a waiting period between the time you apply for a policy and the date it goes into effect. National flood insurance has a waiting period of up to 30 days, and the state wind pool has a 15-day waiting period. Also, insurers stop writing new policies when a hurricane approaches.

    • Do a home inventory. Make a list and take photos or video. It can be as simple as a list of things you own or as detailed as hiring a company to record everything. But that list and copies of insurance policies should be with you and sent to a friend or relative inland in case of a storm.

    • Store important documents, including your inventory and insurance policies, where they will stay safe and dry. There are password-protected databases in which people can store some information online.

    • Consider flood insurance if you don’t already have it. Flooding (including storm surges from hurricanes) is not covered in standard homeowners insurance policies. It may be purchased through insurance agents from the National Flood Insurance Program.

    • Know that flood insurance and wind and hail insurance cover different things. Either force can destroy a home, so carry enough of each kind of policy.

    • Understand your deductible, or what you have to pay before insurance kicks in. Some policies have a flat amount, others use a percentage of a home’s value or might use a combination depending on what causes the damage.

    • Discuss your questions with your insurance agent. Get answers before you need to file a claim.

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You might think you're due for a break on your homeowners insurance. After all, it's been more than 20 years since the Lowcountry's last memorable hurricane, Hugo, struck in 1989.

That's a common notion, but it's not necessarily true, according to Russ Dubisky, executive director of the S.C. Insurance News Service, a nonprofit organization funded by insurers.

He said homeowners often don't fully understand the range of issues that influence insurance rates.

"We just want to remind folks: There's a lot of factors here," Dubisky said.

For one thing, the risk of a storm hitting coastal South Carolina remains relatively high, he said.

In addition:

  • Calamities elsewhere in the country or world can raise the cost of reinsurance, a kind of "insurance for insurance companies" that literally spreads risk around the globe, he said. That means your rates can be influenced by the recent earthquake and tsunami in Japan as well as the thunderstorms and tornadoes that caused $6 billion of damage in April alone across the Southeast.

  • Even though home values have plummeted, the cost of building materials is rising with the price of oil. That means insurers now must plan to pay more than they previously expected for the copper, lumber, shingles and other materials it would take to rebuild your home if disaster strikes.

  • The population along the coast continues to increase, meaning insurers are potentially susceptible to more claims than they were in the past.

  • Insurers occasionally adjust the models they use to predict the impact of catastrophes, altering which areas they perceive as more or less risky.

    Dubisky encouraged frustrated consumers to remember their rates are intended to ensure their community can quickly recover if necessary.

    The good news: There is ample competition among insurers in South Carolina, so good deals on rates can be had -- even in areas along the coast, Dubisky said.

    "If you wanted to shop around, you can find a competitive product at a competitive price," he said.

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