CHARLESTON -- 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 potential damage.
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 rate increase has been approved by the S.C. Department of Insurance, which also approved rate hikes for State Farm, South Carolina's dominant private home insurer, and other insurance companies.
The wind pool increases will kick in when policies come up for renewal after Sept. 1.
This fall, Beaufort County homeowners in Zone 1 -- areas closest to the water, such as Hilton Head, Daufuskie and Fripp islands -- can expect their wind pool premiums to rise by 8.7 percent, Harrison said. Farther inland, homeowners in Zone 2 can expect increases of 0.67 percent.
The Beaufort County area fared slightly better than Charleston, Colleton, Georgetown and Horry counties, where some wind pool members will see rate increases of about 11.5 percent. That's primarily because the Beaufort County area has not been hit by as many major storms, Harrison said.
State Farm's average rate will stay the same in the Beaufort County area, but other parts of the state will see increases for new policies after June 15 and renewals after Aug. 15.
Any rate increases are sure to be unwelcome as families still suffer from the recession, job losses, stagnant wages, falling real estate prices and higher costs for necessities, such as fuel.
"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."
This round of increases, however, is nothing like the increase of 2007, when insurers reduced coverage in coastal areas and wind pool premiums shot up by 35 percent.
Wind pool rates increased again in 2009, by 1.6 percent.
Even though real estate prices have been falling for about four years, insurers say it costs more to insure coastal property because the cost of construction materials, such as copper pipe and roof shingles, has been increasing. In addition, hurricane modeling suggests that risks are greater than previously 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, State Farm spokesman.
Harrison said the wind pool needs more money because the cost of reinsurance has increased. Reinsurance is insurance the wind pool buys, worth about $1.3 billion, so it will 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.
Staff writer Josh McCann contributed to this report.