Some Coastal State Homeowners Unhappy with New Hurricane Insurance Law

Posted in Home Insurance , Hurricane Insurance

September 15th, 2009

Inland homeowners along the coastal states, namely North Carolina, are unhappy witha hurricane insurance law that seems to favor wealthier coastal-area homeowners. Under the new law that took effect in the state last month, inland homeowners will be held responsible for coverage ofcoastal homes if the state’swind coverage plan, known as the Beach Plan,empties out with a big storm.

Many of the houses located on the coasts of North Carolina are valued at $750,000 and up, which wouldn’t be a problem if they didn’t need to be insured. However, there is a current cap on the amount of coveragethe Beach Plan is required to shell out, which means that if a storm hits, the money has to come from somewhere.

You may be wondering, why not eliminate or stop building these expensive properties? Apparently, big beach houses and rental properties are vital to North Carolina’s tourism trade. These big houses generate revenue for owners, property managers, landscapers, handymen, cleaners, etc. With so much money to be made, losing the properties would apparently be a huge liability.

So now back to who’s going to cover these homes. Because there is a cap on the Beach Plan, insurersmay have to ponyup $1 billion industry wide to cover the$750,000 that these coastal homeowners will require. But what’s worse isthat while coastalhomeowners will see an increase in premiums, so willinland homeowners who will face as much as 10% in surcharges on their own property-coverage bills to subsidize the costs.

It doesn’t look like an easy road ahead for insurers and inland homeowners in coastal states. At this point, it seems their only reprieve will be for the area to avoid storms altogether.