Friday, April 30, 2010

New proposal trims homeowners premiums in return for storm-resistant building

Coastal residents may get an insurance break next year by making their houses safer from hurricanes.

In a filing by insurance companies with the N.C. Department of Insurance, the insurers propose to give credits on annual wind and hail premiums based on rankings of a house's construction.

Condominiums and apartments are excluded from the credits, said Kristin Milam, director of public information for the Insurance Department.

If the proposals by the N.C. Rate Bureau are approved, the credits on premiums will be available to insured homeowners "who build, rebuild or retrofit certain residential dwellings, in accordance with specified standards, to better resist hurricanes and other catastrophic windstorm events," according to the filing by the N.C. Rate Bureau, an industry organization that bargains collectively with the state for insurance companies.

The filing was required under the 2009 Beach Plan reform bill passed by the General Assembly Aug. 6 and signed by Gov. Beverly Perdue on Aug. 26.

The deadline for the filing was Saturday.

The proposal works like this: There are three levels of credits for existing homes – bronze, silver and gold – based on standards of the Institute for Business and Home Safety. an organization that studies the effects of natural disasters and whose members are insurers and reinsurers.

The institute also has standards called "Fortified New" for new-construction homes.

The credits grow proportionately with the amount of insurance you have, Milam said Thursday. The credits would be effective when a homeowner's wind and hail policy is renewed, she added.

They also vary depending on where you live,

The filing explains it this way:

If you have $75,000 in wind and hail coverage on your home, and the home is rated "bronze," your credit would range from 5 percent to 7 percent of your annual premium if you live on the mainland of New Hanover, Brunswick or Pender counties.

That would amount to $41 to $57 off your premium each year for as long as your home maintains that ranking, according to the filing.

If you are building a home that will be ranked "fortified new," your credit could amount to 20 percent, or $162 off.

If the Insurance Department approves the filing, it will go into effect next year.

The whole home is rated under the bronze-silver-gold standards, said Fred Malik, fortified programs manager for the Institute for Business and Home Safety.

These retrofitting rankings apply to homes that are occupied, he said.

"At the bronze level, we are dealing with roof covering, roof attachment, attic ventilation systems – working to keep water out," Malik explained.

There are two sub-rankings under each main ranking. "We give owners two methods of qualifying," he said. The sub-ranking of "1" is a home where the roof covering does not have to be replaced, and 2 is a home where the roof covering does have to be replaced, he said.

"At silver, you have all the standards for bronze, but you're adding window and door opening protections, adding bracing for gables over 4 feet high, and improving the attachment of accessory structures such as carports," he continued.

The gold standard includes the requirements for bronze and silver, and "we're looking at making sure that the home has a well-executed load path," which Malik explained as "tying the roof down through the structural members of the home all the way to the foundation."

In late 2008, former Insurance Commissioner Jim Long approved increases in both homeowner insurance premiums and wind and hail coverage under the Beach Plan, which is supposed to be the insurer of last resort for coastal residents.

Both went into effect in 2009, after Long left office.

Homeowner insurance was allowed to rise up by nearly 30 percent on the mainland of New Hanover, Brunswick and Pender counties, and about 17 percent on the barrier islands.

The Beach Plan's wind and hail increases were based upon the homeowner insurance premiums, so area residents were hit with a double whammy. Some Wilmington residents said their total premiums went up by more than half.

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Ken KeeganReal Estate Broker(910) 523-0903 mobileEmail

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