Hurricane tips

As we get closer to the end of hurricane season, it seems as though this is the time when the number of storms increase. As we are facing Hurricane Isaac bringing rain to South Carolina, we felt it imperative to post some helpful tips in preparing for the possibility of a hurricane or needing to evacuate your home.

The Atlantic hurricane season runs from June 1st to November 30th

The biggest steps towards preparing for hurricane season include a thorough insurance review and developing an emergency plan.

Here is some helpful information to make sure you’re prepared this hurricane season:

Insurance review

Talk to your agent or company to update, ask questions, and make sure you have the right coverage’s and deductibles in place to protect against a loss.

• Flood insurance is not included in a basic homeowner’s policy. Floods (including storm surge brought on by hurricanes) are the most common natural disaster in the U.S. Since the whole state is susceptible to flooding, the S.C. Insurance News Service encourages everyone to consider purchasing flood insurance from the National Flood Insurance Program.

• In the event coverage is unavailable through the private market, some coastal residents may need to obtain separate wind and hail coverage through the South Carolina Wind and Hail Underwriting Association (SCWHUA).

• A deductible is the amount of loss paid by the policyholder before insurance kicks in. Different insurance companies offer different types of deductibles. Percentage deductibles can range from 1 percent to 10 percent and your policy may contain more than one deductible. For example, your standard homeowners’ policy deductible may be $1,000, but you might have a 2 percent wind deductible.

• A home inventory is a great way to ensure you have adequate coverage for your home’s contents. A home inventory is a list of all your personal possessions and their estimated value. To help with the process, free “Know Your Stuff – Home Inventory Software” is available through the Insurance Information Institute at

Emergency plan

Have a plan in place if a storm is threatening and evacuations have been ordered.

• Prepare the exterior of your home and yard if strong winds and water are imminent. Nail any loose shingles or boards, and cover windows with plywood or storm shutters. Bring lawn furniture, potted plants, garbage cans, grills and outdoor decorative items into the garage. Cut weak limbs and those overhanging a structure and remove yard debris.

• Decide ahead of time where you’ll go if an evacuation order is issued, and have more than one alternative – the home of a friend or family member, a hotel, a shelter. Be sure to listen to NOAA Weather Radio or local radio and TV stations for evacuation information and instructions.

• Plan what to take with you. Disaster kits should include prescriptions, bottled water, clothing, flashlights, a battery-powered radio, batteries, items needed for pets, insurance policies, your home inventory, passports/drivers licenses/ID cards, birth and marriage certificates, and bank account numbers and other financial information.

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Why are my homeowner premiums increasing?

Due to the recent changes in homeowner policies and premiums, we felt it would be beneficial to help explain some of the changes that are taking place. We recently found an article in the SC Insurance News service that best explains what is taking place in the insurance market.

Frequently asked questions on coastal property insurance

Recent headlines have raised some valid questions about insurance rates and coastal property. Here is a list of frequently asked questions, and their answers that help give consumers a better understanding of the current marketplace.

I haven’t had a claim. Why are my rates going up?

First, insurance is a transfer of risk and not a savings account. Your premium is paid to transfer the risk of rebuilding your entire house to the insurer for the policy term. Secondly, rates are based on future risks. While claim history is one factor that helps indicates risk, it isn’t the only one. Some other factors that are included in determining rates include population growth, exposure, reinsurance costs, and construction costs.

There are several factors that could be contributing to an in increased pressure on rates. Population growth (especially in catastrophe prone areas), increases in catastrophe exposure, near-record losses in 2011 (insured losses in the United States totaled $35.9 billion, which was significantly higher than the previous 10-year average of $23.8 billion), increases in loss frequency and severity, and a lack of investment income for insurers.

Your insurance premium is not simply collected by and retained by your insurance company. The premium you pay protects you against the unpredictable risks associated with catastrophic events such as hurricanes, and non-catastrophic events like kitchen fires or theft.

Premiums also help the state’s economy. In 2009, the insurance industry provided nearly 39,000 jobs, paid about $125 million in state premium taxes, and contributed about $3 billion to South Carolina’s gross state product.

Why do South Carolinians, on average, pay more than our neighbors in N.C. and G.A.?

South Carolina has exposure to catastrophic hurricanes that cause significant damage well beyond their specific point of landfall. Hurricanes’ damage is not limited to part of a city, or a specific neighborhood. These massive storms often span hundreds of miles and cause widespread damage.

Our state has more than 187 miles of direct exposure to hurricanes with $191.9 billion in insured property along the coast. That coastal exposure represents 28% of the state’s total insured value (neighboring states NC and GA have only 9% and 5% of their respective exposures along the coast).

With increased development along the coast, risk analysts estimate that if Hurricane Hugo hit today, there would be about $10.9 billion in insured losses (Hugo caused $4.2 billion in 1989). Insurers must prepare now to ensure their ability to pay claims after a hurricane devastates our coast.

My home value has decreased, why hasn’t this lowered my insurance rate?

Since insurance provides protection against the costs of repairing and/or rebuilding your home, property values are not among the factors that help determine rates. Property values include the land value associated with a home, which is not covered by insurance. Insurance protects against losses to the actual dwelling or structure.

What is the Department of Insurance doing to protect my interests as a consumer?

The mission of the State of South Carolina Department of Insurance is to protect the insurance consumers, the public interest, and the insurance marketplace. The DOI is charged with ensuring the solvency of insurers, enforcing and implementing the insurance laws of this state, and by regulating the insurance industry in an efficient and equitable manner.

Part of their responsibility is to keep the insurance marketplace healthy and competitive by focusing on solvency, disclosure, and transparency for South Carolinians. Any rate change requested by a carrier must be filed and reviewed by the SC Department of Insurance. The insurance laws and regulatory environment governing South Carolina’s insurance market serve as a model for other states faced with similar exposures.

In other coastal states where rates are suppressed and capped; customers are faced with less competition, widespread non-renewals, greater subsidies, and mechanisms that will pass disaster restoration costs along to citizens through taxes and or assessments.

There are more than 100 companies currently writing homeowners insurance in South Carolina and some companies have entered the market since the implementation of the Omnibus Coastal Reform Act of 2007. There is availability, competition, and companies continue to enter the market.

Competition benefits consumers, and a healthy marketplace means insurers have enough claims paying capacity to help their customers recover quickly after a loss without unfair subsidies and mechanisms that will pass disaster restoration costs along to citizens through taxes and/or assessments. Since the regulatory changes passed in 2007, rate increases have slowed with increased competition. Premiums in 2008 – 2010 have risen by just over four percent a year, only a little bit faster than inflation. In the three years before the changes went into effect, annual premium increases averaged about 9 percent.

Are catastrophe models, or “black boxes”, simply ways insurance companies justify rate increases?

Catastrophe models are just one tool that insurance companies and reinsurers use to help determine risk. Models help provide more predictability by using events that have actually happened in the past. If companies simply used models to project greater losses, they would risk pricing themselves out of a competitive market. On the other hand, models that show the least amount of damage might position an insurer to have inadequate means to pay for claims. Catastrophe models are used not to justify higher or lower rates, but to justify a rate that is appropriate for a particular concentration of risk.

The term “black box” implies mystery and secrecy. The fact is that the majority of the information contained in catastrophe models is known. However, certain proprietary information that accounts for a small portion (typically between 3 and 5 percent) is protected for competitive reasons. This is not uncommon in any competitive industry. For example, a soft drink company lists its ingredients on the can, but it doesn’t list the proprietary formula that makes the final product.

Why are some companies choosing to non-renew policies?

By looking at the industry’s combined ratios the last five years, companies sometime spend more on claims and expenses than they collect in premiums. When a company is spending more per each dollar in premium that they take in, they protect their policyholders by managing exposure, not by growing. Companies compete for the best risks and work to refine their book of business to sufficiently diversify their exposures so that they are not overly concentrated with any particular type of risk.

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WC Wilbur Blog Launched!

WC Wilbur & Company, Inc has launched its blog today. With offices in Summerville and North Charleston, SC we serve our customers with the belief in the value of relationships and by viewing every client relationship like a partnership.

Read More About WC Wilbur & Company, Inc Insurance.

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