S.C. Governor Expected to Sign Hurricane Mitigation Bill

June 7, 2007

The South Carolina House has concurred with the Senate on the so-called coastal property omnibus bill and forwarded it to the governor who is expected to sign the legislation.

HB 3820 includes a limited expansion of the South Carolina Wind and Hail Underwriting Association as well as a requirement that it be the “market of last resort” and diminishing competition with the private market.

This legislation ratifies an order of the Department of Insurance that expanded for two years the territories available for coverage through the windpool.

Included in HB 3820 is a ‘Hurricane Loss Mitigation Grant Program’ that provides matching grants for homeowners who retrofit their homes with prescribed preventive measures and offers a consumer education and support program. Eligible properties must have a homestead exemption with an insured value of $300,000 or less. Grants are limited to $5000, although low income homeowners are eligible for the $5000 grant without having to meet the matching requirement. Matching fund grants are also available for local governments to encourage projects that will reduce hurricane damage to single-family, site-built homes.

The new law allows tax credits – up to $1,250 – for lower-income property owners who pay more than 5 percent of their incomes towards insurance premiums.

In addition, consumers will be allowed to contribute to a personal catastrophe savings account to cover their deductible – or in some cases to self-insure – exempting them from state income tax based on the sum they place in the account. Specifically, if a deductible is less than $1,000, the consumer can contribute up to $2,000 to their account. If the deductible is more than $1,000 the consumer can contribute up to $15,000 and for those who self-insure, contributions can max-out at $250,000.

The bill contains several proposals that address catastrophic risks, benefit consumers and help stabilize the insurance marketplace.

The Property Casualty Insurers Association of America commended Gov. Mark Sanford and the South Carolina Legislature for their moves.

“South Carolina is considering a number of promising steps in this legislation that if passed, could provide stability to the state’s insurance market,” said Robert Herlong, vice president and regional manager for PCI. “Additionally, long-term solutions must include effective mitigation efforts. The approach outlined in this bill and several being considered at the federal level would give homeowners themselves additional incentives to make improvements and would save many dollars later in disaster assistance and other government programs. These are the efforts that truly help to bring down the cost of insurance.”

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