Shopping for homeowner's insurance is no easy task

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Shopping for homeowner's insurance is no easy task

Unread postby RatPak11 » Wed Jun 06, 2012 12:49 pm ... -easy-task

Storm of Money: Shopping for homeowner's insurance in South Carolina is no easy task
Tony Bartelme
EmailPosted: Wednesday, June 6, 2012 12:29 a.m.
UPDATED: Wednesday, June 6, 2012 2:01 a.m.

When Allen Kaufman opened his homeowner's insurance bill recently, he couldn't believe his eyes.

“It went up 43 percent!” he said. “I called the state Department of Insurance, and they said Allstate had been granted an increase. They told me they had gotten lots of calls.”

Kaufman's experience is a familiar one to tens of thousands of residents of coastal counties.

Largely because of perceived hurricane risks, South Carolina has some of the highest average premiums in the nation, and by some measures, higher than states that are more vulnerable to hurricanes.

Rates have risen 71 percent over the past decade statewide, a number that masks much higher increases on the coast, according to data from state and national insurance organizations.

Insurance industry representatives say high rates are driven by growth along the coast, increased property values and construction costs, and new forecasts that storms may be more frequent in the future.

“Rates are based on numerous factors and are rarely influenced by any single factor or occurrence,” said Russ Dubinksy, executive director of the S.C. Insurance News Service. South Carolinians, he said, “are exposed to virtually every natural disaster with the exception of volcanoes.”

Critics of the industry say that when it comes to setting rates, insurers hold much better cards than property owners.

In a report this year, the Consumer Federation of America accused insurers of systematically shifting risk to consumers and taxpayers by increasing deductibles, reducing coverage and pulling out of higher-risk areas altogether, a move that forces property owners to find insurance in expensive specialty markets or quasi-government “wind pools.”

“In other words, property-casualty insurers have paradoxically emerged as masters of risk avoidance, rather than continuing their historic role of risk taking,” the authors of the report said.

Valuable database
Making matters even more difficult for consumers is the sheer complexity of shopping for home insurance.

Insurance rates vary greatly depending on a home's age, type of wiring, roof and other factors. Consumer credit scores also play into rates, a practice the consumer advocates say adversely affects low-income property owners.

Consumers have few tools to sort through this Byzantine industry.

One little-known database, however, is on the S.C. Department of Insurance's website.

The database highlights premiums from 25 companies for a hypothetical house insured for $150,000. The Post and Courier has built a searchable database with this information to make searching this information easier.

The information shows how rates for a hypothetical home insured for $150,000 can vary dramatically. In Charleston County they range from $1,177 with Allstate to $3,276 with Travelers.

But those numbers also come with numerous caveats. The premium prices are for a home built in or after 2005, which leaves out the bulk of the state's housing stock. Some companies publish low rates but may not be writing new policies, including downtown Charleston and the Sea Islands.

Consumers have few warnings that rates will go up, even though insurance companies provide this information to the state.

Ann Roberson, executive assistant for the S.C. Department of Insurance, said rate increases can be found on the agency's website, but she acknowledged that the information is extremely difficult to find. The agency is trying to find better ways to present this information to consumers, she said.

18% average boost
People like Kaufman would welcome that.

Kaufman moved to Mount Pleasant about 12 years ago and said he had never made a claim.

After he received his new insurance bill, he decided to do some digging. “The first thing I did was call the Department of Insurance to find out if it was a mistake.”

It turned out that Allstate sought a 40 percent increase, but after the Department of Insurance rejected that hike, it settled for 18 percent. That didn't mean everyone would see their rates go up that much. Allstate, like other insurers, could charge higher rates on the coast, such as the case with Kaufman, as long as it held the line elsewhere and kept the statewide average at 18 percent.

No matter what happened behind the scenes, Kaufman wasn't about to take that increase without a fight.

He shopped online with other insurance companies to get quotes and ended up finding one for about $1,700, higher than what he was paying before but less than the roughly $2,600 Allstate wanted to charge. “Plus, I was getting earthquake coverage.”

Then he gave Allstate another shot. To his surprise, it ended up giving him a good deal. He said that while he's getting less coverage, his premiums will be a tad less than last year's.

The lesson: “If you don't say anything and just pay, you'll get a bad deal.”


Jeff Grigg
06/06/12 at 09:48 AM
Hey stop complaining.This is a free market economy and a business has every right to charge what they want. Right? Isn't that what we as South Carolinians have said for years? Get government off the backs of business? Get rid of regulations and oversight? Free market? What? You guys don't actually want a Socialist government telling them how much they can charge do you?Oh, you mean except when it affects YOUR pocketbook. OK SC now I get it.(Said firmly tongue in cheek)

.Missy Cowell
06/06/12 at 08:34 AM
This is exactly what happened to us! I want to shop around but now wondering if it's worth it. We have separate flood insurance. Insurance is a crock.

.Chris Marley
06/06/12 at 07:32 AM
The South Ccarolina legislature and the Insurance regulators are fully purchased by the insurance companies. Say no to all increases. The insurance companies will threaten to leave the state. Tell the insurance companies (and any company in which they are a major owner) that if they stop writing any one line, they and every subsidary will be prohibited from writing ANY and ALL lines of insurance in the state. What the squeeling start in teh legistature.

.Becki Bowman
06/06/12 at 07:25 AM
LOL rates are based on numerous factors, when was the last hurricane here, or major fire, or damaging earthquake, volcano? FOR ALL of the PREMIUM MONEY I have paid, does the home qualify for a NEW ROOF due to the hot SC SUN......LOL

.Becki Bowman
06/06/12 at 07:19 AM
We have been with Allstate for years, cars home, rental insurance. We also recieved the huge icrease, called and told them we were pulling everything, shopping around, and would make sure every family member would be doing the same! And we had them review any claims, none! Same story, a decrease, etc. It is a game, all a game to put more money in their pockets!
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