What does it cost to insure a home in Charleston, Mt Pleasant or the Barrier Islands?
by Larry Freudenberg
I've owned our family's 113 year old insurance agency for 30 years and experienced huge changes with home insurance premiums for homeowners in Charleston, Mt Pleasant and the barrier islands (Kiawah, Seabrook, Folly, Sullivans and Isle of Palms). When I first started in the insurance business the cost to insure a home was extremely reasonable. But now 30 years later the cost to insure a home in Charleston has really skyrocketed beyond anything that I would have imagined. Why? One simple word - hurricane. We live on the eastern Atlantic coast and are subject to hurricanes. I can attest personally to the catastrophic magnitude and damage that a hurricane can cause to a coastal community. Just a few years after I joined the family's Charleston insurance agency we were subjected to one of the worst hurricanes to ever hit the mainland of the United States. Hurricane Hugo was a category 4 storm when it struck dead center on Charleston September 21, 1989. The destruction was enormous. Our clients were completely taken off guard because Charleston had not been subjected to a hurricane since the year I was born, 1959. We had 30 years with no hurricanes and that's long enough for people to get the feeling that it won't happen again. Guess what? We're back in that same boat. It has been 27 years since Hurricane Hugo and people around these parts think it won't happen again or if it does then it won't be that bad. If history has anything to say about storms hitting our community then they're completely wrong. Charleston is in a tropical zone. With hurricanes like Hugo, Andrew (Miami), Super Storm Sandy (NJ & NY), Katrina (New Orleans) and more causing huge damage and more and more people relocating to coastal communities the cost of home insurance has seen huge increases.
Ok. So how much does it cost to insure a home in Charleston? Before I'll give that answer I have to qualify anything I say by briefly explaining that there a many variables that go into the premium for one house versus another. These are: (not an exhaustive list )
1. Is the home new or old? If it is over 20 years old has the roof been replaced. Has the HVAC been replaced. Has the electrical and plumbing been kept up to date? If it is even older which is common in Charleston with some homes being hundreds of years old all of these things have to be considered and affect the premium. Even the shape of the roof will factor into the premium because a home with a hip roof is less expensive to insure than a gabled roof. Why? A hip roof is inherently stronger.
2. What is the home's construction? Is it a frame home with wood veneer on the exterior, brick veneer or solid masonry. The fire insurance portion of the policy is higher for a frame house versus a solid masonry house.
3. Is the house located within a few miles of the ocean? South Carolina has specified wind zones. The highest and most costly is of course the barrier island. But there is also an other moderately high zone two which covers most areas around Charleston like James Island and Mt Pleasant east of Hwy 17. For more information on the wind zone in South Carolina visit the South Carolina Wind & Hail Underwriting Association's website at www.scwind.com/.
4. Does the home have any upgrades that lower the risk of wind damage like storm resistant windows, roof framing tie downs, storm shutters....?
5. Are the owners retired? Some insurance companies give a discount to seniors and retired homeowners.
6. Credit. The homeowner's credit factors into the premium charged by many insurance companies. Apparently people with poor credit have a higher claims probability.
7. Prior losses. Has the home had losses in the past 5 years? If the house has had claims from broken pipes, roof leaks or faulty wiring then these will increase the premium.
8. Dogs. Does the homeowner own what is considered a vicious dog? Even if their dog hasn't bitten anyone having a pit bull or certain breeds could increase the premium. The average dog bite claim nationally is over $30,000.
9. Does the homeowner smoke or anyone who lives in the house smoke? This could increase the premium because the risk of a fire claim is higher.
10. Is the home located in a gated community. In that case the chance of a theft loss is lower and the premium will be lower. A central station alarm system will also typically lower the premium.
11. The dollar amount that the home, contents, attached structures and additional living expenses will directly impact the premium. Nobody wants to overinsure their home because you're just wasting premium dollars but you definitely don't want to underinsured a Charleston house either.
The factors are numerous and are dynamic. They change as rebuilding cost change, weather predictions change and other factors that the homeowner has no control over.
As of the time of writing this article we can say in very very general terms what we're seeing to insure a home in these areas are......
**New Construction in Charleston or Mt Pleasant - A $500,000 house in these areas should be at a low of $2200 to insure.
**Suburban houses in Charleston or Mt Pleasant over 20 years old - A $500,000 house should be about $2200 if in near new condition and higher if not.
**Suburban houses in Charleston or Mt Pleasant over 40 years old One that is not maintained could be $5000 or more to insure. That would be a home where the HVAC, wiring, plumbing and roof have not been updated. But one that is well maintained could be $2200.
**Downtown historic Charleston - This is really hard to generalize. Some of the historic homes can be $600 or more per square foot to replace if that. They may have slate roofs and special windows and other construction materials as required by the architectural review board. A 200 year old home like this but kept in average condition may be $10,000 to $15,000 to insure.
**Barrier Islands - A million dollar home (replacement cost of the house) could be $10,000 on Sullivans Island, Kiawah, Folly or the Isle of Palms.
Because most areas of the lowcountry are in flood hazard zones, many homeowners are required to buy flood insurance or elect voluntarily to buy flood insurance. Flood insurance can range from $400 per year to $10,000 per year for the maximum limits of $250,000 for the house and $100,000 for personal property for a single family home. Explaining how this works will have to wait for another article.
Confusing? Yes and it changes all the time. I really do hate to generalize but have been asked so many times for ballpark figures to insure a house in Charleston. So here it is. But to be precise my agency's licensed agents can provide quotes for specific homes. If you're considering buying a new house then call and we can give you the premium range before you sign a contract to buy it. Or if you feel you're paying too much now for your existing house then let us run numbers using our computer rating system to see if your current home insurance policy is competitive. I have to emphasize competitive because sometimes buying the cheapest policy is not wise. As with anything, you can get what you pay for. A very unwelcome surprise after a claim.
I'm also available for information. After all of these years I do have a wealth of knowledge about these issues and will gladly try to help both customers and non customers navigate these tricky waters.