THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, May 11, 1995 TAG: 9505110465
SECTION: LOCAL PAGE: B1 EDITION: NORTH CAROLINA
SOURCE: BY BETTY MITCHELL GRAY, STAFF WRITER
DATELINE: RALEIGH LENGTH: Medium: 75 lines
Added insurance coverage would be available to Outer Banks property owners under a bill a Senate committee approved Wednesday.
By a voice vote, the Senate Committee on Pensions and Retirement, Insurance and State Personnel, approved legislation that expands the coverage available to property owners through the so-called ``Beach Plan.''
The Beach Plan was established in North Carolina to provide an adequate market for essential property insurance, such as coverage for homes and businesses, for coastal areas of the state.
About $3.2 billion worth of property is insured through the state's Beach Plan.
The bill, sponsored by Sens. R.C. Soles Jr., a Columbus County Democrat, and Patrick J. Ballentine, a New Hanover County Republican, would require the Beach Plan to offer Outer Banks businesses and homeowners coverage for loss of business income, additional living expenses and loss of rental income.
The bill stipulates that within 30 days of approval by the legislature, the North Carolina Insurance Underwriting Association, the group that oversees the Beach Plan, file rules, practices and procedures for offering the new coverage with the state insurance commissioner.
Property owners who buy the new coverage will likely see their insurance bills increase 10 to 20 percent, the committee was told. But they also would be able to purchase the same type of coverage that inland residents now can buy.
Insurance that pays business owners for their loss of income and reimburses home owners for loss of rents if their homes and businesses are damaged or destroyed is available from most insurance companies.
But many of these companies refuse to cover property on the Outer Banks and in other coastal areas because of the high risk of loss from hurricanes and other storms.
This leaves these property owners with no other source for their insurance than the Beach Plan - which does not offer insurance to cover lost income or loss of rents.
This gap has left about $125 million in rental income without insurance, according to Mollie Fearing, a Manteo insurance agent.
``This is extremely important coverage that affects all 20 coastal counties,'' Fearing said from her office after the Wednesday committee meeting. ``The investors and property owners will benefit from this.''
The bill now heads for the Senate floor where it is expected to be approved by that chamber this week.
If the bill passes the Senate, it must be approved by the House of Representatives before it becomes law. Fearing applauded the committee's action, saying that Outer Banks property owners have needed the option of buying added coverage for some time.
But the bill was opposed by one insurance company representative and some committee members who said that, in the event of a major storm, the increased coverage could raise insurance premiums for property owners in other parts of the state.
``There's a lot of cost implications in the bill,'' Benjamin Seagle, a representative for Aetna Life & Casualty Co., told the committee. ``This would broaden the basic coverage in the Beach Plan, which is not supposed to be a Cadillac product.''
Some committee members agreed.
``If we continue to broaden the Beach Plan and the big one hits, then everyone will have to help pay for it,'' said Sen. Donald R. Kincaid, a Caldwell County Republican.
But most committee members as well as Insurance Commissioner Jim Long said the insurance coverage, available to most state residents, should be offered to those who live along the coast.
``This provides fair treatment to people in the coastal area,'' Long told the committee.
KEYWORDS: THE BEACH PLAN REAL ESTATE INSURANCE HOMEOWNERS INSURANCE
OUTER BANKS by CNB