Notice of Regulation 69-56 Named Storm or Wind/Hail Deductible
(Issued upon August 23, 2000)
To: Property and Casualty Insurers
From: Mr. Ernst N. Csiszar, Director
Subject: Notice of Regulation 69-56 Named Storm or Wind/Hail Deductible
On June 23, 2000, Regulation 69-56 was approved in South Carolina. This bulletin is provided to provide notice of that regulation. In summary, the regulation provides requirements for language on declarations pages and in insurance contracts regarding notice of named storm or wind/hail deductibles. There is also a signature requirement when implementing or changing a named storm deductible.
Insurers must file the appropriate forms with the Department and implement this regulation by December 23, 2000.
The regulation is provided in its entirety.
69-56. Named Storm or Wind/Hail Deductible
Under S. C. Code Ann. Section 38-73-70 (1976), the Department of Insurance may make reasonable regulations for the enforcement of Chapter 73 entitled "Property, Casualty, Inland Marine and Surety Rates and Rate-making Organizations."
A. Purpose: The purpose of this regulation is to clarify the process for insurers to inform policyholders who purchase property policies which contain named storm or wind/hail deductibles as a percentage of policy limits rather than as a specific fixed dollar amount regarding the nature of their deductible.
B. No insurer may offer a new property policy to or renew an existing policy of an insured that includes a named storm or wind/hail deductible unless the insurer:
(1) includes an example which illustrates how the deductible functions for a policy valued at $100,000 and this illustration will include a clear explanation of the event which will trigger the deductible; and
(2) includes on the face of any policy that contains a separate named storm or wind/hail deductible the following statement: THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR NAMED STORM OR WIND/HAIL LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU. THE ENCLOSED EXAMPLE ILLUSTRATES HOW THE DEDUCTIBLE MIGHT AFFECT YOU. This identical statement shall also appear on the declarations page. The language may be added to the policy by an amendatory endorsement.
C. Renewal Changes: No insurer may change a current property policy at renewal by implementing a named storm deductible or increasing the size of the named storm deductible as expressed in percentage terms unless:
(1) the insurer includes an example which illustrates how the deductible functions for a policy valued at $100,000 and this illustration must include a clear explanation of the event which will trigger the deductible; and
(2) the named insured signs or initials a disclosure that acknowledges that the named insured has read the example.
D. Implementation: Upon approval of this regulation, the Department of Insurance must issue a bulletin to all insurers within 60 days informing insurers of this regulation. The bulletin shall provide insurers with a 120 day period to begin implementation of the notice requirements. There is no requirement that insurers obtained signed disclosures from policyholders who have a property policy currently that includes a named storm deductible.