2.2 South Carolina Wind and Hail Underwriting Association (SCWHUA)
Key Takeaways
- SCWHUA provides wind and hail coverage for properties in coastal areas that cannot obtain coverage in the standard market
- Coverage is available in designated beach and coastal areas of South Carolina
- SCWHUA is a residual market shared among all property insurers licensed in South Carolina
- The association provides wind and hail coverage only, not comprehensive property coverage
- Applicants must demonstrate inability to obtain wind coverage in the voluntary market
Overview of SCWHUA
The South Carolina Wind and Hail Underwriting Association (SCWHUA) is the state's residual market mechanism for wind and hail coverage in coastal areas.
Purpose and Function
| Aspect | Description |
|---|---|
| Type | Residual/involuntary market |
| Structure | Shared pool among all licensed property insurers |
| Purpose | Provide wind and hail coverage for coastal properties |
| Oversight | South Carolina Department of Insurance |
Eligibility and Coverage Area
Designated Territory
SCWHUA coverage is available in:
| Area Type | Description |
|---|---|
| Beach Areas | Barrier islands and beachfront properties |
| Coastal Counties | Charleston, Beaufort, Georgetown, Horry, Jasper, Colleton |
| Inland Areas | May extend inland in designated zones |
Eligibility Requirements
To qualify for SCWHUA coverage, applicants must:
- Property Location: Property must be in designated territory
- Market Efforts: Unable to obtain wind coverage in standard market
- Property Condition: Meet minimum insurability requirements
- Other Coverage: Have basic property coverage elsewhere (if required)
Properties Covered
- Owner-occupied residential dwellings
- Rental properties
- Condominium units and associations
- Commercial buildings
- Mobile homes (with restrictions)
Coverage Provided
Wind and Hail Coverage Only
| Coverage | Included | Notes |
|---|---|---|
| Wind Damage | Yes | Direct physical loss from wind |
| Hail Damage | Yes | Direct physical loss from hail |
| Wind-Driven Rain | Limited | Only through openings created by wind |
| Flood | No | Must be obtained separately |
| Fire | No | Must be obtained separately |
Coverage Limitations
SCWHUA coverage is supplemental to other property coverage:
- Provides wind and hail coverage only
- Does not include fire, theft, or liability
- Deductibles may be percentage-based
- Coverage limits based on property value
Deductibles and Rates
Deductible Structure
| Deductible Type | Amount |
|---|---|
| Standard | 2% of coverage amount |
| Optional | 1% or 5% available |
| Named Storm | May differ from standard |
Rate Factors
SCWHUA rates consider:
- Distance from coast
- Construction type
- Building age
- Protective devices
- Loss history
- Elevation
Application Process
Steps to Obtain SCWHUA Coverage
- Seek Standard Coverage: Attempt to obtain wind coverage in voluntary market
- Documentation: Document inability to obtain coverage
- Application: Apply through licensed South Carolina agent
- Underwriting Review: SCWHUA reviews property information
- Inspection: Property inspection may be required
- Policy Issuance: Coverage begins upon premium payment
Agent Requirements
- Must be licensed in South Carolina
- Must have SCWHUA appointment
- Responsible for proper application submission
- Cannot bind coverage without SCWHUA approval
Loss Sharing
How Losses Are Allocated
All property insurers licensed in South Carolina share SCWHUA losses:
| Component | Description |
|---|---|
| Assessment Base | Proportional to voluntary market share |
| Loss Distribution | Spread among all participating insurers |
| Deficit Recovery | May assess insurers for excess losses |
| Reinsurance | SCWHUA purchases reinsurance to limit assessments |
Exam Tip: SCWHUA provides ONLY wind and hail coverage for coastal properties - it is not comprehensive property insurance. Property owners must have separate coverage for fire, theft, liability, and other perils through standard policies or the FAIR Plan.
What type of coverage does the South Carolina Wind and Hail Underwriting Association (SCWHUA) provide?
In which areas of South Carolina is SCWHUA coverage available?
Who shares in the losses of SCWHUA?
The SC Wind and Hail Underwriting Association
The South Carolina Wind and Hail Underwriting Association (SCWHUA) is the state's residual market for coastal wind exposure - the coverage of last resort when standard insurers will not write wind in high-risk beach areas. Its key features are heavily tested on the state portion:
| Feature | SCWHUA Rule |
|---|---|
| Purpose | Provides wind and hail coverage only for coastal property that cannot get it in the voluntary market |
| Eligible area | Designated beach and coastal areas of South Carolina |
| Funding | A shared residual market - all property insurers licensed in SC participate in profits and losses |
| Eligibility proof | Applicant must show inability to obtain wind coverage in the voluntary market |
Because the association provides wind and hail only, an insured in the coastal zone still needs a separate policy for fire, theft, liability, and other perils, plus flood coverage through the NFIP.
How the Association Fits the Coverage Stack
A South Carolina coastal property owner often assembles coverage from several sources because no single policy covers everything. The SCWHUA wind/hail policy sits alongside a standard homeowners or dwelling policy that excludes wind in the coastal tier, plus an NFIP flood policy. The association functions like other state beach and windstorm plans (FAIR-plan cousins): it spreads the catastrophic coastal wind risk across all admitted property insurers in proportion to their statewide market share, so a single carrier is not forced to absorb the concentrated coastal exposure.
To qualify, an applicant must demonstrate that wind coverage is unavailable in the voluntary market - the association is not a first choice but a backstop. The exam tests three points: the SCWHUA covers wind and hail only, it serves designated coastal/beach areas, and it is a shared residual market funded by all licensed property insurers. Understanding that the association fills only the wind gap - not fire, liability, or flood - is the central concept, because candidates often wrongly assume it is a complete property policy.
Which statement about the South Carolina Wind and Hail Underwriting Association (SCWHUA) is correct?
Eligibility, Claims, and the Residual-Market Concept
To place coverage with the SCWHUA, a producer documents that wind coverage is unavailable in the voluntary market for the coastal risk, then submits an application to the association, which issues a wind and hail only policy for the designated territory. The premium reflects the concentrated catastrophe exposure and is generally higher than voluntary-market wind pricing would be, because the association insures only the highest-risk coastal band.
When a hurricane strikes, the association pays wind and hail losses on the covered structure, while the homeowner's separate base policy responds to non-wind perils and the NFIP responds to flood and storm surge.
This division forces careful wind-versus-water claim allocation, and the anti-concurrent causation rule means surge is treated as excluded flood even when wind contributed. The association's defining feature - that all admitted property insurers share its results in proportion to market share - is the same residual-market mechanism South Carolina uses for high-risk auto through SCAIP, and recognizing that parallel helps candidates answer questions about how either plan is funded and why coastal or high-risk insureds still need separate coverage for the perils the residual plan does not address.