Beach Plan

What is 'Beach Plan'

A beach plan is property insurance for coastal property owners who have a high exposure to windstorm and hail losses. A beach plan is designed to cover losses that a regular homeowners insurance policy does not and has a separate deductible. Further, instead of a dollar amount deductible, such as $5,000, beach plans have a percentage deductible based on the home’s insured value.

BREAKING DOWN 'Beach Plan'

If your home is valued at $250,000 and your beach plan deductible is 5 percent, you’ll pay $12,500 before your insurance policy will pay anything. Without these high deductibles, insurance companies wouldn’t be able to afford to offer beach plans at all. Windstorm losses can be extremely expensive for insurers since they cause major damage and affect numerous policyholders simultaneously.

Beach plans are necessary because basic homeowners insurance often limits coverage for wind damage in storm-prone states like Florida, Louisiana, Texas, North Carolina, South Carolina and others. If you want to be covered when high winds propel your neighbor’s patio furniture through your back window or rip your roof off, you need windstorm insurance.

Beach Plan Example

One example of a beach plan is North Carolina’s beach plan, called the Coastal Property Insurance Pool. The state government created this insurance market of last resort in 1969 to fill a gap in the property insurance market for coastal residential and commercial property owners. The state regulates the beach plan but is not the insurer. Insurers that belong to a nonprofit association of North Carolina insurance companies called the North Carolina Joint Underwriting Association write policies under the beach plan.

The Coastal Property Insurance Pool offers commercial, homeowner and dwelling windstorm coverage and homeowner coverage to any person having an insurable interest in property located in the 18 eligible coastal counties of North Carolina. The Coastal Property Insurance Pool also offers commercial fire and dwelling fire in a more limited area defined as the beach area (comprised of North Carolina south and east of the inland waterway, including the area known as the Outer Banks).

Property owners who can’t obtain wind and hail coverage in the regular insurance market because insurers view the risks as too great can purchase insurance through the Coastal Property Insurance Pool. It offers actual cash value contents coverage, windstorm insurance and hailstorm insurance. Residential policyholders can get building coverage for as much as $750,000 through the beach plan.

Insurance products offered in the Coastal Property Insurance Pool:

  • Dwelling Fire (Beach Territories only)
  • Commercial Fire (Beach Territories only)
  • Homeowner (Beach and Coastal Territories)
  • Dwelling Windstorm and Hail (Beach and Coastal Territories)
  • Homeowner Windstorm and Hail (Beach and Coastal Territories)
  • Commercial Windstorm and Hail (Beach and Coastal Territories)
  • Crime (Beach Territories only)

Other states that have beach plans include Mississippi, South Carolina, Texas and other East and Gulf Coast states.