Gov. Beverly Perdue signed a bill Wednesday that obligates homeowners across the state to pick up the tab if a mega-hurricane hits North Carolina and exhausts the state's emergency insurance pool.

The bill requires homeowners to pay a surcharge, not to exceed 10 percent of their annual premiums, to cover storm damage that exceeds the financial capacity of the Beach Plan, an insurance plan created by the state for people who can't get coverage elsewhere. For the average homeowner, the surcharge will be capped at $65 a year, based on the typical amount of insurance policies in the state.

The Property Casualty Insurers Association of America praised the new law.

"The General Assembly responsibly chose to solve the problem before the storm," said David Sampson, President and CEO of the group, "instead of after a devastating event."

Legislators passed the new law amid warnings that some insurers would stop doing business in the state without a financial backstop. The surcharge on all homeowners would be triggered only if the state endured what is often referred to as a once-in-a-century storm. The storm would have to cause $2.4 billion to exhaust the Beach Plan's resources. The largest payout by the plan so far was $130 million during Hurricane Fran in 1996.

The General Assembly approved the bill Thursday amid concerns that more insurance companies will stop doing business here without state homeowners providing a financial backstop for catastrophic hurricanes, John Murawski reports. It will become law when it is signed by Gov. Beverly Perdue, as is expected.

The bill requires homeowners to pay a surcharge, not to exceed 10 percent of their annual premiums, to cover storm damage that exceeds the financial capacity of the Beach Plan, an insurance plan created by the state for people who can't get coverage elsewhere. For the average homeowner, the surcharge will be capped at $65 a year, based on the typical amount of insurance policies in the state.

Triggering the surcharge would require what some call a once-in-a-century storm. It's estimated that a hurricane would have to cause $2.4 billion in damage to trigger the surcharge on homeowners, and a much larger storm for the surcharge to hit the annual cap.

The biggest payout to date by the 40-year-old Beach Plan has been $130 million for damage caused by Hurricane Fran in 1996. That was significantly less than the $2.4 billion the Beach Plan currently can access to cover storm damage.

The Senate sent its version of a bill that would shore up the state's coastal insurance plan back to the House for a final vote.

The bill would allow the state-created insurance plan known as the Beach Plan to assess a surcharge on homeowners and businesses across the state if a storm generates more claims than the plan can pay. 

The Senate backed off a proposal that would have raised the cap for coverage under the plan from $750,000 to $1 million. Senate Leader Marc Basnight, a Manteo Democrat, begrudgingly agreed to the reduction, which was proposed by Sen. Phil Berger, an Eden Republican and the chamber's minority leader.

"He and his colleagues are demanding that it occur," Basnight said. "I hope you are proud of it." 

Berger said he moved for the cap because it would be hard for many senators to go back to their non-coastal districts and explain why insurance might be more expensive because million dollar houses were destroyed.

"The idea that this plan covers property up to $1 million, I think, creates a real political problem for many of us who are willing to support a compromise bill," Berger said.

The $750,000 cap would give the bill an easier time back in the House, said Rep. Hugh Holliman, a Lexington Democrat and the chamber's majority leader. 

The House and Senate dug in and heard scores of bills Wednesday.

Notable votes included bills on beer, reptiles and coastal insurance.

* HB 1595: Allows grocery stores to offer beer tastings similar to wine tastings that are already allowed. Beer can be served in portions no greater than 2 oz. The bill heads back to the House for a final vote.

* SB 307: Regulates possession and keeping of certain dangerous reptiles such as venomous snakes. Bill now goes to the governor.

* HB 1305: Would place the burden of paying for the damage caused by a catastrophic hurricane on homeowners across the state. Bill now heads to the Senate for consideration.

A bill that calls for a surcharge on homeowner insurance policies across the state if a catastrophic storm wreaks havoc along the North Carolina coast was tentatively approved by a wide margin by the state House.

The bill, which must be voted on again before it moves to the Senate, calls for homeowners to bail out a state-created insurance plan known as the Beach Plan if a storm generates more claims than the Beach Plan can pay, David Ranii reports.

In that event, homeowners would be assessed a surcharge of  up to 10 percent of their annual premiums.

Currently, insurers who offer homeowners policies can be assessed to cover damages the Beach Plan can't pay on a prorated basis, based on how much business they have in the state. Nothing in state law permits insurers to recover any of that money from their policyholders.

The bill proposes capping insurers’ exposure at $1 billion, which supporters — including the insurance industry — say is necessary to avoid insurers fleeing the state.

Bill sponsor Hugh Holliman, a Lexington Democrat, noted that, given the Beach Plan’s current surplus and level of reinsurance homeowners wouldn’t be liable for a surcharge until damages topped $2.4 billion.

So far, the most the Beach Plan has paid in claims for a single storm is $150 million.