Stacey Vanek-Smith: Hurricane Irene is making a b-line for North Carolina. The storm is set to hit the coast Saturday. It could pose the first big test for North Carolina's coastal insurance plan since it was reformed in 2009. Officials say they can pay for up to $4 billion in damages; after that, it's all on the homeowners.
Marketplace's Adriene Hill has more.
Adriene Hill: Many homes and businesses on the North Carolina coast are covered by what's known as the "Beach Plan." It's insurance of last resort for people who can't otherwise get coverage on their properties. The Beach Plan has about $70 billion in exposure. It has access to about $4 billion to pay out damages.
Wayne Goodwin is the North Carolina insurance commissioner.
Wayne Goodwin: You may wonder, well if there's $70 billion in exposure, is $4 billion enough?
Yeah, I wondered that.
Goodwin: Well it would be because it is extremely unlikely that any single major storm or series of storms would devastate all of the exposures on the coast.
But if a storm did cause more than $4 billion dollars in damages? Under North Carolina law, homeowners across the state could be asked to pony up -- paying as much as 10 percent more for their property insurance.
David Marlett: Then mine and my neighbors and people in the rest of the state could have a 10 percent surcharge each year until that amount is paid off.
David Marlett is a professor at Appalachian State University, about five hours from the coast. He says adequately insuring beach properties is a struggle for all coastal states -- some plans are better funded, and better thought-out than others.
Hill: What kind of shape is North Carolina's plan in?
Marlett: I would say compared to other states, it's pretty good.
Yes, Irene's track is ominous, but Marlett doesn't think it looks like the kind of storm that would overwhelm the $4 billion pool.
Marlett: And let's hope it doesn't get that bad.
I'm Adriene Hill for Marketplace.