It was announced at a news conference Wednesday that roughly 25,000 coastal property owners in Alabama will see a reduction on their wind insurance rates.
The timely changes come as the state’s hurricane season begins June. They are the product of collaboration between Alabama Gov. Robert Bentley’s property insurance task force and grassroots organizations.
“Today is really a good day for insurance consumers in coastal Alabama," said Alabama Insurance Underwriting Association (AIUA) secretary and manager Robert Groves.
The changes affect most AIUA policyholders—up to 25,000, reported AL.com.
One of the changes made allows homeowners more access to affordable “Replacement Cost Value” policies over “Actual Cash Value” policies. The latter is favored by insurers for areas particularly vulnerable to wind damage.
Under the change, the AIUA will convert many of the Actual Cash Value policies into Replacement Cost Value programs. Those policies could see their rates go down from 20% to 2.5%.
Additionally, new Replacement Cost Value policyholders will be given living expense coverage to aid them should they lack a place to stay following a catastrophic storm. Such coverage was previously not offered.
"People will be getting better coverage," said Alabama Department of Insurance commissioner Jim Ridling. "My [concern] is if we have a lot of people on the coast with Actual Cash Value [policies] and high deductibles, a lot of people will not be able to afford to rebuild what Is damaged with their homes."
"If you drive from here to New Orleans, you get a good view of what happens when people cannot afford to rebuild. There are still abandoned homes, slabs, blue tarps and abandoned businesses from the Mississippi border to New Orleans. I do not want that to happen in the state of Alabama when we have a storm," the commissioner added.
Officials said that the agreement has no “unintended consequences,” but they declined to contemplate what possible additional expenses and concerns may arise as a result.
