Alabama Establishes Statewide Mitigation Discounts for FORTIFIED Construction
"Discounts range from 35 percent to 60 percent on the hurricane portion of a policyholder’s premium and discounts from 20 percent to 35 percent on the other wind portion of the premium."
The Alabama Department of Insurance (ALDOI) has established new wind mitigation discounts for property insurance for Insurance Institute for Business & Home Safety (IBHS) Fortified residential and commercial structures in Alabama.
Under Bulletin 2016-07, discounts range from 35 percent to 60 percent on the hurricane portion of a policyholder’s premium and discounts from 20 percent to 35 percent on the other wind portion of the premium.
The Alabama Legislature passed ACT 2015-313 in support of efforts by IBHS to identify construction standards that will strengthen residential and commercial structures against hurricanes, straight-line winds and small tornadoes. The Act requires all insurers in Alabama to provide residential and commercial policy holders with discounts, once their structures have been built or retro-fitted to IBHS Fortified standards.
Alabama Insurance Commissioner Jim Ridling worked with IBHS, The American Institute for Research, and Aon Benfield to estimate the loss savings generated by these wind mitigation features and announced the benchmark discounts for residential and commercial structures for each county in Alabama.
The analysis conducted by the ALDOI indicates that structures mitigated under IBHS standards should earn discounts from 35 percent to 60 percent on the hurricane portion of their premium and discounts from 20 percent to 35 percent on the other wind portion of their premium.
According to the ALDOI, these discounts are significant since the hurricane/wind exposure represents approximately 70 percent to 80 percent of the cost of homeowners insurance on the coast and approximately 40 percent to 60 percent of the cost upstate in the tornado alley. These discounts can generate annual insurance premium savings to consumers that range from several hundred dollars inland to several thousand dollars along the coast.
“Mitigating homes and commercial structures has the greater benefit of improving community resiliency after a hurricane or tornado, reducing clean-up costs and the impact on businesses due to the displacement of workers. Alabama’s goal is to educate consumers and businesses to the many benefits of mitigating our communities so as to reduce the devastation caused by hurricanes and tornadoes,” ALDOI said in a statment.
To this end, Smart Home America (a non profit organization based in Alabama but serving many states), has launched a program called “Don’t Goof When You Re-Roof” to educate consumers on the advantages of re-roofing their homes to IBHS standards.
In addition, the ALDOI launched the “Strengthen Alabama Homes Grant Program” last year to provide funding to consumers on a needs basis to help retro-fit their homes to the IBHS standards. ALDOI said Alabama now leads the nation in the number of IBHS mitigated homes, and the count is expected to grow.
Updated discounts go into effect for Mobile and Baldwin Counties in 2017. Discounts for the rest of the state will go into effect January 1, 2018. Insurers have the option of honoring the FORTIFIED discounts earlier if they choose.
The state is now broken into three zones - coastal, central and northern. Each zone has different insurance discount rates for meeting FORTIFIED construction standards or a modern building code standard of at least the 2006 International Residential Building Code (IRC). See our chart and State map for a breakdown of the rates and the zones.
ZONES
COASTAL ZONE = MOBILE, BALDWIN, WASHINGTON, ESCAMBIA, COVINGTON, GENEVA, HOUSTON,
CENTRAL ZONE = SUMTER, MARENGO, PERRY, DALLAS, AUTAUGA, MONTGOMERY, BULLOCK, BARBOUR, CHOCTAW, WILCOX, LOWNDES, CLARKE, MONROE, CONECUH, BUTLER, CRENSHAW, PIKE, COFFEE, DALE, HENRY