News Five Investigates: Cost Vs. Benefit

Alabama Insurance Insurance companies continue to use Hurricane Ivan to justify dropping thousands of Gulf Coast customers but is there something you can do to help yourself?

by Jessica Taloney

Published: Thu, May 15, 2008 - 4:20 pm CST Last Updated: Fri, May 16, 2008 - 10:04 am CST

Thousands of home and business owners are still feeling the wrath of Hurricane Ivan, four years after it struck the Gulf Coast.

Insurance companies continue to use the storm to justify dropping thousands of customers... even today!

Sharon Hamilton is one of those customers. ALFA dropped the wind insurance from her homeowners policy offering her coverage through what's called the "beach pool." Instead of paying $1,800 a year, Hamilton's new policy would cost more than $7,000.

"I was just scared. I couldn't imagine what we were gonna do," said Hamilton. "Our mortgage company required it, and I was afraid we were not going to find any," she said.

Thankfully, Hamilton found another option. She shopped around and got coverage through a different company. The premium is still much higher than what she was paying, and now she's looking for ways to bring the cost down.

"The 30 year old home is the one you can mitigate on," said Alabama Insurance Commissioner Walter Bell, who is urging Gulf Coast residents to hurricane proof their homes in exchange for credit from their insurer.

"It saves the consumer a tremendous amount of grief when a storm comes along because you aren't in the repairing stages every other year," said Bell. "It also saves the companies because they don't have that initial costs in terms of having to reimburse, having to pay claims on things we can build against."

The question is whether the benefit outweighs the cost, especially for families who don't have extra cash laying around.
We asked Steve Miller of Langan Construction to give us some estimates on a laundry list of upgrades endorsed by Commissioner Bell.

"That's gonna be the first thing that goes from the wind," said Miller, pointing to the roof.

Miller says the shingles on Hamilton's home would probably only withstand 60 mph wind, which is the equivalent of a moderate tropical storm. Miller suggests upgrading to architectural shingles, which can withstand winds up to 130 mph. "But, it's going to cost a lot of money," he says.

The cost of replacing Hamilton's roof with architectural shingles is somewhere between $6,500 and $8,000 depending on the resistance. If Hamilton opts for a metal roof, which Miller says is even sturdier, she's looking at $10,000 to $13,000.

Commissioner Bell also suggests installing permanent shutters. "Working shutters, not just the decorative kind," Bell says.
Miller estimates the price tag for the basic model shutters is about $9,000 for 12 windows.

"I would probably have to take out another mortgage, which I won't be able to afford," said Hamilton, who says the price tag is simply too high for those two improvements alone... But, the commissioner's suggested list of upgrades goes on.

"If I'm in a flood plain, I should raise my home," said Bell. "I should have tie downs on my roof to make sure it doesn't blow off with the first wind that comes along."
Some insurance companies already offer discounts to property owners who make some of the commissioner's suggested improvements, but Bell and several Mobile lawmakers would like to make the discounts mandatory. Senators Ben Brooks, Trip Pittman and Rusty Glover, all of Mobile and Baldwin Counties, proposed legislation, SB-609, to establish mitigating credits. The bill failed to win the approval of lawmakers' during this year's legislative session, but Commissioner Bell expects the issue to be brought up again next year.

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carl Says:

Fri, May 16, 2008 at 2:17 pm

The insurance commissioner isn’t going to be there much longer and i’ve said it before,It wouldn’t surprise me to see him get an insurance related job with these companies. I’ve tried to contact him by phone and email and never got him. My home was built in the early 60s and I have made most of the changes on my own.Most of them were not too expensive,just time consuming, such as the shutters,$400 for the whole house and gable end,Materials and paint.Then there was the home made tie downs for the roof and utility sheds,a sumppit in the utility room,and other things to help increase wind and water resistance,such as spraying the brick with clear sealer.But none of this made a difference in the premium they wanted,so I am without coverage since Katrina. I don’t like it but you gotta take a stand somewhere.If you’ve got the money you don’t need,it would be prudent to buy it.

working4u Says:

Fri, May 16, 2008 at 12:33 pm

asda- Thanks for asking, but if I am not mistaken I think they had a hugh influx in sales of new home owner policies after the storms and have temporarily stopped writing new home owner policies for this area. You may want to call anyway.

Nationwide Insurance

asda Says:

Fri, May 16, 2008 at 12:14 pm

working4u which insurance company do you use? I need a new one and I am not going back to Allstate.

working4u Says:

Fri, May 16, 2008 at 12:11 pm

I am not bragging by any means. I have had the same Home Owners insurance with the same company for eight years. I had a roof and water damage claim after each Hurricane. Replace roof after Ivan and minor water damage after Katrina. My home was hurricane proofed when constructed in 1992. Since the first year of coverages with this company I have seen an increase of maybe $110.00 a year and that was a year after Katrina. After hearing all of the nightmares about Insurance companies trying to screw over the hand that feeds them I thought it would be different to post a positive for the insurance companies out there that have remained loyal to their customers and have not tryed to be unreasonable. The services I receive from this insurance company has far exceeded my expectations. Guess I was just lucky.

asda Says:

Fri, May 16, 2008 at 9:53 am

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asda Says:

Fri, May 16, 2008 at 9:52 am

I have emailed Mr. Bell some questions about statements he has made and also about the punishment that the insurance companies are going to get for the illegal practices. Also I asked him why ALFA had anything to do with the writing of new insurance laws. When and if he ever emails me back I will post his reply. I suggest everyone take a couple of minutes and send him an email Maybe if he gets a few thousand he might actually start paying attention.

Razorsharp Says:

Fri, May 16, 2008 at 9:47 am

I agree with Bamabob. Absence of claims and self repairs should factor in and have a direct affect on policy premiums. In fact, I think insurance on a home should no longer be mandatory. It’s useless anyway. Let them repeal that law, and watch how many people drop their expensive, lousy coverge. Then, watch these insurance companies grovel. They would have to make their rates competitive then. Seems to me like what these insurance companies are doing is a legal form of extorsion nd racketeering.

asda Says:

Fri, May 16, 2008 at 8:04 am

So ALFA drops homeowners and then tells them to sign up for the beach pool. Didn’t ALFA help write the laws for the beach pool and so forth? Sounds to me like they are dropping people and then making them sign new policies for 1/3 of the coverage and 4 times the price, even when they are making record profits on years they should have shown record losses. And the Fact that the insurance commissioner states when asked about the high cost of insurance he says well they have alot of influence what are you going to do? Sounds to me like he is getting alot of money from them. Why can’t someone investigate if they Insurance commissioner is getting kick backs from ALFA and the other insurance companies. I still want to know how Walter Bell got his job? Is he appointed or elected?

BamaBob Says:

Thu, May 15, 2008 at 6:46 pm

What if you own a home that was built in ‘76 or even older that has weathered every storm that has come this way with only very minor damages? What if you have never made a claim against your home owner’s policy, because you made the minor repairs yourself?

Shouldn’t those things factor into the cost of your policy more so than a line drawn by a bunch of bean counters working for insurance companies?

justme Says:

Thu, May 15, 2008 at 5:23 pm

No matter how many thousand’s of dollars to improve, your still going to pay top dollar for mimium coverage, and still have to fight them to get any money for repairs !