Ever-increasing homeowner insurance rates are not only affecting family budgets, but also home sales.
For example, an older home north of Interstate 10 in Spanish Fort - elevation 150 feet above sea level - would appear to be a likely candidate for lower rates. Not so, prospective buyers are finding. In fact, they may be shocked to find that they need to be insured through the Alabama Insurance Underwriting Association (AIUA), also known as the "beach pool."
The root cause is that insurers are trying to reduce their liability along the entire Gulf Coast. To do that, they have constructed parameters on what they will insure and where.
Three Eastern Shore insurance agents whom I contacted agreed to tackle a couple of questions to try to explain: They are: Lad Drago Jr. of State Farm; Glen Gorowsky with the independent Gorowsky Group; and Matt Malone of Malone Insurance, which sells Farmers Insurance. Each agent also sells other insurer's products.
Q: Since insurance cost is a consideration in a house purchase, what type of house, what age and what location will get a buyer the best rate?
A: Drago: Newer, brick homes will always get a lower rate than frame or older homes. Homes located in north Spanish Fort (north of Bay Minette Creek), Stapleton, Loxley, Silverhill, Robertsdale and north Foley are going to get lower rates and can be written through State Farm with wind coverage included. My team will map the homes and let the buyer know what to expect. Homes in southern Spanish Fort, Daphne, Fairhope, and Point Clear can be written through State Farm with AIUA for the wind.
Gorowsky: This has been a moving target and has just changed with the last major insurer (Farmer's) now not writing in Spanish Fort or Daphne.
The main consideration is distance to the water. From U.S. 98 west is the most expensive; going east of it drops as the carriers' exposure drops.
Older homes still rate well, but could experience a rate surcharge if the roof is older than 20 years. When shopping, make sure you know how old the roof is, or when it was replaced.
Malone: New house Fairhope 2006 or newer. The Loxley, Silverhill, Robersdale and Foley are still good (if they are built no later than 1995). 36526 (Daphne) and 36527 (Spanish Fort) are out (with Farmers). Fairhope is 2006 and newer. We have current contracts with Geovera, Lexington, Foremost (owned by Farmers) AIUA (beach pool).
Q. What options do homeowners have if their insurance is so high that they are having trouble paying for it?
A: Malone: I hear that a lot. It's sad. I hate it. They could maybe downsize. ... Some folks that own their home are self-insuring the wind. I do not advise this.
Drago: The only advisable option is to increase their deductibles. By taking on more personal risk through increased deductibles, a customer can reduce his annual premium. State Farm also gives a substantial discount to homeowners who also have their cars insured with us. Finally, if a person is purchasing an older home that has been completely updated (electrical, plumbing, and AC) they may qualify for a 35% Utility Rating Discount on their premium.
Gorowsky: Shop it. At times certain Lloyds of London syndicates offer outstanding rates, but once their quota is written, it goes away until a new quota is offered. New insurers are rumored to start writing in the next 3-6 months.
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