Alabama coastal property owners face more insurer restrictions

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Two of the Alabama’s largest insurance firms said they’re reducing coverage and increasing deductibles in Mobile and Baldwin counties, citing frequent hurricanes, coastal construction growth, lack of strong building codes and the cost of reinsurance.

The insurers, State Farm Fire & Casualty Co. and Allstate Property and Casualty Insurance Co., cover about 41 percent of the homeowners market in Alabama and took hits from Hurricanes Ivan in 2004 and Katrina in 2005.

Other insurance firms could follow their lead with cutbacks, insurance officials said.

State Farm decided that effective Sept. 18, any new homeowners policy in most of Mobile and Baldwin counties will carry a mandatory 5 percent hurricane deductible, rather than the 2 percent in existing policies.

The company is not writing new home, boat or commercial policies near the water, and it won’t take on any new churches, condominiums and apartment buildings for an even larger area – most of Mobile and Baldwin counties, the Press-Register in Mobile reported.

Any new policy in those counties will now carry a 1 percent deductible for non-storm loss, rather than a set dollar amount.

State Farm spokesman David Majors and officials with the Alabama Department of Insurance confirmed the changes.

“They’re basically taking the position of no new business in areas near the coast,” said Ragan Ingram, of the state insurance department.

Allstate also plans to “significantly” expand the area in which it will require 5 percent hurricane deductibles for all residential policies, including some areas of the city of Mobile, Ingram said. Allstate spokeswoman Renita Ward said the company may also drop some customers, raise premiums, limit new commercial policies and change other underwriting practices. She said the company has not decided which areas will be affected.

In some cases, Ward said, Allstate could help people whose policies are not renewed find coverage with other companies.

Allstate has filed a request with the state Insurance Department to raise its homeowners rates, but that hasn’t been approved.

The state has already approved changes to State Farm rates. Rates in Mobile and Baldwin counties, rates went up 23 percent close to the water and 14 percent further inland, Ingram said.