Alabama Homeowners Insurance Rates Soar; Coastal Areas Hardest Hit

Homeowners insurance rates in Alabama jumped by 69.1 percent between 2001 and 2005 — the second-largest rise nationally — despite the fact that Alabamians have lower incomes and are typically insuring less expensive homes than in most other states.

According to figures from the National Association of Insurance Commissioners, the rate pushes the state’s average premium for the most common kind of homeowners insurance well above the national norm. Only Minnesota was worse with a 70.3 percent increase.

Insurance Commissioner Walter Bell said the pain for homeowners in Alabama’s two coastal counties, Mobile and Baldwin, has continued to worsen since 2005, although there have been signs of improvement in the state’s other 65 counties.

The NAIC has yet to release data for 2006 and 2007. Bell told the Press-Register that he expects costs to rise at a lower pace beginning next year if there isn’t a catastrophe. He understands consumers are unhappy about rising prices, but noted that private companies are still shouldering all risks of hurricane damage in Alabama, unlike in other places where state government has taken on risk or insurance is unavailable.

“If we maintain a market in a very high-risk area and other states can’t maintain a market in other high-risk areas, I would call that successful,” Bell said.

A Press-Register analysis of the data shows that Alabamians paid at least 67.76 cents per $100 of coverage in 2005, around 40 percent more than nationwide numbers. This was the sixth-highest rate in the country. The median Alabama policy covered less than $125,000 in value.

State Sen. Ben Brooks, R-Mobile, who’s pushing of bills to entice more private insurers to write policies along the Gulf Coast, said high prices and State Farm’s plan to cut back on new business in the area show that the market hasn’t healed itself.

Topics Homeowners Alabama