[BstYet2Be]

From: Alfa raises homeowners insurance rates by 20 percent across Alabama | al.com

Alfa Mutual Group has raised homeowners insurance rates by 20 percent statewide, with even steeper increases for landlord and farmowner policies. Insurers had been less shy about raising rates in Mobile and Baldwin counties, where policyholders typically pay from twice to four times the state average for homeowners policies.

There outta be a law! Has anyone heard any feedback yet from the Governor's insurance reform commission meetings they've been holding? I'm referring to these and any others that have been held:

See: Frustrated policy holders flood insurance commission meeting (http://www.baldwincountynow.com/articles/2011/09/06/local_news/doc4e5c81547153b358609540.txt - broken link)
and- Governor's insurance reform commission meeting in Mobile tonight (http://www.baldwincountynow.com/articles/2011/09/06/local_news/doc4e5be0de087e2295767923.txt - broken link)
and- No insurance crisis evident in Dothan; meeting draws small crowd | al.com

[skinem]

I heard Clark Howard talking about this the other day...not Alabama specifically, but homeowners insurance nationally. He said it's going up everywhere, and the reason he gave is not what I assumed--large losses due to natural disasters (although I'm sure they haven't helped.)

According to Howard, insurance companies don't make their money off our premiums, but from investing our premiums, which makes sense. He says that the market has been off for some time, especially recently and that returns on money due to such low interest rates have been so poor for the companies that they are having to raise rates to make money.

Not that I like his explanation, but it makes sense...at least when he explains it.

[thereandbacktwotimes]

Originally Posted by skinem

I heard Clark Howard talking about this the other day...not Alabama specifically, but homeowners insurance nationally. He said it's going up everywhere, and the reason he gave is not what I assumed--large losses due to natural disasters (although I'm sure they haven't helped.)

According to Howard, insurance companies don't make their money off our premiums, but from investing our premiums, which makes sense. He says that the market has been off for some time, especially recently and that returns on money due to such low interest rates have been so poor for the companies that they are having to raise rates to make money.

Not that I like his explanation, but it makes sense...at least when he explains it.

Good information! Thank you for posting!

[Keeper]

If that is true then how come the rates always go up AFTER a natural disaster? Living in FL our rates always went up and then after 04 hurricanes the major insurance companies all pulled out.

I am sure that part of that is true but I don't believe it is 'The rest of the story'

[skinem]

Originally Posted by Keeper

If that is true then how come the rates always go up AFTER a natural disaster? Living in FL our rates always went up and then after 04 hurricanes the major insurance companies all pulled out.

I am sure that part of that is true but I don't believe it is 'The rest of the story'

I think both that and what you've said is the 'rest of the story'...it is both.

It does only stand to reason that where you live has an effect upon your rates...after all someone in Nebraska shouldn't be paying as high a rate as someone living in a flood-prone hurricane zone. And someone in Nebraska is more susceptible to tornadoes than someone in southern Cal who is more susceptible to earthquakes, etc...so another big portion is the actuarial tables.

Plus, lousy investments and investment opportunity. No one factor determines our insurance rates.

[harry chickpea]

I seem to be in the vanguard here. When HOI rose to over two percent of the value of our entire property (land and all), I dropped it. I understand the risk, but the actuarial tables are on my side by a wide margin. More and more people who have paid off mortgages and are in fairly low risk pockets will be doing the same as inflation eats away at savings and earning power.

[Keeper]

My HOI rate went up last year after the tornado hit in Guntersville area. I am sure it will go up again this year.

[Jkgourmet]

Originally Posted by harry chickpea

I seem to be in the vanguard here. When HOI rose to over two percent of the value of our entire property (land and all), I dropped it. I understand the risk, but the actuarial tables are on my side by a wide margin. More and more people who have paid off mortgages and are in fairly low risk pockets will be doing the same as inflation eats away at savings and earning power.

Did you keep your liability coverage? Like an umbrella policy?

[harry chickpea]

We are far enough out in the country that I dropped the whole thing. We don't have visitors to speak of. I might reconsider it though. I had a liability only policy once before, with a couple of exclusions, and it was inexpensive.

The route I am taking is not for everyone. A lot of research went into location, and we obviously don't have a mortgage. We also spend a good part of the savings on fire prevention stuff, cameras and anti-theft, and stay super-aware of our risk. The one big risk for us is wind, but we avoided the known tornado corridors. Noah would be knocking at our door if there was a flood big enough to cause us a problem.

[BstYet2Be]

Just as a FYI, I was searching to see if the State of Alabama had a comparison chart for homeowner insurance premiums like the one I knew Texas had, and found it does have one - one that lists sample rates by city for five different scenario examples. (Disclaimer: not all cities are included).

See: AL Homeowners Premium Comparisons

This may answer some of the questions those contemplating moving to the area may have on AL's HOI as well as current residents looking to find lower rates that may be available.