Since Hurricanes Ivan and Katrina, Alabama coastal residents have been burdened with higher homeowners insurance premiums, which has caused many to reduce their coverage to save money.

Many initiatives, such as the Strengthen Alabama Homes Program (SAHP), look to bring insurance companies back to the coast in hopes that more competition brings lower premiums for residents.

The aftermath of Hurricane Katrina. (File)

The Alabama Center for Insurance Information and Research at the University of Alabama just released “The Alabama Coastal Insurance Shopper’s Guide” to help property owners along Alabama’s Gulf Coast find the most competitive rates.

Lars Powell, director at ACIIR, said the new shopper’s guide will help homeowners know how to shop around more easily.

“There are more insurance companies writing at the coast today than there were before Hurricane Ivan,” Powell told the Alabama Center for Real Estate. “Some of them charge twice as much as others for exactly the same coverage. This can only happen in a market where people do not shop around. Competition could run some of the higher-price/lower-service companies out of the area. This is not a bad thing. If other companies know that Alabama is shopping around, and they can effectively compete and market their products, the companies we want — those with competitive prices and good service — will come to the coast.”

Powell said the shopper’s guide could be a powerful tool for Realtors who are assisting homebuyers.

Lars Powell, Alabama Center for Insurance Information and Research

“If a Realtor understands the process of buying homeowners insurance, they can be very helpful to their clients,” Powell said. “No one likes shopping for home insurance, because it is confusing and tedious, like closing on a house. The guide explains that many of the documents involved in buying a house are very useful when shopping for insurance — inspection report, appraisal, etc. More generally, if the Realtor understands the process of buying insurance, they can give their clients good advice.”

Powell said the average homeowners wind insurance premium in coastal Alabama is around $2,000.

“The same coverage for the same house will result in a different premium from each insurance company,” he said. “In some cases, the homeowner can save 50 percent of their insurance premium just by shopping around. For what it’s worth, a homebuyer with $1,000 per year more in their budget can spend about $17,500 more on a home — $84 per month over 30 years at 4 percent interest. The differences in premium across insurance companies increases with the value of the home. Most people would rather have a bigger, better house than to pay unnecessary insurance premiums.”

The guide is broken down into four parts:The Process of Buying Homeowners Insurance, Elements of Insurance Coverage, Markets for Homeowner’s Insurance and Homeowners Comparison Checklist.

It also includes the Top 10 Questions to Ask About Your Homeowners Insurance:

• How much coverage did you quote on my house and does this include detached structures (garage, workshop, etc.)?
• How much coverage is provided for my personal property?
• Are my contents insured for replacement cost or actual cash value?
• Is my house insured for replacement cost or actual cash value?
• Do I have sewer and water coverage?
• How much is my deductible in dollars? How about my wind deductible?
• Do I have (or did you quote) a separate wind/hail policy?
• Do I have coverage for additional living expenses?
• How much ordinance and law coverage do I have?
• Do I have (or did you quote) a Flood Policy? What is my flood zone?

For more information about obtaining a copy of the Alabama Coastal Insurance Shopper’s Guide, click here.