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Big Premiums, Paltry Payouts

Tuscaloosa resident in aftermath of tornados of April 27, 2011.

Tuscaloosa resident in aftermath of tornados of April 27, 2011.

Photo by Caroline Baird Summers

Alabamians are among those crying foul over the discrepancy between what insurers charge for coverage and the payout when claims are made. 

The Wall Street Journal, in a January feature about complaints from residents all along the South Atlantic and Gulf Coasts, highlighted activities of Alabama-based Homeowners’ Hurricane Insurance Initiative.  The group is “lobbying against rates they say are rising so quickly they are causing foreclosures among working-class people and retires on fixed incomes,” writers Valerie Bauerlein and Leslie Scism say in the Journal.

They report that the group’s coordinator, Michelle Kurtz, contends that coastal residents pay $3,000 or more a year in insurance on a $150,000 home while residents in other parts of the state pay less than $1,000, despite widespread tornado damage there.  Insurance Commissioner Jim Ridling is quoted as saying that hurricanes have struck 10 times in 15 years while the 2011 tornadoes were a one-time event.

A database commissioned by the Legislature, which would allow the rates-versus-claims issues to be sorted and studied by zip code, hasn’t yet been completed, the Journal reports.

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