Implementation of Alabama Act 2009-500 — premium discounts or rate reductions for fortified one- or two-family dwellings
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Governs implementation of Alabama Act 2009-500 requiring Alabama-admitted property and casualty insurers to offer premium discounts or rate reductions to owners of certain fortified or retrofit one- or two-family dwellings located in Mobile and Baldwin Counties, and sets filing, notice, and eligibility requirements.
No material clinical or coverage changes in this revision.
Eligibility and Required Offerings
Eligibility and insurer obligations
Properties eligible for required premium discounts or rate reductions must meet ONE of the following construction or retrofit standards; insurers also have filing, notice, and application obligations.
ANY of the following
- New one- or two-family detached dwellings (including certain modular homes, but excluding manufactured homes) that have been designed and constructed in conformity with, and certified as meeting, the Fortified ‘for safer living’ standards promulgated by the Institute for Business & Home Safety (IBHS).
- New one- or two-family detached dwellings that have been designed and constructed in conformity with, and certified as meeting, the requirements of the 2006 International Residential Code for One- and Two-Family Dwellings (including the design criteria applicable to construction in hurricane-prone regions).
- Existing one- or two-family detached structures that have been retrofitted and certified as meeting Level 1, Level 2, or Level 3 hurricane mitigation measures in the Fortified: Existing Homes program (IBHS).
- Existing one- or two-family detached structures that have been retrofitted and certified as meeting the requirements of any other standardized code submitted by an insurer and approved by the Commissioner.
- Manufactured homes designed and manufactured to comply with Federal HUD construction and safety standards applicable to Wind Zone III (24 C.F.R. § 3280.305) and certified as meeting the Fortified: Existing Homes program requirements.
ALL of the following
- The premium discount or rate reduction must be offered to the owner of an eligible property whether or not the property is owner-occupied.
- The Act does not require discounts or rate reductions for condominiums, apartment buildings, commercial properties that do not meet the eligible-property definition, or for renter/tenant policies.
ALL of the following
- Insurers must offer the discounts or rate reductions for eligible properties located in Mobile County and Baldwin County, Alabama; insurers are strongly encouraged to make such discounts available elsewhere in Alabama.
ALL of the following
- Insurers must file actuarially-justified rating plans recognizing the required premium discounts or rate reductions with the Department of Insurance by January 1, 2010, unless the insurer elects to file discounts equal to or exceeding Department benchmark discounts published in SERFF, in which case actuarial justification is not required.
- Insurers with approved filings must notify insureds in Mobile and Baldwin Counties in writing at the next policy renewals on or after May 1, 2010, about the availability of discounts, the general nature of the improvements or documentation required, and where detailed standards information can be obtained.
- If a property becomes eligible during a policy term, the insurer must apply the discount or rate reduction for the remainder of the coverage term.
- Failure to file required rating plans by the January 1, 2010 deadline may result in Department action under the Insurance Code.
ALL of the following
- The Act became effective May 14, 2009, and applies to new policies written or existing policies renewed on and after May 1, 2010.
If an insurer elects to file discounts equal to or exceeding the Department benchmarks published in SERFF, the insurer need not provide separate actuarial justification for the filing.
Standards, Benchmarks, and Filing Rules
| Fortified standards / 2006 IRC / Fortified: Existing Homes Levels 1-3 | Construction or retrofit certifications that qualify property for discounts under the Act. |
Insurer Filing, Notice, and Mid-term Requirements
File rating plans by Jan 1, 2010 — benchmark option available
Each affected insurer must file an actuarially-justified rating plan with the Department recognizing the required premium discounts or rate reductions by January 1, 2010, to allow review and approval for use by May 1, 2010. Insurers that elect to file discounts or reductions equal to or exceeding the Department's benchmark discounts published in SERFF are not required to submit actuarial justification.
- Deadline to file: January 1, 2010
- If filed discounts >= Department benchmarks published in SERFF, actuarial justification is not required
- Failure to file by January 1, 2010 may result in Department action under the Insurance Code
Provide written notice to insureds at next renewal on/after May 1, 2010
Insurers with an approved rate filing must notify all insureds in Mobile and Baldwin Counties in writing at the insureds' next policy renewals occurring on or after May 1, 2010, about availability of the discounts or rate reductions, the general nature of improvements and documentation required, and where detailed standards information may be obtained.
- Applies only to insureds in Mobile and Baldwin Counties
- Notice timing: at next policy renewal on or after May 1, 2010
- Notice must: (1) state availability of discounts/reductions, (2) describe generally the improvements/documentation required, and (3) advise where detailed standards info can be obtained
Apply discount mid‑term when property becomes eligible
If a property becomes eligible for a discount or rate reduction during the coverage term, the insurer must apply the discount or reduction for the remainder of that coverage term.
- Applies mid-term when property attains eligibility
- Discount or reduction effective for remainder of coverage term once eligibility occurs
Property Types and Eligibility Definitions
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