In an unprecedented move, Nationwide Insurance has kicked off a discount program based on home construction features, including roof type, window protection and secondary water resistance.
Reducing premiums for homeowners through Nationwide’s Wind Mitigation Program will spur rebuilding activity, particularly along the Mississippi Gulf Coast, where some projects have stalled because of exorbitant insurance rates.
“Insurance is one of our major issues,” admitted Biloxi Mayor A.J. Holloway. “The cost is just killing people and efforts to rebuild. For some people to insure their homes, it’s as much as $10,000 to $20,000.”
Nationwide has long been a strong supporter of wind mitigation and strong building code enforcement to protect coastal property, said Nationwide spokesperson Nancy Smeltzer.
“This unique program offers a significant financial incentive to property owners that we believe will encourage stronger structures that can withstand hurricane force winds,” she said. “Nationwide was pleased to work with the Mississippi Insurance Department to develop this program to help coastal policyholders. We’ll continue to work with regulators to develop sound policies and programs.”
At this point, it’s too early to predict the number of participants, Smeltzer said, “but we’re pleased with the positive feedback that has been received from customers and agents.” The program takes effect April 13, 2009.
In September, Nationwide filed hurricane mitigation construction discounts that will affect personal lines property, including homeowners, tenants, condominiums and mobile homes. The wind mitigation discounts are available to existing homeowner policies in the six coastal counties of George, Hancock, Harrison, Jackson, Pearl River and Stone.
Discounts may range from 1% to 35%, depending on the changes made, and multiple discounts may apply.
“Discounts will be given for such things as roofing materials, roof shape, roof deck attachment, roof-to-wall construction, window and door protection and secondary water resistance,” explained Smeltzer, noting that secondary water resistance refers to roofing felt or some other approved layer of protection between shingles and the roof sheathing below. “Property owners may also be eligible for premium credits by increasing some deductibles. Other discounts may be applicable for such things as age of home and insuring multiple products.”
State Insurance Commissioner Mike Chaney, who said consumers expressed enthusiasm about the discounts “and the fact that discounts can be stacked” during a recent meeting on the Mississippi Gulf Coast, is excited that Nationwide is rolling out this program “without government being involved.”
“We’ve encouraged it, but there hasn’t had to be a mandate to get them to do it,” said Chaney, who has met with a half-dozen insurers about offering similar programs. “The momentum’s building, and we think we’re going to get a lot of others on board. The key is … you’ve got to build your high-risk area home back to some standard of building code that’s enforced uniformly and above the flood plain. It’s pretty simple. If you do this, you save lives and you save property. A byproduct is you’ll get a cheaper insurance rate. It’s to the insurance company’s benefit to encourage people to build back safer because they’ll pay out fewer claims in another hurricane and the risk is reduced when they insure a home. It’s a win-win for everybody.”
Don Halle, president of the Home Builders Association of the Mississippi Coast and owner of Gulf Construction, said builders are interested in “anything that’ll help us get costs down.”
“Builders are faced with the problem now of finding ways to cut costs,” he said. “That’s become difficult. What if we save money on one side because of reduced insurance costs and have to raise it on the other side because of the cost of building the home? We don’t yet know all the costs associated with the required features for the reduced insurance, but I think builders are willing to comply if they can do it within the cost restraints they’re faced with.”
Contact MBJ contributing writer Lynne W. Jeter at Lynne.Jeter@gmail.com.