Upgrading Your Home Against Disasters Can Help Save You Money On Your Insurance

Ron Watson’s roof on his Alabama home looks the same as all his neighbors’ roofs. Yet his is saving him money every year. 

With the help of nails specifically designed to stay in place during high winds, along with other construction elements, Watson’s roof is less likely to be damaged in natural disasters, like hurricane force winds. 

After installing his new roof, his insurance company offered him the same discount offered to all Alabama residents which is part of a program that encourages Alabama homeowners to take steps to make their houses more resistant to disasters. 

“That’s a big incentive,” Watson said in a recent NPR article. “Homeowners insurance now has been through the roof because of the storms we’ve had through here.”

Which is why many states are now developing similar discount programs. Nearby states have modeled their approaches after Alabama due to its success. Premiums are rising at shocking rates as increasingly common extreme weather forces insurance companies to pay out more claims. 

While this is a relatively new program, over 50,000 roofs in Alabama have been upgraded through the program to provide better protection against natural disasters. These new roofs meet the FORTIFIED roof standard. With these new updates, homeowners can qualify for insurance discounts up to 20% to 35% off the wind portion of their insurance. As a bonus, strengthening other parts of the home can lead to even more discounts. 

An even newer program is now being implemented in California. The state has seen massive damage from recent wildfires, which have destroyed tens of thousands of homes. As recently as January, State Farm got approval to raise rates by 17%. 

Even with the new price hikes, California is offering less than the Gulf states in discounts. Often, they the discount amounts to less than 10% off. Unfortunately, lower prices aren’t the most pressing concern on most homeowners’ minds. They also have to worry about the possibility of losing their coverage altogether. From 2018 to 2023, almost 2 million Americans were dropped from their insurance companies, leaving them struggling to find new coverage. According to a report from the Senate Budget Committee, most of these homeowners lived in counties at high risk for disasters. 

State insurance commissioners claim that home improvements could assist homeowners in retaining their insurance. However, state governments don’t have the authority to make insurance companies insure anyone. This leaves many unsure if home improvements are even worth lower rates if their insurance could drop them at any time. 

As climate change worsens, so do the frequency and severity of natural disasters. Hurricanes and wildfires have been a major factor in recent years, and disaster experts say that communities must come together to prepare their homes for what is coming. It’s also essential that insurance companies consider what changes have been made to homes when considering where to offer coverage. Colorado has recently joined the discount group by passing a bill that will set up a wildfire insurance discount. 

Dave Jones, the director of the Climate Risk Initiative at UC Berkeley Law, and the former insurance commissioner of California, argues in the recent NPR article that, “The discount is nice and it’s a positive development, but it doesn’t matter if they won’t write you the insurance. While focus on the discount is important, there needs to be an even greater focus on getting the insurers’ models that they use to decide whether to write and renew insurance to account for these things.”

In Alabama, wind and rain can deal double damage along the coast. 

It often starts in Alabama with heavy winds that strip roofs of any form of protection. Then the rain will finish a home off by rushing through any exposed spaces, causing deep rot and destroying precious family memories. 

According to the Alabama Department of Insurance, hurricanes that assailed the state in the mid-2000s have led to home insurance wind premiums tripling in some cases. Since then, tens of thousands of homeowners have lost coverage altogether, leaving them responsible for the damages of the next natural disaster. 

After realizing the severity of the threat, Alabama came up with a solution: implementing the FORTIFIED roof standard. This idea created a set of rules to ensure that a new roof would be more resistant to storm damage. 

The first step is installing waterproofing stick-on layers to the roof. This is a preventative measure taken to ensure rain can’t get through, even if the wind takes shingles off. The second step is using ring shank nails which are rigid nails that are difficult to pull out, even during storms.

“I tell people all the time, Mother Nature is undefeated,” Travis Taylor, acting director of Alabama’s Office of Risk and Resilience, says in the NPR article. “But we have to do what we can do to limit the exposure we have, limit the damage, by fortifying.”

In 2020, Hurricane Sally hit Alabama. Damage was more common on homes without fortified roofs. In a recent study, Alabama’s insurance department discovered that homeowners who are part of the FORTIFIED roof program had filed fewer insurance claims and even claimed less damage. 

“Getting a good, certified roof is a lot,” Ron Watson said in the recent NPR article, “Watching them do it I realized, man, all the ones I had done before wasn’t near as good as this one is.”

Unfortunately, there are downsides. Fallen trees still cause major damage and major expenses. New fortified roofs aren’t designed to protect against this danger, even though storms regularly take down trees. 

New roofs are expensive, costing around $10,000 or more. While large parts of the Alabama coastline have recently adopted new building codes that resemble the successful FORTIFIED roof program, many still can’t afford such a costly new upgrade. To combat the cost, Alabama has come up with a new incentive to get homeowners to switch over.

Alabama requires all insurers to provide at least a 20% discount on the wind premium if the homeowner has a fortified roof. In most areas, customers only save on the wind portion, but along the coast, wind coverage is almost 80% of the total premium. This discount saves homeowners several hundred dollars each year.

Another incentive is that the state will pay for installation. The Strengthen Alabama Homes grant covers up to $10,000. Every three months, Alabama homeowners nervously await in anticipation, hoping that this time, they will be one of the few selected for the grant. Since its start in 2008, almost 8,500 homes have been gifted new roofs. The state now plans to continue this initiative in more northern counties starting this November. 

Richard Kindle, a recipient of the grant, said in the NPR article, “I almost cried. I was like this is too good to be true. This was a program I really needed to get in on.”

Several other states, like Louisiana and Mississippi, have created their own insurance discount programs, similarly to Alabama. 

“There are states that are copying our program down to the letter,” Taylor says in the NPR article “Everywhere the word ‘Alabama’ is mentioned, they replace it with their own state.”

Elizabeth Stage who lives in Oakland, CA is no stranger to the danger of wildfires. In 1991, she personally witnessed the Oakland Hills Fire destroy more than 3,000 homes. 

“The ’91 fire got within two houses of mine,” Stage explains in the NPR article. “House next door was unscathed, and the one past that was completely charred on one side.”

With her newfound fear of fire, Stage got to work on protecting her home. Things like her redwood deck, roof, and siding were quickly replaced with less-flammable materials. She updated her windows to dual pane tempered glass, which not only traps heat but also resists high temperatures that other windows fail at. Her new yearly tradition is clipping away all vegetation within 5 feet of her house. 

In order to get even a small discount from her insurance, Stage’s home would have to pass an inspection by the Insurance Institute for Business & Home Safety, a group that studies what makes houses burn and is funded by the insurance industry. The inspection costs $125. However, Stage is not yet eligible to pass the inspection due to a wooden staircase on the side of her home. 

Her insurance company could offer her up to 15% off if she passes the inspection, but that’s the best-case scenario. Stage has said she still plans on fixing the staircase, but the discount isn’t the driving force behind the decision. 

“It would be frosting on the cake,” she says in the NPR article “Before I worry about my premiums, I need to worry about a nonrenewal notice.” Stage is just hoping that her many home improvements will protect her from the massive coverage reversal happening across the country, and even in her own neighborhood. 

To many, the few hundred dollars of savings isn’t enough to motivate them to commit to costly repairs that are required to qualify. Cutting down foliage or replacing a roof can cost tens of thousands of dollars, far too costly to justify the meagre savings.

In California, Bill Pottinger has cleared out his flammable foliage around his home, but he doesn’t think the discount is worth the certification process. 

“So far, it hasn’t been a strongly motivating factor,” Pottinger says in the NPR article “If it ever looked as if that made the difference between my being able to get insured, or at rates that were in the vicinity of $500 to $1,000 in premium difference, that’s a much different picture.”

Safer from Wildfires, California’s insurance discount program, was established in 2022. Even for the largest insurance companies, discounts are capped at 15%, with the lowest discount being only 8%. In order to receive these discounts, all parts of a home must be protected, including windows, eaves, roof, siding at the base of the home, gates and fences, as well as all flammable vegetation. Each of the items alone often qualifies for a 0.5% to 1% discount. 

“I don’t think these amounts will cause behavior to change,” says the director of the Climate and Energy Policy Program at the Woods Institute for the Environment at Stanford University, Michael Wara in the recent NPR article, “Window replacement, siding replacement — that is not something you do to save 2% of $2,000 a year.”

Currently, discount amounts are set by insurance companies. While they do have to justify them to state regulators, the discounts are rarely enough to encourage many homeowners to make expensive changes to their homes.  

“These percentages will grow and be refined as more data come in,” says the deputy commissioner of climate and sustainability for the California Department of Insurance, Michael Peterson in the NPR article. “We will get more information on the performance of those actions and then be able to do similar things that really hold the whole system accountable for having percentages of discounts that do reflect the real risk reduction.”

While insurance experts are confident wind-resistant roofs can help lower damage, wildfires are simply just more difficult to prepare for. Having a fire prepared home often comes with retrofitting countless parts of the house, as well as staying on top of the flammable yard work.

“We are in a fundamentally different position than Alabama,” Wara says in the NPR article about California. “The benefits of a super roof are fully captured by the person who makes the investment. One of the challenges with fire is that it matters what your neighbors do too.” Basically, one homeowner could take every measure to protect their home, but if their neighbor has been lax about their home’s safety, both homes are still in danger. 

Insurance experts have suggested implementing policies that would protect homeowners who have upgraded their homes from losing their coverage. The believe this would lead to more active participants in the program. Only one insurance company (CSAA) in California guarantees customers will keep their coverage if their home is wildfire certified. 

“This is a huge problem and one that insurers can and should address by making sure the models they use to decide whether to write or renew insurance accounts for empirically proven property and landscape-scale adaptation,” Jones says in the NPR article. “They need to begin to do it, or states are going to pass laws to require it.”

In 2020, California introduced a bill that required insurance companies to offer policies for wildfire-prepared homes. However, the bill was quickly shot down, and no bills of similar subject matter have passed in the years since. The state has started a program that helps whole neighborhoods protect their homes. The program is currently working with pilot groups. A new bill, the California Safe Homes Act, would help provide grant money for home projects, but has yet to be approved. 

Insurance is already expensive, but to keep it from getting worse, implementing protective measures can help fend off high prices and high damages from the escalating natural disasters.