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Hurricane rates move inland

By Jay MacDonald ·
Friday, January 28, 2011
Posted: 10 am ET

Just because you live inland doesn't mean you're safe from hurricanes – or their potential impact on your homeowners insurance rates. A new computer model due out this spring could redraw the map on America's hurricane territory and stick many inland homeowners with the bill.

The Sarasota Herald-Tribune reports that forthcoming computer models by Risk Management Solutions, one of the companies that help insurance companies estimate hurricane losses, could spread the risk for hurricane losses further inland than ever before.

"Based on recent storms, especially Hurricane Ike, which tracked north up the Ohio River Valley and swamped Chicago in 2008, the company has concluded that storms do not fall apart over land as quickly as previously believed," says the story.

The new RMS model reportedly increases the annual expected hurricane losses from Texas to Maine by 25 percent, and includes such inland destinations as Pittsburgh and Memphis.

The old "Florida rule" that reserved higher homeowners insurance rates for residents on the windward side of the state's coastal interstates also takes a hit. As a result, homeowners in Orlando could see rates creep up, while some coastal residents might actually see a decrease in their insurance premiums.

It's important to note that RMS is just one of several models that insurance companies consider when determining rates. If the model gains acceptance, especially among the reinsurers that insure the homeowners insurance companies, consumer rates could increase, especially inland.

It is also important to note that these models are not released to the public and their review by state insurers, at least in Florida, are confidential by law.

What do you think? Should inland homeowners insurance rates be bumped based on fluky Hurricane Ike? Is global warming making more of the country vulnerable to the whims of weather? Or are the models little more than a scientific way to pick your pocket?

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February 27, 2011 at 11:36 am

I've lived on the (Alabama) beach, on a bayou & now appr. 16 miles from the beach. When I lived on the bayou (Florida) (I-10 bridge just around the corner was hit by Ivan & out of service for a long time) my rates via USAA were very reasonable before the hurricane (I sold 4 mo. before the hurricane). Waterfront lot, NOT on pilings two story with siding. I moved to Alabama, inland (16 miles) one level brick home & USAA sent my premium out the roof. I inquired why this happened...seems they considered the whole county when applying windstorm/hail rates (6 yrs ago). I had to switch companies, as the rate USAA quoted was near $5,000. My house in AL had zero damage from Ivan. The house in FL, on the bayou ....whole 1st floor washed away. Took the owners over 8 mo. to put it back together. I heard Chinese drywall was used....yipes!!

C. Burke
January 28, 2011 at 12:43 pm

I've already been hit. My insurance rates went up 40% from last year, and by shopping around, everyone else was up, too.
I was told the lines were moved inland, and I was now considered a higher risk. I'm in S.C. Our last major hurricane was Hugo in 1989.