Insurance companies will still pay

Even if a house does not meet code, insurance will still pay for damage from a hurricane

By COLLINS CONNER

© St. Petersburg Times, published June 27, 1999

Click here for main story The long, lonely fight Repairs can cost thousands What you can do about your own house The experts How the Times study was done Letter from Lennar Homes Summary of engineer, builder responses

Here's the worst-case scenario

A major storm hits Tampa Bay, where thousands of gable homes were built after 1992; Andrew's terrible toll is repeated.

Will insurance companies pay to repair or replace homes whose designs didn't meet code?

Yes, says Leslie Chapman Henderson, who heads the insurance industry's educational arm, the Florida Alliance for Safe Homes.

"We can't penalize our consumers like that," she said. "If something is not built to code or if the (construction) doesn't meet the standards sufficiently, we settle with the customer and (go) back against the builder or responsible party."

But that approach hits the insurance industry from another direction.

"After Andrew, class-action suits were filed against the builders," said Peter Billing, director of codes and standards for the industry's Institute for Business and Home Safety. "The builders came out on the bad side. But they were insured, so insurance companies paid that too. So no matter which way you go, the insurance industry ends up paying."

The insured losses in Andrew, when more than 8,000 homes were destroyed and 37,245 suffered major damage, were $17-billion. Those 1992 losses could have been cut by 40 percent had all the buildings been designed and built to code, according to the insurance industry's studies.

Though it was clear from Andrew that gable homes are particularly vulnerable to high winds, the industry continues to insure gabled homes, even though the design makes it more vulnerable to high winds.

"As far as refusing to insure a gabled house, given the extent of regulation we face, we'd face government problems if we refused," Henderson said.

Instead, the industry has launched a drive to persuade home buyers to insist on wind-resistant construction in their homes.

"I believe it's got to become something like car safety, where people not only feel they want it, but they feel they need to have it. People won't buy a car without air bags," said Henderson. "We have to have home-buying customers who say, 'I don't want this thing because it doesn't have a reinforced garage door.'

"House builders must know that they need to have safety features to compete. The industry isn't going to do it on its own."

But homeowners are unlikely to make those demands as long as they can buy reasonably priced insurance, according to Joseph Minor, a wind-engineering expert.

"For years before Andrew, you could insure a house in Palm Beach County for $300 a year," Minor said. "This year, on the home of a friend, (the insurance rate) passed $1,000. And he's beginning to say, 'I'm going to have to do something to see if I can ease this insurance burden. I've got to start thinking about shutters, retrofitting garage doors, whatever the insurance companies give points for.' "

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