Alfa Insurance Ties Homeowners Coverage to Auto in Alabama

Alabama residents who have their homeowners insurance through the state’s second largest property insurer must now include their auto coverage as part of their insurance package.

Alfa Insurance Co. announced it will no longer underwrite single homeowners policies in Alabama. It will only provide coverage to homeowners who also place their auto coverage with the company. Agents have the option of using other carriers for their homeowners-only business.

Alfa spokesperson Jeff Helms said the decision is part of a plan to streamline the insurer’s book of business and provide better customer service. He also said the insurer’s 500 agent force will be in a better position to attend to individual clients’ needs.

“Our personal approach works best when we can reach all of a person’s insurance needs,” he said. The insurer offers automobile, home and life insurance.

Klye McCaleb, an Alfa agent in Phoenix City, Alabama, said linking home and auto insurance has been a trend, not only with Alfa, but also with other insurers. From a customer’s point of view, he said, there are pluses and minuses. For example customers who insure through Alfa could receive a 15 percent discount on their homeowners policies and 12 percent on auto policies.

However, he also noted, if other companies follow Alfa’s lead, customers may find themselves forced to go with one insurer or be stranded.

“It will be benefit customers in some ways, but cost them more in others,” said McCaleb.

The Montgomery, Alabama-based Alfa’s decision to link home and auto insurance is just the latest step by the insurer to reshape book of business.

In June, the insurer announced it would drop 73,000 policies as they come up for renewal. The majority of those policies cover multiple rental properties owned by landlords and individual homeowners who didn’t have other coverage with the insurer. Minus those 73,000 policies, Alfa will still cover about 330,000 homeowner policies and 20,000 businesses and churches.

In September, Alabama regulators approved a statewide average 20 percent increase in Alfa’s homeowner rates. That increase, however, doesn’t cover the losses suffered by the insurer as the result of the tornadoes that swept through the state last April. Alfa officials predicted that the tornadoes would generate 25,000 claims totaling $475 million in damages, making it the costliest storm in the insurer’s history.

Topics Carriers Auto Alabama Homeowners