Insurance Program ‘Fortifies’ a Builder’s Bottom Line

Filed in Codes and Regulations, Design by on April 4, 2017 0 Comments

Tom Stokes, president of Alabama’s Truland Homes, found a profitable niche for his company with the help of an above-code program designed to give new home buyers additional peace of mind — not to mention, deeply discounted insurance premiums — in hurricane-prone regions of the country.

The FORTIFIED Home™ program from the Insurance Institute of Business & Home Safety requires property protection upgrades, including sealed roof decks, additional bracing and gables and vents that resist water intrusion — and two inspections to ensure correct installation.

After a series of hurricanes, including Katrina which devastated the Gulf Coast in 2005, many home owners in the southeastern United States were dismayed when their insurance companies began to withdraw from the market. Those that remained boosted their premium costs by up to 500%.

The Fortified Home design, inspection and certification program was launched to bring insurers back into the market with more reasonable rates. And when the rates didn’t go down as quickly as planned, some states decided to institute cost savings by mandating the discounts in cases where the home is certified.

Alabama was one of them, and Truland Homes was among the first builders to look into the program.

Participating builders must submit to a special inspection before being certified to the Bronze, Silver or Gold levels, with each level adding more layers of protection against the winds and rains that accompany hurricanes.

“We had some concerns — How much more would this cost? How much time would it add? And for us,” a company building about 250 homes a year, “how do we take this program and do it across the board with all our homes?” Stokes said.

Truland started building Fortified Home prototypes with “early adopters,” the engineers, code officials and others who expressed interest in the program. Once they got started, “We wanted to see consistency, and that is exactly what we found.”

By 2015, Stokes was comfortable enough to make the Fortified Home certification a standard feature on all his homes.

“We wanted to be a leader and be of more value to our customers, and it’s been a huge success for us,” he said.

The additional labor and materials costs range between $2,000 and $3,00 per home and the inspections add about two days to the construction time, but they can pass the costs on to their customers because of the stark difference in insurance costs compared to non-Fortified homes: Stokes said a 4,000-square-foot house without the certification costs $5,000 per year to insure, while the same home build to the standard is about $1,200 a year to insure. The Alabama discount sheet has the details.

Best of all, Truland Homes is setting the standard for the market, Stokes said. As the insurance industry promotes the program, more and more potential customers ask about it, and Truland is ahead of the game. “We can advertise it and promote it. And others can’t talk about it yet,” he said.

Learn more at the FORTIFIED Home™ website.

 

 

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