MOBILE, Ala. (AP) - Alabama will be paying $800,000 annually for three years to an insurance company as a hedge against heavy damage to state property on the coast from a major hurricane.
Under the deal that took affect last month, global insurer Swiss Re will pay the state $5 million if a Category 3 or 4 hurricane with winds between 111 mph and 155 mph hits the Alabama coast. It will pay $10 million if a Category 5 hurricane with winds in excess of 156 mph storms ashore.
State Finance Department officials told the Press-Register in Mobile the money would be used to cover all or part of the deductible that the state would pay on its traditional coverage of state property, such as parks, schools and other government buildings.
Swiss Re said Alabama is the first U.S. state government to buy such insurance, but it has sold similar policies to governments in Mexico and the Caribbean.