Biloxi Weighs Wind Insurance Options

"Very painful." That's how one Biloxi city councilman described looking over the city's projected property insurance cost for the upcoming year. At a special meeting on Tuesday, the city's insurance broker briefed the council on its insurance options.

The Biloxi city council has a big decision to make before July 1st concerning its wind storm coverage. Some leaders say no matter what they do, the city will have to shell out hundreds of thousands of dollars more than last year.

With its stately columns and historical architecture, the mayor says Biloxi's City Hall appraises at $4.7 million. If wind destroyed it, the city would only get an insurance check for a quarter of that amount. That's under its current policy.

"We had dropped some [coverage] earlier because when we first renewed this after the hurricane. Then, the insurance rate was really high, so we dropped off some and we're going to pick that back up," Ward 5 Councilman Tom Wall said.

Biloxi's insurance broker told council members they had several options. One choice is pay $779,159 for wind coverage. That's an additional $400,000 for the same amount of wind coverage as last year. Another option is to pay $1.4 million for up to $31 million of coverage. Some council members think the later option is the better deal.

"The policy that we currently have limits our loss to $1 million for wind per building," said Ward 2 Councilman Bill Stallworth. "The other policy we looked at would cover basically whatever loss the building experienced, so there would be actual replacement value."

Councilman Stallworth says premium prices aren't the only concern.

"FEMA is also going to require us to make a good faith effort to improve our insurance coverage above what we were," he said. "If we simply replace what we had, then they can come back on us and say, 'No. You haven't done enough, and we may not want to insure you with flood insurance for the following year.'"

City leaders should vote some time this month on how much they'll pay. Either way, they say it won't be easy.

Councilman Wall said, "It is painful. It is painful. I don't know how to describe it, but it's outrageous. But it's something that we're going to have to do. We can't leave ourselves uncovered."

The insurance broker also told council members they could chose to fully insure Biloxi's buildings for $1.7 million. He also gave some good news. The coverage the city was unable to buy last year, even if it had wanted to, is available this year.