Understanding AIUA Policies – What is at stake?


In last week’s post, we discussed loss settlement types – ACV (Actual Cash Value) versus RCV (Replacement Cost Value).  We provided information about the benefits of RCV settlement types and touched on the fact that many insureds may not know what type of loss settlement method their policy contains.  As we’ve said many times, when it comes to your insurance, the devil is in the details. Knowing your settlement type, deductibles, and most importantly what is and is NOT covered is extremely important when purchasing insurance.  We’ve made it our mission at SSIA to help educate the consumer so they aren’t surprised and trapped in an unfortunate financial situation upon suffering a loss.

Part of our education mission is to advise the public when we become aware of any important issues in the insurance industry, particularly those that can, and often do, affect some of our friends and neighbors.  One such issue is related to certain AIUA (Alabama Insurance Underwriting Association) issued policies.  If you currently carry, or are considering the purchase of a homeowners or dwelling policy issued through AIUA, this information is very important to you.

Currently, there are approximately 31,000+ AIUA issued policies, and of these, roughly 91% are written with an actual cash value settlement method.  Combined with high deductibles, many of these policyholders may be paid nothing, or only cents on the dollar after a claims event.  This leaves citizens in our community in an extremely vulnerable position creating a situation where they may not be able to repair or rebuild.

AIUA’s mission statement is to provide a market from which consumers can “obtain essential insurance when they are unable to obtain coverage in the private insurance market.” Essentially AIUA is there to provide coverage when there are no other alternatives left for the consumer.  Despite multiple carriers currently offering broad coverage at affordable rates in Mobile and Baldwin counties, AIUA’s sales continue to grow suggesting that they are becoming the preferred choice amongst many agents and consumers, rather than the insurer of last resort, as bottom line price savings become the only focus.  Consumers must begin to realize that high deductibles and actual cash value settlement methods may make it financially impossible for them to repair their property after a loss.

If you are an AIUA policyholder, here are some ways to determine what settlement method your policy is:

  • If your home is older than 25 years of age, your policy will be settled with an ACV settlement method.
  • If your home is not your primary residence, but rather a secondary or rental, your policy will be settled with an ACV settlement method.
  • Locate your declarations page, and go the second page titled, “Policy Provisions,” and look for “Forms and Endorsements”.  If your policy is shown as DP-01, your policy will be settled with an ACV settlement method.  If your policy is shown as DP-02, your Dwelling will be settled on an RCV basis, but your Contents/Personal Property will still be settled on an ACV basis.
  • Here is a sample declarations page for reference:


We want our local consumers to know that “by design, AIUA policies provide basic, no frills coverage.” We at SSIA are proud to work with many reputable carriers who can provide affordable, well-rounded coverage.  Let us conduct a free insurance review of your policies – we’ll be happy to discuss the details of your current coverage and offer suggestions to better protect you, while keeping your premiums affordable.