Combines public investment, insurance underwriting, building standards, and homeowner incentives

Introduction

Alabama demonstrates that resilience financing does not always require creating an entirely new financial instrument. Sometimes the most effective innovation is aligning existing market incentives. By connecting public investment, insurance underwriting, independent building standards, and homeowner incentives, the Strengthen Alabama Homes program has created a self-reinforcing model in which every participant benefits from lower risk. The result is a practical example of how measurable reductions in physical risk can be translated into financial value.

Unlike some states, Alabama does not have a statewide building code. Instead, the coastal counties of Baldwin and Mobile have adopted a building code supplement that brings local construction requirements closer to Insurance Institute for Business and Home Safety (IBHS) FORTIFIED Roof™ standards (IBHS n.d.). This is an important distinction: stronger coastal building rules have helped normalize resilient roof construction, but they are not the same as a statewide FORTIFIED building code mandate, and new housing statewide does not automatically receive a FORTIFIED designation.

Alabama’s approach combines five financing and policy mechanisms to encourage roof upgrades. First, it uses insurance department regulatory and licensing revenues, along with authorized transfers from the Insurance Department Fund, to capitalize the Strengthen Alabama Homes (SAH) grant program.¹ Second, it requires insurers to provide benchmarked premium discounts for verified FORTIFIED designations. Third, it offers a state income tax deduction that helps offset retrofit costs for households that self-finance upgrades.² Fourth, it requires insurers to offer a Stronger Roof Endorsement that allows policyholders to pay for coverage that supports upgrading to FORTIFIED standards when a covered loss requires roof replacement.³ Fifth, Alabama has expanded Catastrophe Savings Accounts so that tax-advantaged savings can be used for predisaster FORTIFIED retrofits and the annual cost of FORTIFIED endorsements. Together, these tools support both the upfront investment in stronger roofs and the long-term insurance and household savings that follow verified investment in risk reduction.

This case study is part of Scaling FORTIFIED Roof Adoption, a project showing how states are shifting from reactive disaster spending toward proactive investments in resilient infrastructure.

Programs

Strengthen Alabama Homes:
Grants Funded Through Department of Insurance Revenues

Program Overview: Strengthen Alabama Homes is administered by the Alabama Department of Insurance under the Strengthen Alabama Homes Act and program rules adopted in the Alabama Administrative Code. ^{4, 5} The program provides grants to help homeowners upgrade to the Insurance Institute for Business and Home Safety FORTIFIED Roof standard (IBHS n.d.).

Funding Source: The SAH Fund is capitalized through insurance department regulatory and licensing fees, along with authorized transfers from the Insurance Department Fund.⁶ The state uses its insurance regulatory infrastructure to direct insurance department revenues into a dedicated mitigation grant program.

Roof Financing: The program provides grants of up to $10,000 per home for FORTIFIED Roof upgrades. It operates on a verification-based model requiring IBHS-certified evaluators, approved contractors, and certification prior to payment.

Scale: Since 2016, SAH has awarded around $86 million to retrofit roughly 8,700 homes, contributing to more than 53,000 cumulative FORTIFIED designations statewide (ALDOI n.d.). Participation is largely concentrated along the Gulf Coast .

Rationale: The program is designed to reduce future wind losses by increasing adoption of verified resilient construction at the household level. This benefits homeowners by reducing physical vulnerability and supporting insurance affordability, while also benefiting the broader insurance market by reducing claim frequency and severity. Because private insurers typically contract with homeowners on an annual basis, they may not have a strong incentive to finance retrofits for any single home. A state-administered grant program helps solve that coordination problem by creating market-wide investment in risk reduction.

Access to Financing: The program is broadly available without income thresholds. Even with a grant, homeowners may still face a cost gap between the grant amount and the full cost of roof replacement. For lower-income households, that difference may be insurmountable.

Additional Context: On the supply side, the SAH program has helped grow a workforce of evaluators, contractors, and roofers familiar with FORTIFIED requirements. On the demand side, it has increased consumer awareness and confidence that stronger roofs are attainable and valuable. This market-making function may be one of the program’s most important contributions.

Insurance Incentives: Mandatory Benchmarked Discounts

Program Overview: Alabama requires insurers to provide premium discounts for homes that achieve verified FORTIFIED designations. While many states require or encourage mitigation discounts, Alabama is somewhat different because it requires benchmarked discounts rather than leaving each insurer to determine its own actuarially justified discount (Ridling 2016). As a result, discounts are more standardized across carriers, making the benefit easier both for the state to communicate and for homeowners to understand.

Funding Source: The discounts are provided through private insurers as part of regulated insurance pricing. A homeowner who invests in a FORTIFIED Roof, whether through SAH, self-financing, or post-loss upgrade coverage, can receive an ongoing insurance benefit after the designation is verified.

Roof Financing: This mechanism does not directly finance roof upgrades, but improves the return on investment by lowering insurance premiums after retrofit completion. The discounts are set relative to the verified designation (FORTIFIED Roof Silver or Gold).

Rationale: The discounts connect risk reduction to household affordability and create a clear financial incentive for homeowners to pursue resilient construction.

Access to Financing: Available to any homeowner with verified FORTIFIED designation; no income threshold or geographic, high-risk-zone restriction.

Stronger Roof Endorsement

Program Overview: The Stronger Roof Endorsement is a unique feature of Alabama insurance law that complements the Strengthen Alabama Homes grant program. Rather than providing a grant, it changes what an insurance policy can pay for after a covered loss (ALDOI 2019).

The endorsement is an optional homeowners insurance endorsement that insurers in Alabama are required to offer. If a covered wind or hail event damages a roof badly enough that it must be replaced, the endorsement pays the additional cost of rebuilding the roof to the FORTIFIED Roof standard instead of simply replacing it with a code-compliant roof. Insurers must offer this endorsement when writing a new homeowners policy on a non-FORTIFIED home and at the first renewal of an existing policy.

Funding Source: Funded through premiums paid by policyholders who opt into the endorsement.

Roof Financing: Insurance companies cover the additional cost of a FORTIFIED roof when a homeowner has a legitimate claim require roof replacement due to storm or hail damage.

Rationale: Turns post-disaster recovery into an opportunity for pre-disaster risk reduction, expanding adoption during the natural replacement cycle and helping to avoid spending public and private dollars repeatedly to rebuild after storms.

Access to Financing: Any homeowner with an insurance policy should be able to add this endorsement to their policy. However, it will slightly increase their insurance cost.

Additional Context This approach is highly replicable because it embeds resilience into standard insurance claims processes.

Retrofit Tax Deduction

Program Overview: Alabama provides a state income tax deduction for homeowners who self-finance eligible retrofits.

Funding Source: State tax policy.⁷

Roof Financing: Allows households to deduct 50% of retrofit costs, up to $3,000 per property.

Rationale: Encourages households who do not receive SAH grants or choose to self-finance upgrades by reducing the effective cost of resilience investment.

Access to Financing: Most useful to households with enough cash flow to pay upfront and enough tax liability to benefit meaningfully from the deduction. Supports market uptake, but does not replace the need for grants or affordable financing for lower-income homeowners.

Catastrophe Savings Accounts

Program Overview: Alabama's Catastrophe Savings Account (CSA) program allows homeowners to save funds in tax-advantaged accounts for qualified disaster-related expenses. Recent legislative changes expanded eligible uses to include premiums for the Stronger Roof Endorsement and other resilience-related expenses, encouraging households to prepare financially for both disaster recovery and risk reduction.⁸

Funding Source: State tax policy supporting tax-advantaged savings accounts.

Roof Financing: Provides a savings-based mechanism to help households cover the costs of resilience investments.

Rationale: The important policy innovation is that Alabama has shifted the CSA from being solely a disaster recovery tool to also being a pre-disaster resilience financing tool by allowing funds to pay for resilience-related expenses like the Stronger Roof Endorsement. That aligns financial preparedness with physical risk reduction.

Access to Financing: Best suited to households with discretionary income to save over time. It promotes financial preparedness but is less beneficial for households with limited capacity to accumulate savings.

Summary Tables

Alabama combines five financing and policy mechanisms to encourage roof upgrades: an insurance-funded grant program, insurer-provided premium discounts, a state income tax deduction, a requirement that insurers offer a Stronger Roof Endorsement, and Catastrophe Savings Accounts.

Table 1. Financing Mechanisms

Table 2. Beneficiaries

Alabama arguably has the strongest long-term partnership ecosystem.

Table 3. Partners

Insights

Alabama uses a broad set of regulatory and financial tools to encourage homeowners to upgrade their roofs. Together, these tools lower barriers to adoption and support both the upfront investment in stronger roofs and the long-term insurance and household savings that follow verified investment in risk reduction. The Alabama Department of Insurance report on Hurricane Sally found that FORTIFIED construction reduced loss frequency, reduced loss severity, and improved loss ratios compared with conventional construction (ALDOI and CRIR 2025; Aoun Angueira 2025).

Financial Sustainability: Alabama demonstrates how a state can sustain property-level resilience financing through a combination of insurance department revenues, state regulation, required insurance discounts, tax incentives, and consumer savings tools. The SAH grant program provides upfront capital. Mandatory benchmarked discounts create an ongoing insurance benefit. The retrofit tax deduction and Catastrophe Savings Accounts support households that self-finance improvements. The Stronger Roof Endorsement extends the model into the post-disaster replacement cycle. Together, these tools create a more complete resilience finance ecosystem than any single mechanism could achieve on its own.

Accessibility: Alabama’s grant program directly addresses upfront cost barriers by providing up to $10,000 for verified FORTIFIED Roof upgrades. The absence of an income threshold makes the program broadly available, and mandatory discounts extend benefits to any homeowner with a verified designation. However, affordability challenges remain. The cost of a full roof replacement may exceed the grant amount, and lower-income homeowners may be unable to cover the remaining cost. For this reason, affordable financing options, such as revolving loan funds or other gap-financing tools, could be important complements to the existing program.

Government Role: Alabama’s model is rooted in state insurance regulation. The state authorized and administers the SAH program through the Department of Insurance, directs insurance department revenues into mitigation grants, requires benchmarked premium discounts for FORTIFIED designations, and requires insurers to offer a Stronger Roof Endorsement. The state also uses tax policy and Catastrophe Savings Accounts to support households that self-finance or plan ahead for mitigation expenses. Alabama’s role is therefore not limited to funding grants. It uses regulation, administration, tax policy, and consumer finance tools to shape a market for resilient roofs.

Potential for Replicability: Alabama’s model is highly instructive for other states because it shows how a grant program can catalyze private market adoption. The SAH program helped build contractor and evaluator capacity, increased consumer demand, and created a recognizable value proposition around FORTIFIED Roofs. Other states with insurance regulatory authority, premium discount frameworks, and flexibility in tax policy could adapt pieces of this model. The Stronger Roof Endorsement is especially notable because it turns ordinary post-loss rebuilding into a resilience upgrade opportunity. Catastrophe Savings Accounts offer another replicable tool for helping households prepare for mitigation and endorsement costs.

The remaining challenge, and likely the next frontier, is accessibility—developing financing so that lower-income homeowners can participate even when the grant does not cover the full cost of roof replacement, and developing programs that support resilience upgrades and investments for affordable housing developments.

Sources

ALDOI. 2019. ALDOI Establishes Endorsement for Fortified Roofs. (Birmingham, AL), September 23. https://aldoi.gov/currentnewsitem.aspx?ID=1068.

ALDOI. n.d. “Strengthen Alabama Homes.” Alabama Department of Insurance. https://www.strengthenalabamahomes.com/.

ALDOI and CRIR. 2025. Performance of IBHS FORTIFIED Home Construction in Hurricane Sally. Alabama Department of Insurance and Center for Risk and Insurance Research, University of Alabama. https://www.aldoi.gov/PDF/News/PerformanceIBHSFortifiedHomeConstructionHurricaneSally.pdf.

Aoun Angueira, G. 2025. “Alabama Study Reveals Hurricane Resilience Programs Are Paying off for Homeowners and Insurers.” Business. AP News (Alabama), May 27. https://apnews.com/article/alabama-hurricanes-climate-resilience-fortified-dcf7df9bf9c447ef98eb007ba3b17223.

IBHS. n.d. “FORTIFIED Roof^TM.” Insurance Institute for Business & Home Safety. https://fortifiedhome.org/roof/.

Ridling, J. 2016. “Modification to Alabama Bulletins 2013-07, 2010-03 and 2009-07- Premium Discounts or Rate Reductions for One- or Two-Family Dwellings, and Introduction of New Commercial and Residential Discounts.” Bulletin. Alabama Department of Insurance, October 31. https://aldoi.gov/pdf/legal/2016-07%20-%20Modification%20to%20Ala.%20Bulletins%202013-07,%202010-03%20and2009-07.pdf.

Roofing Contractor, GAF, Habitat Bring Fortified Roofs to Alabama, Roofing Contractor, Apr. 23, 2026, https://www.roofingcontractor.com/articles/102142-gaf-habitat-bring-fortified-roofs-to-alabama.

Smart Home America, Construction Code Supplements, (2026), https://www.smarthomeamerica.org/resources/code-supplement.

Acknowledgments

We would like to thank Julie Shiyou-Woodard and Graham Green of Smart Home America for their valuable contributions, insights, and support in the development of this work.

Authors and Affiliations

• Sujay Dhanagare, Duke University
• Lydia Olander, Nicholas Institute for Energy, Environment & Sustainability, Duke University
• Matt Posner, The Resiliency Company

The authors welcome corrections and clarifications. Please contact lydia.olander@duke.edu.

Citation

Posner, M, L. Olander, and S Dhanagare.  2026. FORTIFIED Roof Case Study: Alabama. NI 26-18. Durham, NC: Nicholas Institute for Energy, Environment & Sustainability, Duke University. https://nicholasinstitute.duke.edu/publications/fortified-roof-case-study-alabama.