Approximately 25,000 coastal property owners will see a reduction on wind insurance rates before hurricane season kicks off next month.

The announcement was made during a news conference Wednesday at the 5 Rivers Delta Resource Center in Spanish Fort.

"Today is really a good day for insurance consumers in coastal Alabama," said Robert Groves, secretary/manager with the Alabama Insurance Underwriting Association.

The savings apply to a majority of AIUA policy holders. Among the changes: Homeowners will be able to better access affordable "Replacement Cost Value" policies as opposed to "Actual Cash Value" policies insurers often prefer for areas vulnerable to hurricanes.

AIUA, under the change, will covert a majority of the Actual Cash Value polices to Replacement Cost Value programs for a charge of 2.5 percent, down from the current 20 percent fee.

In addition, the new Replacement Cost Value policy holders will receive living expense coverage - which had not been previously provided - to assist homeowners whose properties are destroyed, but are in the process of being rebuilt, following a major storm.

"People will be getting better coverage," said Jim Ridling, commissioner of the Alabama Department of Insurance. "My (concern) is if we have a lot of people on the coast with Actual Cash Value (policies) and high deductibles, a lot of people will not be able to afford to rebuild what Is damaged with their homes."

He added, "If you drive from here to New Orleans, you get a good view of what happens when people cannot afford to rebuild. There are still abandoned homes, slabs, blue tarps and abandoned businesses from the Mississippi border to New Orleans. I do not want that to happen in the state of Alabama when we have a storm."

The agreement doesn't come without any "unintended consequences," officials said. But they declined to speculate what type of additional expenses and issues that might arise.

Alabama Gov. Robert Bentley said he wasn't sure how the reduced insurance costs on the Gulf Coast might affect rates elsewhere in the state.

"The people in this area, Mobile and Baldwin counties, have been paying more than they should be paying," Bentley said. "If we are equalizing things some, that is OK. The people in this area have been suffering because of the high costs of insurance."

Negotiations for lowered insurance costs have been ongoing for years and much of the effort has been led by grass-roots groups such as the Homeowners' Hurricane Insurance Initiative.

Officials credited the agreement to the ongoing work by grass-roots organizations and through efforts by a working group Bentley assembled last year.

"Even though they had different ideas on things, they worked together to try and come up with solutions," Bentley said. "This is how government and private entities and individuals should work together."

Michelle Kurtz, one of the leaders behind HHII, said Alabama is "leading the nation" in pursuing reduced coverage costs. But she also acknowledged that much work needs to be done, including the agreement of a multi-state solution involving more than a half-dozen states along the Gulf Coast.

Representatives with the insurance industry will meet in New Orleans Thursday to discuss ways to pool resources together and save money.

Charles Angell, deputy commissioner and casualty actuary with the Alabama Department of Insurance, said one solution could be finding ways for multiple states to collaborate on ways to reduce wind insurance coverage.

"Every insurance company has to purchase reinsurance to protect them when a hurricane comes in," Angell said. "If we can find a way to purchase that reinsurance economically, there might be more of a savings for consumers on the coast."

Angell said that a resolution could be reached without having each state pursuing its own legislation, which could slow the process. "It could come about in 12 months," he said.

Coastal lawmakers also applauded the changes, saying it represented an agreement that had been in the works for years.

Rep. Joe Faust, R-Fairhope, said he's been working on solutions for the past "eight to nine years."

"We've climbed a mountain today," he said.