Published 5:02 am Saturday, June 4, 2022
By American Press Staff
By Emily Burleigh
As hurricane season rolls around, Louisiana Insurance Commissioner Jim Donelon urges local homeowners to prepare for hurricane season by performing an insurance checkup.
“Know what your coverage is,” Donelon said. “Know your insured value, which has nothing to do with the appraised value of the home.”
The insured value takes into account the replacement costs of damages that can happen to your home in the case of a natural disaster, he said.
Donelon listed three vital steps to take to help policyholders make their insurance work for them. “No. 1, be prepared,” he said. “That includes being prepared to evacuate, and when you do evacuate, take your important documents, such as copies of your insurance policy and, in particular, the information on how to start the claims process if necessary.”
Before leaving, walk through your home and video-tape or still photo your assets, he said.
“All of your assets are covered by your insurance as part of your contents coverage.”
Donelon said taking the time to document property before a natural disaster is vital to ensure proper coverage.
“It’s so helpful to the policyholder to be able to show the undamaged and real value versus trying to reconstruct what is left after the damage.”
The second step is to get with your insurance professional, he said.
“Go over all your insurance needs. It’s a good time to do an annual checkup. Be focused on property insurance, both wind coverage and flood coverage.”
Policy owners with flood coverage are encouraged to keep it in place. “If they’re being subsidized, they have the right to continue that coverage, and even pass it on to descendants through a succession or to purchasers at a sale.”
The third precaution is to know what your insurance doesn’t cover. For example, homeowner insurance does not cover floods.
Typically, fire, hail, tornado, and wind damage coverage comes with a name-storm or hurricane deductible. A third of the policies in the state have a 5 percent deductible on the insured value of your home. On a house valued at $200,000, the deductible for hurricane damage is $10,000 out of pocket.
Donelon said he believes that everyone in Louisiana should have flood coverage. “Only 25 percent of the policies in Louisiana do have flood insurance. It’s less than that in Southwest Louisiana.”
Donelon attributes this to the lack of frequent, significant floods in the area. “When folks don’t think there’s a risk, they don’t want to spend the money. But we are all at significant risk everywhere in the state of Louisiana.
“I urge everyone to access the still significantly subsidized national flood insurance program,” he said, “The new rating system called Risk Rating 2.0 has gone into effect. This has dramatically increased the cost of flood insurance in vulnerable areas.”
The National Flood Insurance Program used to be priced, by FEMA, based on the region or zip code of your home. However, the new Risk Rating 2.0 has changed the way the vulnerability of your home is assessed.
“The basic change from the old system of pricing on zones is that now every policy is priced on an individual assessment basis,” he said. “Twenty percent of policyholders are expected to see a premium decrease for the first year of Risk Rating 2.0.”
Seventy percent of policyholders will see minimal increases of $10 per month or less, and 7 percent are experiencing increases of $20 per month or less.
This new system began on April 1, for policy renewals, and Oct. 1, 2021, for new policyholders.
Donelon admitted the Risk Rating 2.0 system is receiving legislative pushback from coastal states because of the high rates the 3 percent of policyholders are seeing.
“Thousands of cases in Louisiana, flood insurance for those properties are going up by multiple percentages over what it has been under the old system,” he said. “Therein lies the problem. The renders those properties worthless overnight.
Donelon predicts that legislators might be able to decrease the 18 percent percent compounding annual increase. He expects the cap will be negotiated to 8 percent or 9 percent compounding.
Due to inflation over the past two years, it is suggested policyholders file a supplemental claim if they believe they were inadequately compensated.
“Roofers, contractors, suppliers, all their prices are up dramatically from what they were two years ago,” he said. “If you got a check a year and a half ago for what you thought was the full repair of your house … and it’s not enough to pay back what you actually spend, over and above your deductible, you have the right to file a supplemental claim.”
Published 5:02 am Saturday, June 4, 2022