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Named Storm Deductibles’ Seeing Increases in Louisiana

June 3, 2013, Paul Murphy / Eyewitness News: BATON ROUGE, La. — Coastal states in the U.S. allow property insurance policies to include hurricane or “named storm” deductibles. The rate is tied to the insured value of the home.

Louisiana Commissioner of Insurance Jim Donelon says, unfortunately, the cost of storm deductibles appears to be on the rise.

“My own homeowners policy went with the company I had been with from 2 to 3 percent.”

Another carrier, Centauri Insurance, is also raising its named storm deductible for new accounts.

“Centauri has to answer to a company who actually writes insurance for them and they’ve told them that in the current Louisiana market for future business in south Louisiana, they’ll go from a 2 percent to a 3 percent,” said Riverlands Insurance Owner-Agent Thomas Hymel.

That means on a house valued at $300,000, the amount you pay before you can collect for wind and rain damage increases from $6,000 to $9,000.

“I would say three is norm these days and the exception is below that and above that,” said Donelon.

“Allstate has statewide 5% hurricane deductible, no matter where you live,” said Hymel. “That’s their stance.”

Hymel says a higher deductible isn’t always a bad thing.

“I prefer maybe a little higher deductible and save on the premium and just have that little special account on the side, and if the hurricane does come then I can afford to pitch in and maybe pay for some of my roof.”

Donelon is now pushing Congress to create named storm deductible savings accounts.

“Just like health savings accounts, pre-tax the money put aside to be able to meet that deductible in the event you need those funds.”

The best advice is to decide the amount of coverage you need and what you can spend, then shop around.

“I would say you got to have an “A” rated carrier with some history behind itself and look where they’ve been other than Louisiana if their new to Louisiana,” said Hymel. “Look if they’ve been into Florida. Are they in Texas? Are they along some of the coastal states already?”

Louisiana’s overall homeowners’ insurance rates are 3rd highest in the country behind Texas and Florida.

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