The Insurance Crisis in Louisiana :: What You Need to Know

The Insurance Crisis in Louisiana :: What You Need to Know

Everywhere we look right now, people are talking about the current crisis happening with homeowners and flood insurance in Louisiana. From renters towhat you need to know about the current insurance crisis in Louisiana homeowners to landlords – everyone is feeling the crunch of dwindling carriers and soaring prices. For many people, it is a time of panic as their policies come up for renewal and they are hit with quotes that are sometimes triple what they paid the year before. Being a mortgage broker this is affecting me both personally and professionally. I have watched the prices creep up over the past 12-15 months, and it is making it increasingly difficult for Louisiana residents to purchase a new home. Renters are being passed on their landlord’s insurance hikes, and people are finding themselves in very tough spots. As monthly mortgage payments are increased, mixed with record-breaking inflation, the rise of foreclosures seems imminent. I find myself in constant conversation about the topic lately and asked for my opinion on the subject. The best (and only) thing that you can do is educate yourself on the situation and get in front of it. As we sit less than 3 months from the beginning of hurricane season (yikes), I sat down with local Goosehead Insurance owner & agent Brandi Sercovich to get answers to all the important questions.

How has the landscape of the insurance industry changed in the last year?

Louisiana insurance markets were not prepared to deal with the financial fallout of natural disasters. The numerous hurricanes that have hit Louisiana and the surrounding states over and over the last few years have caused multiple insurance carriers to either file bankruptcy or pull their company out of Louisiana.

How are these large insurance companies not more prepared? Going bankrupt after a few storms seems crazy!

One of the main issues most do not talk about is the carriers that are allowed to come into the market and sell policies in a hurricane risk area at low cost, with low deductibles. (Example: $500k home / $2500 deductible (all covered perils) / premium $2800) Hurricane hits and the client makes a claim and the estimated damages are approx. $85,000 to replace the roof, gutters, etc. Since the deductible is only $2500 they pay that one customer $82,500.)  If they would have implemented 2%, 3%, and 5% deductibles then the payout would be less. The bottom line is these carriers are undercharging the consumer to make fast money and when the consumer needs them they either do not want to pay or they go under. Some carriers go insolvent and still manage to open another company and do the same thing over and over.

How do these changes affect homeowners insurance in particular?

Homeowners are being affected by the rates and lack of carriers to shop insurance. It is becoming extremely difficult to find policies with carriers that they can count on and afford.  No one has faith in the system anymore due to the lack of stability, claims handling, and unaffordable rates.

How has flood insurance been impacted? What is “Flood 2.0” people keep hearing about?

Flood 2.0 has caused many not to be able to afford to live in their homes and many are not able to purchase homes. If a client does not have flood insurance they must get a new quote which is usually 2 or 3 times more than what the 1.0 rates would have been.  If a seller has flooded in place with the 1.0 rates the buyer can assume that policy, however, over time that premium will be 2.0 rates and in most cases unaffordable. Current homeowners will notice their premiums going up and should inquire with their carrier on what their flood cap is. The flood cap is the maximum price they can charge you for your flood insurance. (Example: A home in a non-flood zone had flood insurance for $450. The company can raise the premium 18% each year until it hits its flood cap. If the cap is $4200, that is what the flood insurance cost will be in about nine years if you do the math)

What should people in Louisiana expect for the foreseeable future in 2023? 2024?

I honestly believe the 2023 storm season will determine what is next. Carriers are scared to come back into the market but I truly believe if this season is not active more options will be available for 2024. There is a lot of unknown within our industry right now.

Is there anything for this upcoming hurricane season people should know?

Take photos and videos of your home exterior and interior. Always take receipts with you and your policy when you evacuate. This is helpful for when you make a claim to show exactly what you had prior to the loss.

What should people be checking on their policies to make sure they are covered correctly?

Yes, check your coverages! Make sure you have RCE dwelling and contents. Do not settle for actual cash value! Know and understand what your deductible is – do not be blindsided.  (Example: If you have a $350k home and a 3% hurricane deductible ($10,500) and your claim is $20,500 your payout will be $10,000.)

It’s time to renew my policy. What’s the best course of action?

Always ask for a policy review and make sure you have the proper coverage that suits your personal needs. Ask your current agent (if possible) to shop for better coverage and premiums. It is best to call around because not all agencies have the same carriers. Also, make sure you know what your policy consists of and know your coverages!

These are all the basics that you need to know. Get with a trusted insurance agent and go over your policy now, don’t wait. Fingers crossed for a safe and uneventful hurricane season!

Dana Wattigney
Moving from Nebraska in middle school, Dana considers herself a New Orleanian 25 years later. She now lives in Belle Chasse with her husband Ryan, 12-year-old Mila, and 8-year-old Rex. As the Executive Director of the YMCA in her community, she is very involved in all aspects of family life. You can find her on the weekend doing DIY projects, cheering on LSU or the Saints, and spending time with her family. A lover of all revelry, there is no festival, concert, or event that she won't go to! Catch her with the Krewe of Cleopatra each Mardi Gras. She gets out of town with her kids as much as possible, they enjoy the outdoors, especially the mountains & the beach. Affectionately known as "Dana Dolittle" to her friends, you can expect her to have a random animal she is trying to help at any given time. Dana loves to write & says there are no topics off limits.



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