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Insurance premiums expected to rise due to IDA; policyholders fear higher deductibles too

Published: Nov. 1, 2021 at 6:33 PM CDT|Updated: Nov. 1, 2021 at 6:46 PM CDT
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NEW ORLEANS (WVUE) - Hurricane Ida’s widespread damage has stressed the insurance market and one insurer recently said it is pulling out of Louisiana. And higher premiums are expected even as homeowners fear that and larger hurricane deductibles.

Mike Barba stood outside his home, which had roof damage from the storm. He spoke about having to put a different type of shingle on part of the roof.

“I couldn’t find the exact color, but I didn’t want the ceiling to fall in,” said Barba.

He decided to do the repairs himself and not call his insurance company for fear that he will end up paying more for his homeowner’s policy.

“That’s what a lot of people are afraid of when you make a claim, the deductible, premium shoots up,” said Barba.

Steve Zimmerman lives in the same neighborhood. He feels fortunate he did not have as much damage as some of his neighbors.

“The main thing why it ain’t fixed is this corner piece is about 20 years old and I can’t find it nowhere,” Zimmerman said has motioned toward a large portion of a gate that is damaged.

Zimmerman delayed eating a meal situated on a tray as he spoke to FOX 8.

“The only damage I really had was a couple of shingles off the roof, some of them came up, I got up there, we fixed it, the gate, I’m waiting on that one piece. I can’t put it together until I get this once piece to close my yard up,” said Zimmerman.

Still, he worries his premium will increase.

“I know mine is going to go up because everybody around had trouble, you know, I just hope it don’t take and make mine high enough. I’m on a fixed income,” said Zimmerman.

Deductibles are already higher for hurricanes following Hurricane Katrina’s catastrophic impact along the gulf coast.

Dan Burghardt owns Dan Burghardt Insurance Agency.

“As far as deductibles, most people are having a hard time dealing with the current deductibles of 2% and 5%, whether they increase that options to try and keep the rates under control, it’s hard to predict,” said Burghardt.

And Louisiana Insurance Commissioner Jim Donelon expects policy premiums to go up by 10 to 12 percent next year. Further, his office says for the first nine months of this year, homeowners’ insurance rates increased statewide by an average of 4.3%.

Burghardt said rate hikes occurred after Katrina.

“If you relate this to a Katrina experience, everyone who had homeowners’ insurance at a very priceable rate went through a series of every year seeing a rate increase for these companies that paid their Katrina claims to catch back up,” Burghardt stated.

He thinks it is too soon to say exactly how much premiums might increase in Louisiana.

“I’ve called to a couple of company VP’s and executives to get their feed [back] on it, their pulse on it and it’s too early in the game to decide what they may need and then they have to get with their reinsurer,” said Burghardt.

Donelon learned recently that the insurer GeoVera is withdrawing from Louisiana’s property insurance market.

And Donelon said during a recent press briefing that insurance companies in the state are feeling stress due to Ida.

“We are being stressed, our market is being stressed significantly by this event,” said Donelon.

Burghardt says some insurers are no longer writing wind and hail coverage in the state or are being very selective of the areas they write such policies.

“The market for wind and hail are limited,” said Burghardt.

Still, he said people needing coverage can still get it, but it could be costlier.

“We have plenty of markets that are writing homeowners’ insurance. The companies that were priced a little higher on the scale are now surfacing and willing to write business at the rate that they’ve determined where they wanted to be and so the companies that wrote most of the business at a lower rate were inundated,” said Burghardt.

Burghardt says anyone shopping for a new insurer should first get storm repairs done.

“It’s one of the questions is, was all the damages fixed, so that they can insure it? No one is going to want to write a policy on pre-existing damage to a home,” said Burghardt.

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