42,000 Louisiana homeowners dropped by insurance company Friday; State Insurance Commissioner addresses crisis

Published: Jul. 15, 2022 at 10:37 PM CDT
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NEW ORLEANS (WVUE) - 42,000 homeowners are looking for a new insurance policy as of Friday. The company, Southern Fidelity dropped them and now they have 60 days to find a new policy.

Nearly 100,000 policyholders total have been dropped by Southern Fidelity, Lighthouse Excalibur and Maison.

Insurance Commissioner Jim Donelon says six companies have pulled out completely and more than 50 have stopped writing new policies below I-10 and I-12, making the state’s insurer of last resort, Louisiana Citizens, the only option for most.

“As we get further away and hopefully go unscathed through this hurricane season, more of those companies will return to the market, I am certain, as it happened 15 years ago after Katrina and Rita,” Donelon said.

Southern Fidelity customers have until September 13 to find a new policy or sign with Citizens.

Lighthouse and Maison have until August 28.

If you sign with Citizens, the coverage will be retroactive back to the day your policy was canceled, so there’s no gap.

Donelon says the number of Citizens’ policies has jumped from 35,000 to 82,000 and he expects it to grow to 95,000.

That overwhelmed the system, which only has two computer servers. That’s why these dropped policyholders have been given more time and Donelon says they’ve found a quick fix by increasing the capacity of one server.

The word I’m hearing for the past two days is it’s significantly better, though not perfect at this point, but what we’re certain is going to happen now that this July 15. deadline is going to pass and folks were not aware of the 60-day extension before now. The rush will ebb,” Donelon said.

Many homeowners with canceled policies say the Citizens’ quotes they’re getting are simply unaffordable, like one Lafitte resident who was quoted $41,000.

“They need to they need to contact us at 800-259-5300 because I can’t imagine any property having a homeowner’s policy at that price,” Donelon said.

Areas like Lafitte, where they’re seeing $24,000 quotes, fear they will be priced out of their homes.

“I would tell them to do what our friends and neighbors over on the Gulf coast in Mississippi have been doing for the past 15 years, and that is to build higher and to build stronger,” Donelon said.

Others that weren’t canceled say their policy renewals are tripling. An Irish Channel resident reports looking at $15,000.

Donelon says many companies are realizing they’ve been underinsured.

“If it is an unreasonable increase in the insured value of your property, make an appeal to your company and get a contractor to give you an estimate of what your property in your area would cost to rebuild,” Donelon said.

Donelon urges anyone who needs help with their situation to call his office at 800-259-5300.

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