A plan to protect hurricane victims from massive insurance deductibles. As residents of the Gulf Coast work to rebuild after Hurricanes Ike and Gustav, lawmakers in one state are working on a plan to protect hurricane victims from massive insurance deductibles. The plan being considered in Louisiana would limit insurance companies from imposing more than […]
A plan to protect hurricane victims from massive insurance deductibles. As residents of the Gulf Coast work to rebuild after Hurricanes Ike and Gustav, lawmakers in one state are working on a plan to protect hurricane victims from massive insurance deductibles. The plan being considered in Louisiana would limit insurance companies from imposing more than one storm deductible on policyholders in a single season. The proposal is being put forward by the Louisiana Insurance Commissioner and has the backing of two key state lawmakers.
“Named storm” deductibles are imposed by insurance companies in hurricane zones from the Gulf Coast to New England. These deductibles can be as high as 5 percent of a home’s value. In such cases, a policyholder with a home valued at $200,000 would be responsible for a deductible of $10,000. Unfortunately, many people are not even aware that such a policy exists until they make a hurricane damage claim.
As it stands now, in cases were homeowners sustained damage from both Hurricane Gustav, and then Hurricane Ike, the deductible is applied twice – once for each storm. Louisiana Insurance Commissioner Jim Donelon is backing a plan that would only allow insurance companies to assess the named storm deductible once each hurricane season.
In 2004, Florida lawmakers passed such a storm deductible law. The change after the state – and many homeowners – were hit by four named hurricanes, and insurance companies imposed the deductible on each occasion. In the case of a $200,000 home with a 5 percent named storm deductible, a policyholder would be assessed a deductible of $40,000.
Right now, Louisiana state Rep. Chuck Kleckley, R-Lake Charles, chair of the House Insurance Committee; and state Sen. Don Cravins Jr., D-Opelousas, chair of the Senate’s insurance panel have backed Donelon’s plan. However, Cravins is running for U.S. Congress, and if he is successful, another backer would need to be found.
Jeff Albright, head of the Independent Insurance Agents and Brokers of Louisiana, told the Associated Press that independent agents in the state support limiting the named storm deductible. “This idea makes sense because, for a very small number of people, it can be personally catastrophic if you get hit twice,” Albright said.
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