Insurance Commissioner: Knowing your coverage is vital – American Press

By Emily Burleigh

As hurricane season progresses, Louisiana Insurance Commissioner Jim Donelon urges local homeowners to prepare for hurricane season by conducting an insurance review.

“Know what your coverage is,” Donelon said. “Know your insured value, which has nothing to do with the appraised value of the home.”

The insured value takes into account the replacement costs of the damage that can happen to your home in the event of a natural disaster, he said.

Donelon listed three vital steps to take to help policyholders make their insurance work for them. “No. 1, be prepared,” he said. “That includes being prepared to evacuate, and when you do, take your important documents with you, like copies of your insurance policy and, in particular, information on how to start the claims process if necessary”.

Before you leave, walk through your home and videotape or photograph your assets, he said.

“All of your assets are covered by your insurance as part of your contents coverage.”

Donelon said taking the time to document property before a natural disaster is vital to ensuring adequate coverage.

“It’s very helpful for the policyholder to be able to show true value and no damage rather than trying to rebuild what’s left after the damage.”

The second step is to contact your insurance professional, he said.

“Review all your insurance needs. It is a good time to do an annual checkup. Focus on property insurance, both wind and flood coverage.”

Owners of policies with flood coverage are encouraged to keep their coverage in force. “If they are being subsidized, they have the right to continue that coverage, and even pass it on to descendants through succession or to acquirers in a sale.”

The third precaution is to know what your insurance does not cover. For example, homeowners insurance does not cover flooding.

Typically, fire, hail, tornado and wind damage coverage comes with a storm or hurricane deductible. One-third of policies in the state have a 5 percent deductible on the insured value of your home. On a home valued at $200,000, the deductible for hurricane damage is $10,000 out of pocket.

Donelon said he believes everyone in Louisiana should have flood coverage. “Only 25 percent of policies in Louisiana have flood insurance. It’s less than that in southwest Louisiana.”

Donelon attributes this to the lack of frequent and significant flooding in the area. “When people don’t think there’s a risk, they don’t want to spend the money. But we are all at significant risk everywhere in the state of Louisiana.

“I urge everyone to access the national flood insurance program which is still significantly subsidized,” he said. “The new rating system called Risk Rating 2.0 has come into effect. This has dramatically increased the cost of flood insurance in vulnerable areas.”

FEMA used to price the National Flood Insurance Program based on the region or zip code of your home. However, the new Risk Rating 2.0 has changed the way your home’s vulnerability is assessed.

“The basic change from the old zonal pricing system is that now each policy is priced on an individual assessment basis,” he said. “Twenty percent of policyholders are expected to see a premium decline during the first year of Risk Rating 2.0.”

Seventy percent of policyholders will see minimum increases of $10 per month or less, and 7 percent will see increases of $20 per month or less.

This new system began on April 1 for policy renewals and on October 1, 2021 for new policyholders.

Donelon admitted that the Risk Rating 2.0 system is receiving legislative pushback from coastal states due to the high rates being seen by the top 3 percent of policyholders.

“Thousands of cases in Louisiana, flood insurance for those properties is going up by multiple percentages from what it has been under the previous system,” he said. “Therein lies the problem. It makes those properties lose their value overnight.

Donelon predicts lawmakers could lower the 18 percent compound annual increase. He expects the cap to trade at 8 percent or 9 percent cap.

Due to the inflation of the past two years, policyholders are encouraged to file a supplemental claim if they believe they were inadequately compensated.

“Roofers, contractors, vendors, all of their prices have gone up dramatically from two years ago,” he said. “If you got a check a year and a half ago for what you thought was a complete home repair…and it’s not enough to pay what you actually spent, plus your deductible, you have the right to file a supplemental application. claim.”

Leave a Comment