Getting homeowner’s insurance in a post-Katrina world is both more difficult - and easier - than you might imagine.
It also is the source of high anxiety and confusion for first-time home buyers or those who are contemplating a move.
Here’s an overview of what you’ll face when looking for insurance.
The Herald-Guide consulted a licensed and seasoned insurance expert as a source for our Q & A, which is a clear and concise way to address insurance issues for everyone to understand.
First, we address four common scenarios that people face.
Then we take a more in-depth look at specifics, also in question and answer format.
Q. Someone just moving to St. Charles Parish needs to get homeowner’s and flood insurance on a new house. Are they eligble for coverage?
A: An insurance company usually will quote you a price based on the value of your home, your location and the type of coverage you want. But since Hurricane Katrina, there are very few insurance companies that will write a new policy.
However, under state law, everyone is entitled to insurance coverage through a program called the Citizens Fair Plan, and most insurance companies will write a new policy under that federal plan.
Q. After Katrina, some insurance companies dropped coverage for many of their customers. And, because of recent rate hikes, some customers are shopping around for new coverage. Can these customers get new policies?
A: Customers can shop around, but most agencies will not write a new policy. And the rates have risen everywhere because of the storm.
For example, even with coverage under the state’s plan, a house valued at $250,000 could have a premium as high as $5500 per year with $1000 of that premium being put into a hurricane fund to rebuild the state’s coverage.
Q. A parish resident is financing a significant addition to his home, is he able to get homeowner’s insurance coverage on the improvement?
A: Most insurance companies will make changes to existing polices to accomodate things such as home improvements at the same rate of the existing policy.
Q. If a property has been purchased with cash, or a mortgage on a house has been paid in full, is it mandatory that the owner buy insurance?
A. No. Not having insurance on a cash purchase or a satisfied mortgage is a risk that the owner can choose to take. If another hurricane were to hit and the parish were to suffer loss like New Orleans did, a homeowner with no insurance would not have the safety net that insured homeowners have.
Here are more questions and answers that can help you understand insurance coverages that you need for your home.
Q. Is the state's Citizens Fair Plan unlimited?
A. No, it’s capped at $250,000.
Q. You said that "very few" companies are writing new policies. Under what circumstances would a company write a new policy?
A. They might write a new policy if the person has other types of insurance with them, or sold an old, insured home and bought a new one.
Q. Do you know what percentage of people have to get polices through the state plan?A. No, but mostly all people have to now ... 80% at least.
Q. Can a policy be written under the State plan by any agent? Or does the agent have to be contracted by the Sate to write state policies?
A. Any licensed Louisiana agent can write the policies.
Q. Flood and homeowner's insurance are separate issues, right?
Q. For flood insurance there is a set rate, so you are stuck with the premiums. But, are there be other issues besides rates that would make a person want to shop around for flood insurance?
A. If they weren't satisfied with they agent or company, certainly, they can and should shop around.
Q. While we’re on the subject of flood insurance, in St. Charles Parish, does everyone have to have flood insurance? Or are there just certain “flood zones” where it is mandatory?
A. As of right now there are non-flood zones where people don't have to carry flood insurance, but in the beginning of the year, it looks as if that will change and anyone with a mortgage on their house will have to purchase flood insurance because the morgage companies are going to require it..
Q. Can you give me a few examples of rates? For example, If my house is valued at, say, $170,000, how much will I pay?
A. That is really hard to answer because there are so many different factors that go into getting a rate ... the rate could be $500 with one company, $1,000 with another and $1,500 with another one.
Q. Can you give me the steps involved in getting homeowners and flood insruance? For a first-time homebuyer, just the idea of seeking insurance can be daunting.
A. It’s not difficult. Just call an insurance agent and answer his or her questions about the type of dwelling you have ... brick or frame, square footage, age of home, type of home and previous losses, things like that. The agent will walk you through everything.
Q. What are three types of coverage that someone would want to get for their house and property?
A. For the dwelling, for contents, and for general liability.