State Insurance Officials Meet With State Farm Over Hurricane Insurance Deductibles

What is the deductible you would be out of pocket for in the event a hurricane damaged or destroyed your home? That's a question most of us don't ever want to have to answer but an answer most of us in South Louisiana need to know the answer to.

Many homeowners in our state have policies to protect our homes in the event of a hurricane with State Farm. That company recently announced that deductibles would be going up from 2% to 5%. This did not sit well with many consumers and therefore Louisiana's Insurance Commissioner, Jim Donelon, has requested the company allow homeowners an option. That option would be paying an increased premium in order to maintain the 2% deductible.

Donelon told the Louisiana Radio Network,

"They have done that for their policy holders in Mississippi and I asked, in the interest of fairness, for them to do the same for policy holders in our state."

What that change in deductible would look like in real dollars and cents is this. A homeowner with a home valued at $150,000 would pay a deductible of $3,000.00 based on the 2% number. Says Donelon,

"In the case of a five percent, $7,500 out of pocket before your insurance would kick in."

The increases in deductibles became more prevalent along the Gulf Coast after 2005's Hurricane Katrina.

State Farm says it is considering Mr. Donelon's request. Donelon says that if the company does decide not to honor his request it may be necessary to proceed with legislation that would allow "Named Storm Deductible Savings Accounts", this would allow home owners to stock away funds to help with deductibles at a pre-tax rate.