Many residents of the metro New Orleans area may face greater out of pocket expenses.
Due to the fact that Isaac came ashore in the form of an actual hurricane, having been upgraded from a tropical storm, residents with homeowners insurance in the area of metro New Orleans are finding that they are paying more for wind damage repairs they face.
This is because the deductibles for many of the more recent policies are higher for hurricanes.
Homeowners insurance policies that have been written over the last few years include a special deductible for wind damage that places more of the cost burden on the backs of the policyholders.
These new homeowners insurance policies require a higher payment up front for wind damage.
Typically, policyholders have found themselves paying between 2 and 5 percent of their home’s insured value, up front, when they have made a claim for wind damage. This means that if a home is insured for $500,000, and there is a wind deductible of 2 percent, that policyholder will be responsible for the first $10,000 in repair costs before the insurer needs to pay a dime.
This is dramatically higher than the amounts that homeowners insurance policyholders had become accustomed to paying in the past, which were usually in the range of $500 to $1,000, as is the case with claims for broken water pipes, fires, and so on.
According to Jim Donelon, the Louisiana Insurance Commissioner, “That shocked a lot of people in the Baton Rouge area when they suffered damage as a result of (Hurricane) Gustav when for the first time they had a claim that had a (wind) deductible applicable to their claim.” Donelon also pointed out that “The same is going to be true in this event in the New Orleans area. Thousands of folks will become aware of the amount of their deductible for the first time.”
This has become a notable issue among homeowners insurance policyholders who had not carefully understood their new policies or the changes to their old ones, and saved enough money to be able to afford the new, significantly higher deductibles for the damage that they have sustained.