Monday, September 17, 2007

Scary Homeowners Hurricane Deductible

I just received my new homeowners insurance policy in the mail, and I'm really depressed and angry all over again.

I scanned in the cover page and the declaration page. Have a look at the hurricane deductible note in the first image (5% of Dwelling protection coverage limit), and the actual amount in the second image, $7,550.

It looks like your normal policy, except for the pages and pages of bold, all-caps print that tells you everything the policy doesn't cover.

They also added a charge, which equates to a tax, that we all have to pay. It's called the Louisiana Citizens Fair Plan Emergency Assessment Surcharge. The good news? My premium will be reduced to $907.83, and the single surcharge is going to be $32.68. My annual coverage for my house with a replacement value of $151,000 is $940.51. My premium will go down by $128.76 this year. If my garage is destroyed because of a hurricane, I basically have to pay 50% of its value to rebuild it.

But the decrease in premium doesn't even begin to cover the increase in the deductible. 7550/128.76 = 58.6, meaning it would take 58.6 years to save up that deductible from the premium reduction alone.

In 2006, I had an additional deductible for hurricane damage that applied on top of my regular deductible. If you had a $500 deductible, your hurricane damage deductible was $1000, or another $500 tacked on if damage was hurricane damage. We also had two surcharges: Louisiana Citizens Fair Plan Regular Assessment Surcharge, and Louisiana Citizens Coastal Plan Regular Assessment Surcharge. Those added up to $139.47. My annual coverage cost another $929.80, and my total premium was $1069.27 on a $140,000 replacement value.

Prior to Katrina and Rita, we had a separate hurricane deductible equal to the regular deductible (total $1000), but our premiums were lower. Mine was $786 for the period of Oct. 2004 to Oct. 2005, and there was no surcharge.

My premium, and thus my house payment went up $283.27 in one year. And now it's only going down $128.76 with a far, far higher hurricane deductible. This means I'm going to have to increase the value of my emergency fund by $6550 to cover the extra risk.

Where is the money President Bush promised? How are people supposed to rebuild and keep that much cash in reserve for this outrageous increase in deductibles? I live in Baton Rouge, and we didn't see total destruction on the scale of the parishes lying south east of here. How much did their deductibles go up? To 10%? I wouldn't be surprised.

If you want to know why people here are angry and depressed and not getting over the whole thing, this is another reason why. It's two years after Katrina and Rita, and now we are all basically self insured for hurricane damage that isn't catastrophic (more than 5% of the dwelling coverage). We continue to get kicked in the teeth at every turn. What's next? I'm sure there will be something.

For more pictures and information on Hurricane Katrina and her aftermath, see:

Hurricane Katrina Picture Book by Jeffrey Morgan


Breach of Faith: Hurricane Katrina and the Near Death of a Great American City
by Jed Horne.

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