Have you bought a home on the shores of Biscayne Bay? If you have not yet thought of insuring it in hurricane country, do so now before you have the hurricanes at your doorstep.
For people in Louisiana, it is not just the threat of storms but also soaring insurance costs—$1,000 a year for a homeowners policy and an additional $2,100 for windstorm coverage. Insurance companies estimate that this is a bill that has tripled in the last five years.
Homeowners are paying increasingly higher insurance rates as more people flock to the coasts and insurers try to cut back on the billions of dollars of losses they've absorbed from previous storms. Many residents in high-risk areas have to buy separate hurricane or windstorm insurance on top of their regular homeowners policies.
Types of insurance available
In Louisiana there are 6 basic insurance coverage plans that are offered by insurance companies. Even thought these plans might be given different names by an insurance company, they are generally the same.
The Basic Form offers coverage for your home and personal belongings. Personal property can include upholstery, your personal possessions or even furniture. The policy covers damages due to:
- Fire
- Lightning
- Removal of property endangered by peril
- Windstorm or hail
- Vandalism or malicious mischief
- Theft
- Damage from vehicles and aircraft
- Explosion
- Riot or civil commotion
- Glass
- Breakage
- Comprehensive liability
The Broad Form covers all the perils listed above and also offers additional coverage for damages caused by
- Building collapse
- Freezing of, or accidental discharge of water or steam from within plumbing
- Heating/air conditioning systems,
- Domestic appliances
- Falling objects
- Weight of ice, snow or sleet
- Rupture or bursting of hot Water heating systems
- It also provides comprehensive personal liability coverage.
The Special Form covers all perils except those, which are specifically excluded in the policy. Examples of exclusions are earthquake and flood. The Special Form also includes the same protection as The Broad Form.
The Tenants Broad Form covers the possessions belonging to a tenant, but does not cover the building structure since it is not owned by the tenant.
The Comprehensive Form true to its name covers both the home and personal possessions against all perils excluded from the policy. This type of policy is generally more expensive because of the amount of coverage available.
The Special Condominium Form covers the insides of the residence and ones possessions. This plan is basically for all those who own a condominium. This policy is not offered by all insurance carriers, and does not cover building structure.
Be sure to know what your insurance policy does not cover; in the event you need additional coverage. For more information contact Louisiana Insurance Commissioner’s Office.
What to watch out for
- While buying a house, ensure that it is not directly in the path of the hurricanes. Many in Louisiana prefer the coast wherein to build their houses but note that Homeowners in certain areas are overcharged because the paths of hurricanes are so unpredictable and they could strike anywhere along the thousands of miles of Atlantic and Gulf Coast. There are instances of homeowners paying about $2,800 a year for insurance, several times the state's average.
- Secondly soaring property prices in the current real estate boom mean that if you have insured your home for a much lesser value years ago, it is time to upgrade your insurance policy.
- Reports estimate that most insurance carriers change the way they charge deductibles for hurricane damage. Previously, homeowners had to pay a fixed amount for a deductible. But after Hurricane Andrew in 2001, insurers began to change policies so that people would have to pay a percentage, usually around 2 percent, of the total damage as their deductible.
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