Louisiana Department of Insurance Consumer Alert LDI Website James J. Donelon Follow us on Twitter Become a Fan on Facebook
Volume 4, Issue 6
Home Buyer Class
Date: June 8, 2013
Time: 9:00 a.m. - 2:00 p.m.
Location: 5153 Canatella St.
Convent, LA

Home Buyer Class
Date: June 22, 2013
Time: 9:00 a.m. - 2:00 p.m.
Location: 5153 Canatella St.
Convent, LA

Men's Wellness
Date: June 24, 2013
Time: 7:00 a.m. - 1:00 p.m.
Location: Pennington Biomedical Research Center
6400 Perkins Road
Baton Rouge, LA 70808

To find out if Consumer Advocacy will be in your area or to request a speaker for your organization or group, call (225) 219-0619 or send an email to
consumeradvocacy@ldi.state.la.us

If you no longer wish to receive this newsletter please send an email to the following address with "REMOVE" in the subject line.
public@ldi.la.gov

Understanding Hurricane Deductibles

With the 2013 hurricane season now upon us, the Louisiana Department of Insurance (LDI) would like to remind Louisiana consumers about important information regarding their homeowners insurance policies. Following Hurricanes Katrina and Rita, many insurance companies in states prone to severe weather began adding separate hurricane, named-storm and wind and hail deductibles to insurance policies.

Unlike standard homeowners insurance deductibles, which are usually a flat fee ranging from $250 to $1000 depending on your insurer, hurricane deductibles are typically between two and five percent of the homes insured value. That means that if you have a home with an insured value of $250,000 and a two percent hurricane deductible, you would have to pay $5000 up front before your insurer would kick in to cover damages. A similar home with a five percent deductible would be required to pay $12,500.

Hurricane deductibles vary by company. You can find out how much your deductibles are by checking out the first page of insurance policy, or by contacting your agent or producer.

To help consumers manage the cost of these higher deductibles, the Louisiana Legislature passed the single season hurricane deductible law following the 2008 hurricane season in which residents were hit by hurricanes back to back (Gustav and Ike). Now known as Act 134 (LSA-R.S, 22:1337), this legislation states that only one hurricane, named-storm or wind and hail deductible can be applied to a homeowners insurance policy for all hurricanes and named-storms occurring in a single calendar year or storm season. Once the full amount of the hurricane deductible is met by the consumer, the standard all peril deductible will be applied to any other hurricane or named-storm that occurs during that year.

Following a hurricane, you may find yourself in a situation where the amount of money it would cost to fix your home is less than what it would cost to pay your hurricane deductible, thus prompting you take care of the damages on your own. If this happens, it is vital to keep receipts for the items you purchase as the money you spend will count towards your deductible if your home is damaged by a second storm during the same storm season.

For more information on hurricane deductibles, feel free to contact the LDI at 1-800-259-5300.

Simple Steps to Prepare for Hurricane Season

Preparing for a hurricane is one of the most important steps you can take to ensure the safety of your family and your belongings during storm season. One of the first things you should do prior to storm season is educate yourself on the possibility of flooding in your area. If you live in or near a flood zone, contact an insurance provider to purchase a flood insurance policy that will protect your home. Keep in mind that most flood policies require a 30-day waiting period before they become effective.

Next, secure all important documents that you may need in the event of an evacuation or storm in one location in water-proof containers if possible. This includes but is not limited to drivers’ licenses, proof of residence, birth certificates, social security cards, financial records, insurance policies and your home inventory.

Securing your home is also an important step in preparing for a storm. Follow these simple steps to get your home ready in the event of a hurricane:

  • Board all windows with permanent storm shutters or 5/8” marine plywood. Do not use only tape because it will not stop your windows from breaking.
  • Secure your roof to the frame structure with additional straps or clips which will reduce roof damage.
  • Trim all trees and shrubs to ensure they are wind resistant.
  • Clean rain gutters and downspouts and confirm they are securely attached to the house.
  • Reinforce your garage to ensure that wind cannot enter your home. If wind enters the garage, it can cause expensive structural damage.
  • Bring all outdoor furniture and garbage cans indoors.
  • Turn off any propane gas service near your home.
  • If necessary, determine where and how to best secure your boat or other similar items.
  • Install emergency generators to provide electricity in the event of an outage.
  • Obtain sandbags to be used around your home in the event of flooding.

It is also critical to develop a family emergency plan. This plan should include all phone numbers that may be important after the storm, evacuation routes to area shelters and relatives’ homes, and a plan for where your pets will stay during the storm as many shelters do not allow pets. Also, prepare an emergency bag which can be easily obtained in the event of an evacuation. The bag should include drinking water, non-perishable food items, first aid kits including any prescription medications you or your family members may need, blankets, pillows, a battery operated radio with back-up batteries, a flashlight, clothing and cash.

If you are forced to evacuate during the storm, turn off your electricity and water. Unless instructed to do so by a local official, leave natural gas on. When you return from the storm, it may be the only way you can heat your home or cook your food until the power is restored. If you turn the natural gas off, a licensed professional is required to turn it back on which may take weeks depending on the damage in your area.

Lastly, remember to sign up for emergency storm alerts via text or email to stay informed on the storm. The National Weather Service supplies a list of organizations that provide alerts through a variety of means. That list can be found here. Some local news outlets and government offices offer alerts which can provide you with area specific information in the event of a storm. Also, check with your insurance agency to find out if they offer an emergency information hotline you can access before, during and after the storm.

Protect Your Home. Create a Home Inventory Today

With storm season quickly approaching, now is the best time to create a home inventory. In a recent study, the National Association of Insurance Commissioners (NAIC) found that more than half of consumers in the United States do not have a home inventory and nearly 60 percent of those have not updated theirs in the last year.

A home inventory is vital for two reasons. First, creating a home inventory allows you to keep track of what you own and its value. This will allow you to determine if your current insurance policy adequately covers all of your belongings. Second, if you should need to file an insurance claim after the storm, a home inventory will make this process much easier.

 To create a home inventory, complete the following steps:

  • List your belongings in practical groups such as the room they belong in or the type of item.
  • Be sure to include celebration items such as jewelry, artwork or antiques, as well as leisure items such as musical instruments and sporting equipment.
  • Do not forget items in storage or items that are not typically visible such as holiday decorations or tools.
  • Include all pertinent information on your list such as brand name, model, serial number, purchase date, price, and the original sales receipt if available.
  • Photograph or videotape each item/room and include a brief description. Open closets and pantries for documentation as well.
  • Store your home inventory in a safe place such as a fire-proof safe, a secure online site or a safe deposit box. Also, consider sharing your home inventory with your insurance agent and family members who live outside of the hurricane impact region.

One quick and easy way to create a home inventory is by downloading the National Association of Insurance Commissioners (NAIC) free home inventory app, myHOME Scr.APP.book. The app is available to iPhone and Android users and allows you to store all your information including photographs and videos in one secure location. Once you have completed your home inventory on the app you can email a backup copy to yourself and family members in case of damage to your device.

Completing a home inventory is the only way to ensure all of your possessions and keepsakes are accounted for after a storm with your insurance provider. Remember to update your inventory at least once a year or anytime you make a new, large purchase.

Key Changes to Flood Insurance

The National Flood Insurance Program (NFIP), which is regulated by FEMA, offers flood insurance to homeowners, renters and business owners in communities that participate in the flood program.

In 2012, Congress passed the Biggert-Waters Flood Insurance Reform Act. In addition to extending the NFIP for five years, the law also required the program to undergo significant changes to flood insurance, flood hazard mapping, grants and the management of floodplains.  Some changes have already taken effect, and others are scheduled to be implemented in the coming months.

Many of the changes were made to increase the financial stability of the NFIP – which following an overwhelming influx of claims resulting from Hurricanes Katrina and Sandy and other natural disasters, had debt levels of nearly $30 billon. One noticeable change brought about by Biggert-Waters is the gradual increase of flood rates to reflect the true flood risks of an area. This will cause the rates for some, but not all policyholders to drastically increase over the next few years as the NFIP begins to phase out subsidized policies.

Here are some other key changes to the NFIP:

  • Annual increases of up to 25 percent to subsidized policies on non-primary/secondary residences in a special flood hazard area. (Rates will increase annually until rates reflect true flood risks.)
  • Annual increases of up to 25 percent to subsidized policies on properties that have experienced severe or repeated flooding. (Rates will increase annually until rates reflect true flood risks.)
  • Annual increases of up to 25 percent to subsidized policies on businesses/non-residential properties in a special flood hazard area. (Rates will increase annually until rates reflect true flood risks.)
  • Requires that any premiums for a new flood insurance policy for a property not currently covered must be based on actuarial rates.
  • Requires FEMA to create a repayment schedule to eliminate the debt and to report on its progress every six months. FEMA is also required to submit a report to Congress on the options available to the agency for eliminating the debt within 10 years.
  • Establishes a Technical Mapping Advisory Council to address map modernization issues.
  • Requires FEMA to establish an ongoing mapping program to review, update and maintain flood insurance rate maps.
  • Phases out grandfathered rates for most policies once the community adopts a new flood insurance rate map.

To see a complete list of changes created by the Biggert-Waters Act, click here.

There are certain things that you can do to help offset the increases you may experience. One option is to consider is incorporating flood mitigation into your home to help reduce your premium. You may also choose to increase the deductible on your policy. Doing so will lower your premium, but remember that you will likely face higher out of pocket expenses should you need to file a claim.

Contact your insurance agent or producer to discuss some of the key changes to the flood insurance program to see how they affect you.

Reviewing your Health Insurance before a Storm

In preparation for hurricane season, it is important to review all insurance policies including your health insurance policy. When reviewing your health insurance policy, you should find out what coverage your plan provides in the event you are displaced by a storm and need medical care.

You should also review your insurer’s policy on filling prescriptions in the event you are displaced. You may want to have at least a one-month supply of medication on hand at all times. Also, collect all important documents in a waterproof protector including copies of prescriptions or unfilled written prescriptions, prescription cards, health insurance cards and policies. Collect extra eyeglasses, hearing-aid batteries, items for dentures and contact lenses.  Pack prescriptions in their original containers, and ask your doctor about the proper way to store your medications. Label all important pieces of equipment, such as wheelchairs and walkers, in case they are lost or misplaced during the storm.

Lastly, inform local authorities about any persons with special needs, such as elderly or bedridden people, or anyone with a disability who may require extra assistance in the event of a storm. Decide on an evacuation strategy for these individuals ahead of time, so you are fully prepared.

It also important to remember that if you have a Flexible Spending Account (FSA) you should save any medical or prescription receipts to submit to your insurance company for reimbursement.
The July edition of the Consumer Advocacy Newsletter will include more detailed information on how to prepare for hurricane season in regards to your health insurance policies.

Office of Consumer AdvocacyP.O. Box 94214Baton Rouge, LA 70804-9214
(225) 219-0619 or (800)259-5300www.ldi.la.govconsumeradvocacy@ldi.la.gov