LOUISIANA, USA — While the cost of homeowner’s insurance is not going down for everyone, there may be some relief in sight for thousands of you who have seen premiums jump to record highs.
In an exclusive interview, we got some answers from the insurance commissioner about the rising costs of both auto and home policies.
Insurance Commissioner Jim Donelon says the 17.3% rate hike by State Farm for auto insurance, will mostly just hit drivers who buy full coverage, with collision and comprehensive.
Forty percent of the drivers in Louisiana who drive with just the minimum limits, those folks will not feel much of this rate increase, because they only buy liability,” said Donelon.
He says this new hike is due to rising repair costs, but the exorbitant rates in Louisiana is a decades old problem due to lawsuits, and failure of the legislature to pass tort reform.
“We have always had the highest claims to litigation ratio in America, and that is absolutely the reason we have the most expensive auto insurance rates in America.”
Thanks also part of the reason homeowners insurance is so high.
“A plethora of penalties, and attorneys fees added on, that are more generous than the rest of America,” he explained.
But it's also because Louisiana is four times more likely to be hit by hurricanes per capita, more than Florida and Texas.
People are hurting in the state. There are people who can not afford their house note anymore. When asked what is it going to take for our politicians to really buckle down so people don't lose their homes, Donelon replied, “There's no way to artificially or politically suppress rates. If we passed a bill tomorrow, to say rates can’t go up but five percent per year, the doors would be slamming on the offices of the companies pulling out of Louisiana because they’d be losing money.”
That's because the building costs to replace homes has skyrocketed. Already two-thirds of U.S. homes are underinsured. Donelon says the incentive program to lure regional insurance companies, kept rates flat for years after Hurricane Katrina. And the new one is working now.
“And we're seeing it happen faster this time than it did after Katrina and Rita.”
In less than three months, those companies have written 23,000 new policies, taking 7,000 homeowners out of Citizens, the expensive state run program. And there is new approval to write 19,000 more. So, have your agent shop now for a less costly policy.
If you are looking for a new insurance policy, you don't have to wait for the one you have now to end.
If you find one that is less expensive, you can get the rest of your premium back, and switch to the new policy. It's also a good idea to shop for a new policy in October, after the most active part of hurricane season is over.
► Get breaking news from your neighborhood delivered directly to you by downloading the new FREE WWL-TV News app now in the IOS App Store or Google Play.