What to do about your insurance before a hurricane

Louisiana has had a quiet 2022 hurricane season so far, but that doesn't mean residents shouldn't be thinking about their insurance.

The last two seasons brought large storms — Hurricane Laura in 2020 and Hurricane Ida in 2021 — to south Louisiana, causing billions of dollars in damage to homes and businesses in wind and flood damage.

As the peak of hurricane season approaches, Louisiana Department of Insurance Commissioner Jim Donelon said being prepared for upcoming storms includes having an insurance policy that will adequately cover potential losses. He encouraged residents to assess policies and inventory property before a storm hits.

Talk with your insurance agent

Donelon said residents should touch base with the insurance agent. He recommended policyholders talk with the insurance representative at least once a year for all of their coverages including home, car and life policies.

When talking with their agent, policyholders should ask about the coverages for wind and hurricane losses and ask about the named storm or hurricane deductible for a policy. Typically, insurance covers a percentage of the insured value, not of damage, he said.

For example, the typical insured value in Louisiana is $200,000. A policy that covers 3% of the insured value would mean a policyholder would have a $6,000 deductible before coverage kicks in to pay for repairs.

A third of policies in the state have a 5% named storm or hurricane deductible meaning those policyholders if the insured value is $200,000, would have to pay a $10,000 deductible.

"Go over those things with your agent and be aware of the coverage you have and what you don't have flood insurance, adequate coverage of resources to meet that deductible," Donelon said.

Policyholders also should have copies of insurance policies and contact information for an agent in case of an emergency so they can quickly file a claim.

Inventory your house

Donelon also encouraged people to go through their homes with a cell phone and take photos of everything they own to inventory it for potential claims.

"Take pictures of your furnishings, your flat-screen TV, your carpeting, your artwork if you have any, before it gets devastated by a flood event or a hurricane or a tornado," he said. "It's so much easier to, after your loss, adjust that claim and get compensated in a quick fashion if you have such evidence to document your loss."

Donelon suggested backing those photos up to a cloud storage space in case the cell phone is ruined or lost.

The National Association of Insurance Commissioners also has a home inventory app.

Have flood insurance coverage

Donelon encouraged residents to have flood insurance.

"The best insurance any property owner anywhere in the state of Louisiana can make is the still significantly subsidized National Flood Insurance Program," he said.

He said he knew risk rating 2.0 brought "scary" rate increases but that 18% compounded was better than going uninsured. Risk rating 2.0, introduced by the agency in April, is the Federal Emergency Management Agency's updated methodology for pricing that is supposed to communicate flood risk more clearly, according to the agency.

After the 2016 flood that damaged parts of Lafayette and Baton Rouge, Donelon said the average insured property owner who had damage was paid $95,000 for damages covered by the flood policy while uninsured property owners received an average of $9,000 in FEMA grants.

In 2016, only 12% of residents in the Lafayette, Baton Rouge and Alexandria areas had flood insurance, Donelon said.

For information on a National Flood Insurance Program policy, visit www.floodsmart.gov or search for an agent on the LDI website www.ldi.la.gov/findagent.

Flood policies purchased through the National Flood Insurance Program carry a 30-day waiting period, according to LDI. The activation wait period for private flood insurance varies by policy.

What to look for in an insurance company

For anyone who is searching for an insurance company, Donelon recommends they meet with an agent face-to-face when possible to talk about insurance needs and to understand what coverages would be included and whether those coverages would be adequate.

He recommended policyholders check out the financial rating of a company they are considering buying insurance from.

He said the gold standard of rating agencies is done by AM Best. It is more difficult for smaller companies to be rated by AM Best because they have to be seasoned, including having been in business for more than five years.

Donelon also recommended policyholders check the financialrating of a company. He said customers can check their annual financial reports, submitted to the state they're domiciled, and can specifically see how much surplus a company has.