La. Senate OKs Regional Deductibles for Homeowners Policies

May 2, 2008

The Louisiana Senate voted to allow insurance companies to set different, “named storm” deductibles on homeowner policies depending on how far a property is from the hurricane-prone Gulf of Mexico.

Louisiana is the only state that requires insurers set a statewide deductible — meaning properties near the Arkansas state line must have the same deductible as those along the Gulf, where catastrophic damage from hurricanes is far more likely.

The bill by Sen. Don Cravins, D-Opelousas, would only apply to the so-called “named storm” deductibles, those triggered when damage to a property is caused by a named tropical storm or hurricane.

The bill also would put a 4 percent cap on named storm deductibles, meaning some homeowners with Allstate Insurance Co. would see a reduction in their deductible. Allstate recently raised deductibles to 5 percent on homeowners with policies three years old or less.

The measure passed on a vote of 25-13.

Opposition came from south Louisiana, with opponents complaining their constituents would see spikes in named storm deductibles while north Louisiana homeowners’ would drop.

Sen. Troy Hebert predicted a voter backlash.

“If you’re anywhere south of I-10, I can tell you this: You will get blamed for having the deductibles rise,” said Hebert, D-Jeanerette, one of the opponents.

Under the bill, the Department of Insurance would create a map of Louisiana with zones outlining which areas could have deductibles at which level. Insurers would then be able to set different deductibles on properties in different zones.

Senators approved an amendment by Sen. Julie Quinn, R-Metairie, that would force a company that uses that mechanism to then offer those homeowners a lower premium. The amount of the premium reduction would be approved by the insurance department.
The measure now moves to the House.

Cravins had a similar bill last year that passed both legislative chambers, but a panel of House and Senate members could not agree on a compromise version.

On the Net: Senate Bill 160 can be found at

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