One month into the hurricane season, State Farm's 308,000 Louisiana
homeowner's customers are confronting an unpleasant change: their
policies now include a mandatory 5 percent hurricane deductible.
The hurricane deductible was included on new policies in November
and added to existing customers as they've renewed their policies
on or after Dec. 1, spokesman Gary Stephenson said. Most policies
had a 2 percent hurricane deductible; State Farm notifies customers
of the change roughly five weeks before their policies renew.
That means a customer with a $200,000 house and 5 percent hurricane
deductible will pay for the first $10,000 in damage before insurance
kicks in, compared to the $4,000 the customer would have paid under
a 2 percent deductible.
The mandatory hurricane deductible accompanied an average statewide
rate increase of close to 9 percent on premiums policyholders pay for
insurance. The increase averages 9 percent in Orleans and Jefferson
parishes, 7.5 percent in East Baton Rouge, and 9.4 percent in Lafayette,
according to the Louisiana Department of Insurance.
The increased hurricane deductible wasn't part of State Farm's previously
reported rate filing nor was it required to be.
"They (State Farm) can implement the deductible change as long as
they apply it to all policyholders, and it's done statewide," said
Insurance Department spokeswoman Ileana Ledet. The company doesn't
need the Insurance Department's approval.