Local agent discusses insurance issues after Hurricanes Harvey a - KPLC 7 News, Lake Charles, Louisiana

Local agent discusses insurance issues after Hurricanes Harvey and Irma

(Source: KPLC weather) (Source: KPLC weather)
LAKE CHARLES, LA (KPLC) -

Insurance claims stemming from Harvey and Irma will no doubt set new records and while Louisiana wasn't the hardest hit, many wonder if back-to-back disasters will affect insurance rates here.

When it comes to damage from Hurricanes Harvey and Irma, several types of insurance come into play. Those who suffered wind damage, will make claims under their homeowners insurance which comes from private companies.

Local state farm agent Dave McCarty says claims in other states are not apt to affect people in Louisiana.

"Homeowner rates are really controlled by the state.  Insurance is run by each state so I don't think the hurricanes in Florida or Texas  will affect our rates here in Louisiana," said McCarty.

And why do homeowner rates and deductibles go up in states that have a disaster?

"Well, insurance companies can't lose money and stay in business," he said, also explaining that insurance companies must maintain large reserves to pay when there is a catastrophe.

Flood insurance, which covers damage caused by rising waters, is provided by the National Flood Insurance Program. 

The government program is in the red and congress may decide that needs to change.

"They might take some of the areas that were low risk zones, what we call zone x, and change them to a higher risk zone and that could increase premiums for those people,  FEMA gets subsidized by Congress, so Congress can absorb all these losses.  But I think Congress is getting to the point and where they're going to tell FEMA you're going to have to be actuarily sound.  We can't keep giving you billions of dollars," said McCarty.

If there's a lesson for people to learn from recent disasters McCarty says it's for people in so-called low risk areas to buy flood insurance.

"You can get a $250K flood insurance policy for $450 a year. That is a bargain,"said McCarty.

Another way Louisiana consumers could be affected has to do with comprehensive coverage provided as part of their auto insurance policy.  comprehensive covers flooding of cars so McCarty says people may see some rate increases.

"You're going to see some increase possibly in auto insurance premiums in the comprehensive portion of the policy. There have been thousands of cars that have flooded in the Houston area as well as Florida.  We had a big flood last year, 2016, in the Baton Rouge, Denham Springs area, and there were several thousand total losses on cars, and that affected the premiums here in Louisiana,"said McCarty.

For more information about the different types of insurance and what to consider when check out these links.

Louisiana Department of Insurance   National Flood Insurance Program

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