April 20, 2006
New Orleans homeowners may pay 52% more for insurance
If you live in New Orleans and have a homeowners’ insurance policy from Allstate Insurance Co, then get ready to pay almost 52 percent more for your insurance. Under a change approved by a majority vote of Louisiana Insurance Rating Commission, the change in insurance rates will be effective from June.
Allstate is Louisiana’s second-largest homeowners insurance company and has over 200,000 policyholders. According to the company, the increase was mandated because this year, there could be another busy storm season. Another reason was that the cost of reinsurance, the extra insurance carried by insurance companies to help them pay on catastrophe claims, is rising.
Allstate seems to have learnt some bitter lessons from last year’s storm and is probably not willing to take any risks this time around. The company did not have any reinsurance for Louisiana when Hurricanes Katrina and Rita hit the state. Following last year’s record hurricane season, the company bought a one-year nationwide reinsurance policy for all catastrophes.
However, not everyone is going to have to face the sudden price hike. Allstate policyholders in parts of the state such as Shreveport and Monroe will see decreases that will range from 13 percent to 16 percent. However, the exact amount of increase or decrease will depend on many other factors as well. The location of a home, its type of construction, its replacement value and the size of the policy's deductible are all factors that will be taken into consideration by the company when deciding the rate change.
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