Owners of homes and businesses damaged by Hurricane Ida likely face thousands of dollars in out-of-pocket expenses — even with insurance.
That's because in the aftermath of a hurricane, insurance companies across coastal Louisiana can require policyholders to spend anywhere from 2% to 5% of the value of their property before covering damages.
It's often called a "named storm deductible" in industry parlance because it only kicks in for weather events strong enough to be considered a named storm. And it sometimes causes sticker shock for survivors picking up the pieces after a disaster.
For example, if a home has an insured value of 200,000 and a 5% deductible, the policyholder would first have to pay $10,000 in out-of-pocket repairs before insurance kicks in.
The Federal Emergency Management Agency won't cover those expenses, but a separate program run by the U.S. Small Business Administration offers low-interest disaster loans to help survivors pay for losses not covered by insurance.
Homeowners can borrow up to $200,000 to repair their residence and another $40,000 to fix or replace furniture, appliances, cars and other personal property. Renters also qualify for the $40,000 personal property loans.
Businesses, nonprofit and churches can borrow up to $2 million for damaged real estate, equipment, inventory and other assets.
Interest rates on loans for homeowners and renters can be as low as 1.56% fixed, 2.8% fixed for businesses, and 2% fixed for nonprofits. Loans can be repaid over a maximum 30-year time frame.
To qualify for a disaster loan, property owners must first register with FEMA at www.disasterassistance.gov or by calling 800-621-3362.
After registering with FEMA, survivors can submit a loan application with the SBA online at www.disasterloanassistance.sba.gov/ela or by calling 800-659-2955.
Named storm deductibles can sometimes come as a surprise to even the most well-versed insurance experts.
Louisiana's Insurance Commissioner Jim Donelon said that he didn't remember his policy included a 2% named storm deductible until after Hurricane Katrina sent a pine tree through his roof.
"My wife who was handling the claim called me in the office, ‘did you know we had a 2% named storm deductible on this claim?’ And I said ‘honestly, no I did not'," Donelon said in April.
Those comments came during legislative testimony for Senate Bill 54, which would have required policyholders to sign a form agreeing to a named storm deductible in their policy. The bill failed against insurance industry opposition.
State Sen. Jay Luneau, D-Alexandria, introduced the legislation after hearing from constituents who faced damage from Hurricanes Laura and Delta but didn't realize their policies included the special deductible.
"When they found out about it, they didn't have the 20 or 30 thousand dollars on hand to cover it," Luneau said. That included Rapides Parish Sheriff Mark Wood, who faced $25,000 in unexpected out-of-pocket expenses, Luneau said.
The state senator said he plans to reintroduce the bill during the 2022 Legislative Session.
"It's a consumer friendly bill that really would’ve made people more aware of what they’re purchasing," Luneau said.
Having issues getting assistance from either FEMA or your insurance provider in Hurricane Ida's aftermath? Send your story to staff writer Blake Paterson at firstname.lastname@example.org and a reporter may reach out to you.