Louisiana Insurance Lawyer Blog

Residents in northern Louisiana, Shreveport in particular, recently experienced a severe storm that brought significant amounts of hail to the area. Although hail is not as pressing of a threat in Louisiana as it is on the Great Plains (a region that is dubbed "Hail Alley" by the Weather Channel), the damage it causes should still not be taken lightly.

The effects of hail are not always obvious to the casual observer. In extreme cases, hail can destroy structures, break windows, and leave behind unmistakable wreckage. When a hail storm is not so clearly destructive, however, it can damage buildings in such a way that homeowners may not see the need for repairs. Roof damage that results from hail is especially hazardous, because it can cause leaks, structural problem, depreciate a home's value, and it may not appear serious. Photographs of roofs after a hail storm illustrate how shingles, after being peppered with hail, sometimes show nothing more than small circular dents or marks. A homeowner may not notice this damage, or assume that it does not warrant further inspection.

Homeowner's insurance policies in Louisiana do not always include hail damage, which is usually a subsidiary of "wind damage" in policies. If this is the case, such coverage can be purchased separately at extra cost. The costliness of this extra insurance may be exacerbated by insurance companies' treatment of hail damage claims. In Louisiana, deductibles may be percentage based rather than flat rate, corresponding to the home's value and, more often than not, burdening the homeowner with a more substantial out of pocket deductible.

The type of roof is another factor regarding hail damage. Fiberglass shingles are definitively less expensive than many other types of roofing, and are relatively simple to repair or replace. At the opposite end of the financial spectrum, terra cotta and slate roofs can be very expensive if they are damaged. Terra cotta is high in cost, limited in availability, and requires more skill to install or repair the material. Typically, if one shingle on an asbestos slate roof is cracked by hail, the insurance company must pay for the entire roof. A comparable shingle of like kind and quality might be a slate composite shingle like Lamarite. The cost of terra cotta and slate is often double, triple or even quadruple the cost of a shingle roof.

This discrepancy in cost is not overlooked by insurance companies in Louisiana. If your more expensive roof is damaged by hail, an adjustor may suggest that vinyl or fiberglass shingles are your only option for replacement. Such a situation is far more cost-effective for insurance companies, but for the homeowner who is already saddled with a hefty deductible, the prospect of downgrading (and potentially decreasing his home's value with the roofing change) should not be entertained.

If a claim is made, and the insurance company insists upon a reduction in roofing quality, homeowners should pursue further negotiations with their insurance company's adjuster. If all else fails, you may want to speak with your Louisiana insurance lawyer.

Additional Resources:

Storms Bring Hail To Northwest Louisiana (Shreveport Times)

What is Hail?

Photos of Hail Damaged Roofs

Some Louisiana Coastal Policies May Exclude Wind & Hail- Storm Advice For Louisiana Insurance Consumers

Percentage Based Home Insurance Deductibles

State of Louisiana Consumer's Guide To Homeowners Insurance

Understanding Hail Damage & Impacts

If you are a homeowner in Louisiana, the possibility that your property may be affected by a flood is an unfortunate reality. There are physical measures a homeowner can take to protect his property against the threat of a flood, but the prospect that structural mitigation may not be enough should compel a homeowner to seek flood insurance. In this situation, National Flood Insurance Program (NFIP) policies most often come into play.

According to the NFIP, a flood exists "where two or more acres of normally dry land or two or more properties are inundated by water or mudflow." GOHSEP (Governor's Office of Homeland Security and Emergency Preparedness) expands upon this definition to describe how a flood is typically an external event. If the dam or levee behind your property breaks and your home is inundated with water, it is considered a flood. On the other hand, if your pipes burst and your home sustains water damage, it is not a technical flood. Insurance policies for property owners reflect this distinction. When a home is damaged by a legitimate flood, it is a matter for the NFIP to handle. If a home is affected by water, mud or other runoff material not resulting from an actual flood, then it would relate to homeowner's insurance, not the NFIP.

When a homeowner in a "moderate-to-low risk area" applies for flood insurance with the NFIP, he has more than one coverage option. Building and contents can be offered in one premium package, and the NFIP offers additional choices to alleviate the financial burden that flood insurance places on a homeowner. Many Louisiana homeowners do not fit this "moderate-to-low risk" standard. The Preliminary Digital Flood Insurance Rate Maps (DFIRMs) currently used by FEMA and the NFIP illustrate that much of the state is categorized as "high risk." Louisiana homeowners might balk at the price tag for flood insurance, but they may have no power to reject it. The NFIP stipulates that if you are in a high risk area, and your mortgage was acquired through a "federally regulated or insured lender," you must insure your property.

What happens once insurance has been obtained? When flood damage occurs, and the insured approaches the NFIP with a flood claim, he may find that his comprehensive insurance policy does not account for everything. Precious metals, septic systems, and temporary living expenses are among the items not covered by the NFIP. Louisiana homeowners should take care to scrutinize their coverage, or lack thereof, with their agent..

Cost is another factor that must be taken into consideration. NFIP policy rates vary, and a homeowner does have a number of coverage options to choose from, but flood claims are capped at $250,000 for building and $100,000 for contents. Moreover, the annual premiums, and the homeowner's deductible, are costlier in the A and V flood zones (high risk and coastal areas) which comprise much of Louisiana's geography. In a low-risk flood zone, for instance, a homeowner who purchases maximum coverage for building and contents on his property pays an annual premium of $348 or $388, depending upon whether or not he has a basement. The same policy in an A zone costs $2,647, and $5,714 in a V zone. If a homeowner feels that he is still left too vulnerable by the NFIP's coverage limits, he can also purchase "excess" flood insurance, which is offered through a number of general insurance providers in Louisiana. These supplemental policies offer coverage beyond the $250,000 and $100,000 maximums, but they are frequently more expensive. The Louisiana homeowner may find it necessary to purchase an NFIP policy, and perhaps supplemental insurance as a safeguard against flooding, but such precaution certainly does not come cheap.

Additional Resources:

Flooding & Flood Risks Overview

Louisiana Governor's Office of Homelland Security & Preparedness

Louisiana Mapping Project-Charting Our Coastal Future

FEMA- The National Flood Insurance Program

Today, Congress reauthorized the National Flood Insurance Program that expired last Sunday night when Congress failed to pass a temporary extension of the program. The reauthorization is not retroactive. The expiration did not affect existing coverage. However, for the two days period the NFIP did not issue new policies or renew policies, some may have sustained a lapse in coverage. Some home sales were even delayed because some lenders require flood insurance as a term of the mortgage.

The National Flood Insurance Act of 1968 provided insurance against inundation from rising waters or from the overflow of streams, rivers, or other bodies of water, or from tidal surges, abnormally high tidal water, tidal waves, tsunamis, hurricanes, or other severe storms or deluge.

The reauthorization extended the NFIP through March 28, 2010. Congress has extended the existing program several times while working on various proposals to reform the entire system. There are several pending overhaul bills in both the House and Senate. Some of the reform bills seek to expand the flood program to include wind coverage. The National Association of Insurance Commissioners has even promoted the idea of offering coverage for all catastrophic perils.

In the meantime, the NFIP only applies to flood. The NFIP has just released its May, 2010 Revision to the Flood Manual as well as Wind vs. Water Adjusting Practices.

Additional Resources:

NFIP Reauthorzation Through March 28, 2010

Expired NFIP Program Delays Louisiana Real Estate Transactions

NAIC's Proposal For Creating A Comprehensive National Plan To Address Catastrophic Risks

National Flood Insurance Act of 1968 and Flood Disaster Protection Act of 1973, As Amended