Finding affordable homeowners insurance is an important part of the home buying process here along the Gulf Coast.
And while the recent news about insurance rate increases may seem a bit concerning, it’s helpful to understand the important role the Louisiana Citizens Fair Plan plays in providing stable, reliable insurance options for Louisiana homeowners.
What Is the Louisiana Citizens Fair Plan, and Why Does It Exist?
There are so many reasons people love living in South Louisiana. But dealing with the aftermath of hurricanes and tropical weather is a challenge for all of us.
Over the years, many private homeowners insurance companies have chosen to either leave the state after a hurricane, or stop writing new insurance policies in impacted areas. More than 20 insurance companies have either become insolvent or announced plans to leave the state since Hurricane Ida alone.
This often leaves homeowners scrambling to find insurance, and that’s why Louisiana Citizens was created.
The Louisiana Citizens Property Insurance Corporation (often called the Fair Plan) is a nonprofit organization created specifically to provide insurance for people who should be able to obtain private insurance, but are unable to get coverage.
The Fair Plan provides critical market stability by offering insurance options as a last resort to people who may otherwise have no options. And by law, Fair Plan rates must be higher than private insurance options.
Louisiana Citizens Pricing Requirements
Louisiana Citizens rates must be at least 10% higher than private insurance companies. Legislators created this rule in hopes of continuing to incentivize private insurance companies to operate in Louisiana.
The Reason for Price Increases
Faced with the shortage of private insurance options and the growing number of insurance policies being covered, it’s no wonder the Louisiana Citizens Plan has been forced to raise rates.
In short, an increase in demand for the program necessitates an increase in rates.
What Options Are Available to Homeowners
If you’re in the market for a home or facing a tough choice about your homeowners insurance, don’t panic.
Louisiana Citizens is a remarkably flexible program. The rate hike won’t reach every policyholder until their one-year anniversary passes; if the policyholder is able to depopulate before then, they won’t just miss the hike – anyone who prepaid for Lousiana Citizens will get a full refund as well.
In the meantime, speak to one of our mortgage lenders to find out what insurance options may be available to you in the area you’re considering. State regulators are working hard to bring in new insurance companies, and your choices may change quickly.
Our team of mortgage lenders is here to help you get pre-qualified for a home before you start shopping so you will understand potentially how much you may need to budget for insurance, and what options may be available to you including the Louisiana Citizens Plan or in the private market.