Below I-10, insurance hard to find, hard to fund

• By MARK BALLARD
• Advocate Capitol News Bureau
• Published: May 11, 2008 - Page: 1A - UPDATED: 12:05 a.m.

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Back in 2005, Dennis Donnelly hunkered down with evacuated in-laws in his Donaldsonville house to ride out hurricanes Katrina and Rita.

He lost electricity, but Donnelly’s 35-year-old brick veneer house suffered no damage.

The 2,100-square-foot, two-story home is in a suburban-style subdivision built on what once was an Ascension Parish sugar cane field. It sits several miles south of the Mississippi River and about 10 miles south of Interstate 10.

Donnelly said that after two major hurricanes, he expected his homeowners insurance to rise.

“But I never suspected it’d be anything approaching 50 percent,” he said.

Plus, his policy covers less. The deductible for hurricane damage — the portion the homeowner pays before the insurance policy kicks in — rocketed from $500 to $11,000.

Being a financial adviser with an accounting and investment banking background, Donnelly set out to methodically see if he could find a better deal.

What Donnelly discovered is what all too many homeowners in Louisiana already know: Nearly three years after the hurricanes, insurance can be hard to find and very expensive.

That’s despite a variety of measures taken by the state Legislature to make writing policies in Louisiana more attractive, including setting aside $100 million to give to individual insurance companies willing to do business here.

Donnelly contacted each of the 148 companies authorized to sell homeowners insurance in Louisiana and documented the outcome.

Only four companies responded with a quote for the insurance that financial institutions require before lending money to buy a home. The best he could do was a 30 percent increase in price and $4,400 deductible.

The quotes Donnelly received are roughly twice what the state Department of Insurance lists as estimates for the same companies selling similar policies in Baton Rouge — the nearest city to Donaldsonville on the state’s list.

Many property owners in Louisiana are having to rely on the state-backed insurer of last resort, Louisiana Citizens Property Insurance Corp., which was purposely set up to sell policies at prices that are at least 10 percent higher than private insurers.