Many may tap SBA loans

• By TED GRIGGS
• Advocate business writer
• Published: Sep 22, 2008 - UPDATED: 12:05 a.m.

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Thousands of insured Louisiana homeowners may be able to use low-interest federal loans to cover their hurricane deductibles, which could ease a headache for storm victims on the hook for thousands of dollars worth of repairs.

“Folks can use the proceeds from the SBA (Small Business Administration) disaster loan to cover the deductible,” said Carol Chastang, a spokeswoman for the agency. “In the meantime, we encourage people to submit the disaster loan application as soon as possible, instead of waiting for the insurance settlement.”

Chastang said insurance companies are going to be very busy during the coming weeks.

Hurricane Gustav hit the Baton Rouge area hard, damaging thousands of homes and businesses. Many residents got smacked again when they discovered their insurance policies included a hurricane deductible. These deductibles require homeowners to cover damages ranging from 2 percent to 5 percent of their home’s value. A person with a $200,000 house might have to pay the first $10,000 worth of repairs.

Tens of thousands of homeowners face the prospect of covering the deductibles, Louisiana Insurance Department spokeswoman Amy David said.

Federal Emergency Management Agency spokeswoman Denise Everhart said federal law forbids the agency from paying deductibles.

Baton Rouge resident Verien Flaherty, whose home was struck by a tree during Gustav, said she may be forced to sell the duplex because she can’t cover the 5 percent deductible on her Allstate policy, which is about $8,000.

Flaherty, a 74-year-old diabetic on a fixed income, said she found out about the deductible when she called to file her claim.

Flaherty said she hadn’t really checked her policy, since she can’t see well and thought her agent of more than 20 years, whom she views as a friend, would have made her aware of such a drastic policy change.

Flaherty said her adjuster told her to not even bother filing a claim because the damage would be less than her deductible.

“I think something needs to be done,” Flaherty said. “They should get the OK from the consumer before changing their deductible. There should be  a written notice about it.”

Chastang said the SBA has already received a number of loan requests in Louisiana — around 500 in the first two weeks after the storm — and expects many more in the coming weeks.

“We have systems in place that shorten the waiting period for those that do not qualify for a loan, and we refer those people right away to FEMA for grant consideration,” she said.