Facing Huge Insurance Costs After Hurricane Ida? This Federal Loan Program Can Help New
Owners of homes and businesses damaged by Hurricane Ida likely face thousands of dollars in personal expenses, even with insurance.
Indeed, following a hurricane, insurance companies on the Louisiana coast may require policyholders to spend between 2% and 5% of the value of their property before covering damage.
It is often referred to as a “named storm franchise” in industry jargon because it only kicks in for weather events strong enough to be considered a named storm. And that sometimes causes sticker shock for survivors who pick up the pieces after a disaster.
For example, if a house has an insured value of 200,000 and a deductible of 5%, the policyholder will first have to pay $ 10,000 in direct repairs before the insurance takes effect.
The Federal Emergency Management Agency will not cover these expenses, but a separate program run by the US Small Business Administration offers low-interest disaster loans to help survivors pay for losses not covered by the ‘assurance.
Homeowners can borrow up to $ 200,000 to repair their home and an additional $ 40,000 to repair or replace furniture, appliances, cars and other personal property. Renters are also eligible for personal home loans of $ 40,000.
Businesses, nonprofits, and churches can borrow up to $ 2 million for damaged real estate, equipment, inventory, and other assets.
The interest rates on loans for homeowners and tenants can be as low as 1.56% fixed, 2.8% fixed for businesses, and 2% fixed for nonprofits. Loans can be repaid over a period of up to 30 years.
To be eligible for a disaster loan, homeowners must first register with FEMA at www.disasterassistance.gov or by calling 800-621-3362.
After registering with FEMA, survivors can apply for a loan with the SBA online at www.disasterloanassistance.sba.gov/ela or by calling 800-659-2955.
Named storm deductibles can sometimes surprise even the most sophisticated insurance experts.
Louisiana Insurance Commissioner Jim Donelon said he couldn’t remember his policy for a 2% storm deductible until Hurricane Katrina sent a pine tree through his roof.
“My wife handling the claim called me at the office, ‘Did you know we had a named storm deductible of 2% on this claim?’ And I said ‘honestly, no I didn’t,’ ”Donelon said in April.
These comments came during legislative testimony to Senate Bill 54, which would have required insureds to sign an acceptance form for a storm deductible named in their policy. The bill failed against opposition from the insurance industry.
State Senator Jay Luneau, D-Alexandria, introduced the legislation after hearing from voters who suffered damage from Hurricanes Laura and Delta, but failed to realize their policies included the special franchise.
“When they found out, they didn’t have the $ 20,000 or $ 30,000 on hand to cover it,” Luneau said. This included Rapides Parish Sheriff Mark Wood, who faced $ 25,000 in unexpected expenses, Luneau said.
The state senator has said he plans to reintroduce the bill in the 2022 legislative session.
“This is a consumer friendly bill that would have really made people more aware of what they are buying,” Luneau said.
Having trouble getting help from FEMA or your insurance provider following Hurricane Ida? Send your story to editor Blake Paterson at [email protected] and a reporter can contact you.