State Farm Increases Hurricane Deductible to 5 Percent and Raises Rates

August 27, 2014

One month into hurricane season, State Farm decided to increase their hurricane deductible to 5 percent, raise their rates, leaving customers at a loss.

Hurrican Isaac Near LandfallAs many of you are aware, we’re well into hurricane season. For Louisiana citizens this is a crucial time where everyone wants to make sure they are well protected and safe from any hurricane damage.

State Farm Insurance is Louisiana’s largest insurer with about 30 percent of the homeowners in the state, but the company’s recent actions may affect their percentage of homeowners in Louisiana.

State Farm Increases Hurricane Deductible

State Farm just increased their hurricane deductible to 5 percent, meaning 5 percent of the dwelling coverage amount. For example, a customer with a $200,000 house and 5 percent hurricane deductible will pay for the first $10,000 in damage before insurance kicks in. This is a huge increase as compared to the 2 percent deductible that the company had prior to this change. State Farm also took another rate increase which will cause their policy holders to pay even more premium on top of having an inflated hurricane deductible.

This is a really large hurricane deductible considering that there are companies in Louisiana that Guffey Insurance Agency can offer homeowners with a $1,000 hurricane deductible plus a lower premium rate.

Only If Damages Occur

According to an article in The Advocate State Farm only warned their customers of this change approximately five weeks before their policies renewed.

State Farm’s spokesman, Gary Stephenson, stressed the fact that the 5 percent hurricane deductible only goes into effect if there are any damages. However, for those customers located in a hurricane prone area this deductible weighs heavily on them.

There has been a lot of confusion on whether or not the deductible is included in the normal pricing of the policy.

An article from states that Stephenson indicated that the cost of State Farm’s 5 percent deductible increase is included in the normal rate increase.

“The 5 percent is included in our normal pricing for our policy. It has a zero percentage effect on the cost of the policy. It’s just figured in the normal pricing of our policy,” he said.

State Farm suggests that the mandatory 5 percent hurricane deductible is a part of the company’s actions in order to keep the operating costs down, and to keep their products more affordable for their customers.

What Should You Do?

Insurance agencies located in the heart of hurricane paths understand the unfortunate damages they cause. It’s important for you to shop around with independent insurance agencies like Guffey Insurance Agency. Guffey Insurance has been helping Louisiana residence find the best and most affordable insurance that can protect their property since 1974 and have multiple top carriers to offer coverage with.

We’re a couple months into hurricane season, and the time to find your protection policy is now. Guffey Insurance Agency, Inc. is here to help you find the best rates for your personal needs.

We’re here to help you, not burden you. Contact us today to get a free online quote or call us directly at 225-291-4544.

Photo Credit: CC Image Courtesy of NASA Goddard Space Flight Center