Soaring insurance rates make it harder for home buyers to qualify
Lake Charles, LA (KPLC) - What happens when your homeowner’s insurance becomes so high, you just can’t afford it?
If Louisiana Citizens gets the increase requested, some people say they won’t be able to pay it.
When people in Louisiana can’t get homeowners insurance, they usually have to go with Louisiana Citizens, the policy of last resort. And talk of a 63 percent raise in premiums worries policy holders and realtors.
Holly Leggett’s insurance company dropped her after the hurricanes.
“It was based out of Florida and apparently, they’re going bankrupt and pulling out of the state and leaving Louisiana. And the closest thing I can get is Citizens of Louisiana,” she said.
Leggett is paying $1,700 a year and admits a 63 percent increase might put her in danger of losing her house.
“It’s ridiculous. People around here are still trying to get their homes redone from Laura two years ago. If they go up, I’m not going to be able to afford my homeowners insurance, let alone my house note,” said Leggett.
Louisiana realtors are asking the state insurance commissioner not to approve the major increase. Lake Charles realtor Deborah Anderson says higher insurance rates have already caused sales to fall through.
“Less buyers can afford to buy because they have to secure insurance before they can finance their home and go to closing. And if someone is marginal in their financial wiggle room, higher insurance can throw their debt ratio off whack and they won’t qualify,” said Anderson.
The law says Citizens must charge the highest premium in the market because the state doesn’t want to encourage people to use Citizens.
“The purpose of Citizens doing that is because citizens needs to be the insurer of last resort for people who cannot get insurance somewhere else. It by law has to be more expensive than private insurance,” she said. Even if things do get even more difficult, Anderson urges those dreaming of home ownership not to give up.
Louisiana Insurance Commissioner Jim Donelon has said he’s studying Citizens’ request and working on a plan that will help to return more of citizens policy holders to private insurance companies.
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