The Louisiana homeowners insurance crisis has been building over the last three years due to several hurricanes that have left insurers paying tens of billions of dollars in insured losses. As a result, many home insurance companies have gone insolvent, others have stopped writing policies in high-risk areas of the state, and still others have pulled out of Louisiana completely.
This has left tens of thousands of homeowners scrambling to find new home insurance coverage over the last few years. And others who were fortunate enough to keep their policies have seen their premiums increase an average of 27% from May 2022 to May 2023, according to our Policygenius Home Insurance Pricing Report.
Here’s a look at the latest in this crisis, how exactly it started, and what Louisiana homeowners can do to find coverage and lower their premiums.
Latest on Louisiana’s homeowners insurance crisis
In the last three years, over 20 insurance companies have either gone insolvent or stopped writing policies in Louisiana due to the outsized risk of claim payouts due to worsening weather conditions. [1]
Declared insolvent
Access Home Insurance
Americas Insurance Company
Gulfstream
Lighthouse Excalibur
Lighthouse Property
Southern Fidelity
State National Fire Insurance
Weston
No longer doing business in Louisiana
Aegis Security
AIG
American Reliable
American Summit
Bankers Specialty
Geovera Specialty
Lexington
Maison Insurance
Republic Fire
Union National Fire
United Fire
Unitrin Direct
Because of the limited home insurance options, about 100,000 Louisiana homeowners have had to purchase coverage through Louisiana Citizens Property Insurance — the state-funded insurer of last resort. These policies are typically more expensive and offer less coverage than home insurance policies from a private insurer.
However, Tim Temple, Louisiana's soon-to-be elected insurance commissioner, has plans to shake things up when he takes office in January. Temple believes the Louisiana property insurance market is over-regulated and aims to roll back regulatory actions imposed by the state’s longtime commissioner Jim Donelon, who Temple will be succeeding. [2] These rollbacks include:
Nixing a rule that restricts insurance companies from asking for rate changes more than once a year.
Doing away with a rule that prevents insurers from dropping policyholders who’ve held policies with them for at least three years. (Louisiana is the only state that has this law.)
The incoming commissioner thinks these two changes to the law will entice more insurance companies to do business in the state. In turn, this would create a competitive home insurance market in Louisiana, ideally driving down rates and offering more insurance options for Louisiana homeowners to choose from.
What led to Louisiana’s home insurance crisis?
A combination of severe weather, billions of dollars in claims, insurance companies going out of business, and fraudulent lawsuits all contributed to the current crisis happening in Louisiana’s insurance market.
Increase in catastrophic hurricanes
The start of the homeowners insurance crisis in Louisiana can be traced back to hurricanes Laura, Delta, and Zeta that hit the Gulf Coast in 2020. [3] Combined, these three storms caused $10.6 billion in insured losses in Louisiana — with policyholders filing over 320,000 claims. [4]
These catastrophes were followed by Hurricane Ida in 2021, which itself caused $13.1 billion in damage and over 460,000 claims, and Hurricane Ian in 2022 that caused an estimated $30 billion in insured losses. [5]
Insurers going insolvent or pulling out of the state
Following these disasters, home insurance companies in Louisiana didn’t have the reserves to pay out these high-dollar claims, forcing many to go insolvent. Others pulled out of the market completely or stopped writing new policies in hurricane-prone areas of the state like New Orleans, leading to many homeowners losing coverage altogether and having fewer options when looking for a new policy.
Rise in fraudulent home insurance claims
While Louisiana’s insurance industry doesn’t have fraudulent claims on the scale that Florida does, it did run into problems with law firm McClenny, Moseley & Associates (MMA). The firm admitted to filing 850 fraudulent hurricane claims over the span of three months in 2022 in a scheme to defraud Louisiana policyholders and insurers. [6] This is just another hurdle home insurance companies had to jump over, leading many to conclude that it was no longer worth doing business in the state.
What homeowners can do if their policy is nonrenewed or canceled
If your home insurance company nonrenews or cancels your policy, there are several steps to take to try retain your policy or else purchase a new one.
Check that the insurer gave you enough notice. In Louisiana, insurance companies must send a nonrenewal notice at least 30 days prior to the policy expiration date. If they don’t, reach out to the Louisiana Department of Insurance — you’ll likely have a case for keeping your policy. [7]
Ask if there are updates you can make to your home. Oftentimes, home insurance companies cancel your policy due to old roofs or outdated home systems that make you at high risk for filing a claim. Ask if there are improvements you can make to your home to make you more attractive to insure.
Use a marketplace to compare options. If you’re unable to keep your policy, an insurance marketplace like Policygenius can help you compare quotes from multiple home insurance companies to see what options are available. Policygenius works with insurers that specialize in high-risk homes and other surplus lines carriers that might be more willing to work with you compared to standard companies after your policy is dropped.
Look into Louisiana Citizens Property Insurance. If you’re struggling to qualify for insurance from a private company due to your home’s high risk, ask your Policygenius agent if a policy through Louisiana’s FAIR Plan makes more sense. Louisiana Citizens is a state-funded insurer that offers home insurance to Louisiana homeowners when no other company will.
How Louisiana homeowners can reduce their home insurance premiums
Here are a few ways for Louisiana homeowners to lower the cost of home insurance:
Take advantage of the Louisiana Fortified Homes Program. This program grants up to $10,000 for Louisiana homeowners to upgrade their roofs to meet standards that are better able to withstand hurricane-force winds. In turn, many home insurance companies will offer discounts on your premiums.
Install wind and hail-resistant upgrades. If you don’t qualify for the above program, you can still save on home insurance by fortifying your home with impact-resistant windows, storm shutters, and reinforced garage doors that can withstand hurricane-force wind speed. A wind mitigation inspection can often support your case for receiving a discount on your premiums.
Bundle your home and auto insurance. You may be able to score up to 30% off your home insurance bill by purchasing your home and auto insurance with the same company. You can check out our list of the best home and auto insurance bundles of 2024 to see what options are out there.
Raise your deductible. Increasing your home insurance deductible typically results in lower premiums. So if you live in an area of Louisiana that doesn’t typically experience hurricanes or you haven’t filed a claim in the last 10 or so years, then a high-deductible policy might make sense.
Frequently asked questions
Frequently Asked Questions
Why is homeowners insurance so high in Louisiana?
Homeowners insurance is so high in Louisiana because of the catastrophic hurricanes that have hit the state over the last three years — depleting home insurance companies of reserves and forcing many into insolvency. As a result, with fewer insurers in the market and a higher risk of policyholders filing claims, home insurance companies can charge higher premiums to offset the risk.
Why are insurers leaving Louisiana?
Home insurance companies are leaving Louisiana due to the outsized risk of homeowners filing claims due to severe weather conditions.
What is the average homeowners insurance premium in Louisiana?
The average cost of homeowners insurance in Louisiana is $2,452 per year or $204 per month. This is 40% more expensive than the national average of $1,754 per year.
Is State Farm writing homeowners insurance in Louisiana?
Yes, State Farm is still writing homeowners insurance in Louisiana as of November 2023, though it has stopped writing policies in California due to that state’s own home insurance crisis.
