Louisiana citizens are discovering things about their homeowner's insurance policies. At least those under Allstate. After Katrina and Rita, something horrible happened. Allstate wanted to get out from insuring areas of south Louisiana which are deemed extremely high risk due to hurricanes...
But selectively insuring consumers just b/c of geography is not a legal way to go about things. In order to get around this, Allstate took advantage of an unwise law. This law allowed them to jack up their 'hurricane deductible', that is the amount of money the insured has to pay before the company pays for any damage that is a result of a hurricane. Allstate has raised their hurricane deductible to 5%. Even for people in very low priced homes this is still an insane amount of cash.
If your house is worth a very low $130,000, you have to pay the first $6,500 worth of damage. This is INSANITY. People's homes have been become unlivable and they cannot afford to pay this amount of money.
Much of the problem comes from policy owner's not reading their policies. Since this was adopted in March of 2007, the notice of the change came to policy holders after their next renewal. Since some people have extremely old policies, they were probably expecting a deductible of something like a flat $500, and instead are hearing from their companies that they will be paying upwards of $7,000 and $8,000 dollars.
To complicate matters, if you want to get out of a bad policy such as one that carries a 5% hurricane deductible, you reset your policy cancellation deadline. Under Louisiana law, an insurance company has the right to cancel any homeowners policy for any reason during its first 3 years. So when you go to a different company, you lose the security you once had.
People, READ YOUR POLICIES.
Read EVERYTHING that comes in the mail from your insurance company.