State Farm hurricane deductible jumps in Mississippi and Louisiana, but Mississippi has lower option Twitter:July 9, 2014 

BATON ROUGE -- Looks like Mississippi homeowners with State Farm policies got a better deal than their Louisiana counterparts, at least in the latest go-around of rate increases and changes to homeowner policies.

State Farm's Louisiana customers are paying a mandatory 5 percent hurricane deductible, the Associated Press reports. With a 5 percent deductible, a policyholder with a $200,000 home would pay $10,000 out of pocket for hurricane losses before insurance coverage kicks in.

Customers given an option

Mississippi Insurance Commissioner Mike Chaney, contacted by telephone while at a National Association of Insurance Commissioners conference, said State Farm implemented the 5 percent deductible last year in Mississippi. But policyholders who have auto coverage with State Farm have the option for a 2 percent deductible if they pay more.

Chaney said the average loss from Hurricane Katrina was about $15,000, so homeowners should consider the 2 percent deductible at a higher rate unless they want to absorb most of their hurricane losses.

Total disbelief

Chaney found it hard to believe Louisiana didn't get the 2 percent option, so he put the Sun Herald on hold to double check. Louisiana Insurance Commissioner Jim Donelon was at the same conference in California. Donelon said his state did not have the 2 percent option.

Getting back on the line with the Sun Herald, Chaney said, "What can I say, we've got a little better deal in Mississippi."

In Mississippi, the policy change came with a statewide average increase of 7.6 percent, compared with about 9 percent in Louisiana. In South Mississippi, the State Farm rate increases were lower: 5 to 6 percent. Chaney has tried to hold down rate hikes on Coast homeowner policies in recent years because of the sharp increases that followed Katrina.

An eye on the numbers

John Wells, rating director for the Mississippi Insurance Department, said he's already studying State Farm's rate filing for this year. The company is requesting an average statewide rate increase of 4.1 percent, he said, with proposed increases of less than 3 percent on the Coast.

A State Farm spokesman said the 5 percent deductible helps the company hold down premium rates.

Robert Hunter, insurance director for the Consumer Federation of America, said the 5 percent hurricane deductible makes State Farm's average rate increase in Louisiana more like 15 or 20 percent.

State Farm insures more homes than any other company in both states.

The Associated Press, contributed to this report.

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