If New Orleans homeowners can’t get insurance, they can’t buy, sell, or renovate houses, so many leaders are rising to tackle this problem. Right now the only insurance company (I know of) that’s writing policies is the Louisiana Citizens Fairplan, which is not the ideal choice.

For one, the Fairplan was designed to be more expensive than independent insurers so that it would not compete on the open market. Also, the Fairplan takes a little longer to put in place than most market insurance programs, typically two weeks from the time that you put in an application until the time they bind your coverage.

However, the Fairplan will cover almost any type of residential property and does not turn down applicants because of fuse-type electricity or asbestos roofing, as many market insurers do. Also, most experts agree that once New Orleans passes a hurricane season without incident, more insurance companies will come into the market, attracted by the dearth of competition. In other words the market will help bring more options.

The Fairplan only writes on houses in livable condition. For properties that have to be renovated, there is a different type of insurance you can get, called Builder’s Risk (or sometimes commonly called renovation insurance.)

This is the insurance you get if you’re in the process of renovating your home, but haven’t completed, and it was widely available before the storm through market carriers, most notably Zurich.

Now that more homeowners are applying for this type of insurance, companies are getting a large profile of New Orleans area homes for this policy, and so to avoid over saturating themselves in any one market area, companies are trying to make it harder to get builders risk.

For example, a homeowner has always had to employ a licensed, bonded contractor to get the coverage, but now most policies also require a structural certificate from a licensed structural engineer showing the house is in sound structural condition before they will bind coverage. This isn’t a hard thing to get, but it is another expense and time factor that I always make sure my clients are aware of.

Having said that, there is talk of adding a builder’s risk-type policy to the Louisiana Fairplan, and some have said it could go into effect as early as July 1. Preliminary suggestions would allow the homeowner to self help (in other words not have to hire a contractor). However, because this would be through the state program, the rates would necessarily be higher so it’s not competing with market rate providers. But even at higher rates, I have many clients who would welcome having an option.