February 21, 2011
By: Bruce Berry
Researchers in New Orleans have come back with findings that seem to indicate home insurers are buying into the hype that New Orleans is a risky place to operate.
According to the New Orleans Times-Picayune, the study, commissioned by the New Orleans Redevelopment Authority, appears to show that insurers are overestimating the strength of hurricanes in the area and underestimating homes' ability to withstand the elements.
The NORA told the paper it commissioned the study because there are still thousands of empty Louisiana homes on the real estate market, largely due to the high insurance premiums companies are charging.
According to the paper, with the help of Applied Research Associates, NORA came to its conclusions by inspecting 542 Louisiana Land Trust homes and then looking at the 15 biggest hurricanes to hit the state over the past 100 years.
The study's calculations indicate it should cost about $4 to $5 to insure a Louisiana home for every $1,000 its worth. But in actuality, when comparing its numbers to the Louisiana Department of Insurance's, it costs between $11 and $20 per $1,000, according to the paper.
Due to the threat of hurricanes, states in the Gulf Coast area are consistently among the most expensive states for homeowners to insure a home.
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