Amid COVID-19, housing advocates call on local, state leaders to protect homeowners’ insurance
1st June 2020 · 0 Comments
By Ryan Whirty
Contributing Writer
With hurricane season now here in New Orleans and the city continuing to cope with the health and economic effects of the COVID-19 crisis, fair housing advocates are pressing local and state leaders to help homeowners and landlords maintain their property insurance policies.
On May 22, HousingLouisiana called on Congress to allow for federal post-Katrina Road Home funds to be repurposed to help residents pay for their homeowner’s insurance premiums. The organization also asked leaders to allocate monies from the recently adopted federal CARES Act economic-stimulus legislation to cover landlords’ own property insurance. Andreanecia Morris, executive director of HousingNOLA and president of the Greater New Orleans Housing Alliance (GNOHA), said the loss of such coverage can be disastrous for individuals, families and communities.
“Systemically, it’s a huge problem,” she said. “There is a cascade effect.”
HousingLouisiana is a coalition of affordable housing activists, developers and citizens from nine regions across Louisiana, including the GNOHA, the Foundation for Louisiana, the City of New Orleans’ Office of Housing and Community Development, and dozens of other private, public and non-profit organizations.
Those in the local insurance industry agree that having homeowners and property insurance is vital during hurricane season. Ben Guillory, a State Farm agent in New Orleans, told The Louisiana Weekly that if a hurricane hits during the pandemic, “evacuation and coronavirus can be a bad combination for our local residents, as well as those we may come in contact with once evacuated.”
Guillory said he understands that, with the COVID economic downturn, property owners might be tempted to reduce their coverage because money is tight. That’s when hard decisions might need to be made.
“I realize finances are important, but most choose to purchase less insurance than what is needed in order to pay a cheap premium,” he said.
“I often say there is a difference between price and cost,” Guillory added. “Most individuals shop for price but the cost they pay due to having inferior and inadequate coverage is not worth the outcome which they will have traded for.”
But in that case, even in a crisis, something has to give way, Morris said. The results could be financially catastrophic. That’s why housing organizations are calling on local and state officials to provide assistance.
Morris said property insurance is one piece of a larger socioeconomic puzzle in which people’s ability to maintain adequate, stable housing is interconnected with myriad other factors impacted by and created from the coronavirus pandemic.
Aside from the usual, annual dangers to homes and properties from hurricane season on the Gulf Coast – including the fact that most homeowner’s insurance policies don’t include flood coverage, which needs to be bought separately or additionally – the COVID-19 fallout, job losses and drops in personal or business incomes are compounding the importance of maintaining one’s property insurance.
Because such coverage is a requirement for residents – for example, under FEMA regulations or mortgage notes – losing one’s insurance policy can not only have a devastating effect on individual citizens but can also trigger a collapse of neighborhoods, communities, the insurance industry and the economy as a whole.
Morris likened risking homeowner’s insurance coverage to a house of cards or a game of Jenga – removing one card or a single piece can cause a collapse of the whole system. “Taking away pieces at the bottom makes the whole structure more dangerous,” she said. “The thing with Jenga is that there will be a crash, and that will create instability. That’s the point – why are we playing games? We should be working for an equitable society.”
Morris stressed that political and civic leaders must stop ignoring the larger picture and how it’s a sum of its parts.
“We’ve seen a failure of our leaders to recognize this,” she said. “We’ve got to get through to them that so much [potential instability] is connected to the fact that we don’t have stable housing for everyone.”
On May 5, local and state housing advocates met with Louisiana Department of Insurance Commissioner Jim Donelon to discuss concerns about homeowner’s insurance policies and the affect they can have on communities during this crisis.
At the start of the coronavirus pandemic, Donelon issued a temporary moratorium on property-insurance cancellations. However, unlike Gov. John Bel Edwards’ recently-extended moratorium on evictions, Donelon’s halt to the cancellations of insurance policies expired May 12, prompting housing activists to ask in an email to Donelon what the commissioner’s response would be to a potential collapse of the homeowner’s insurance market.
In a May 11 email to Donelon, the advocacy group asked that if 10 to 20 percent of individual residents have their policies cancelled because of nonpayment, what his office would do to ensure homeowners could obtain and hold on to insurance policies, particularly if the residents experience a loss of income from the COVID-19 crisis.
In an email a day later to the group, Donelon said his hands would be tied because he simply enforces state policy and doesn’t set it.
“As I said during our discussion on what to do about homeowners who are now unemployed and can’t afford their insurance premium,” Donelon said in the email, “I don’t have a solution for their problem as I’m a regulator and do not have the power to provide grants as councils, legislators and Congress do. I can’t order companies to keep coverage in place while not being paid or they will successfully challenge that action and/or stop writing business in Louisiana.”
A subsequent inquiry to Donelon for comment from The Louisiana Weekly wasn’t immediately answered.
Morris said she understands such arguments, but also said that regardless, civic and political leaders need to do all they can, including working with advocacy groups like the GNOHA and HousingLouisiana, to provide as much help as possible to homeowners, landlords and other citizens during this crisis and as hurricane season begins.
“The issue of housing keeps rearing its head, and we saw [a possible insurance crisis] was a threat from the very beginning,” she said. “But it fell on deaf ears, and it’s very distressing to see our leaders at every level ignore this.”
This article originally published in the June 1, 2020 print edition of The Louisiana Weekly newspaper.
