Letters from CEO's: AAA Hurricane Insurance

Dear Mr. Wilablog,

My name is Robert L. Darbelnet and I am the CEO of AAA. First, I would like to thank you and your wife for the last 10 years of doing business with our company. When you bought your first house, we were very happy to see that you turned to AAA to provide home, flood and hurricane (wind and hail) coverage.

The reason I am writing this letter to you is because it has become clear to AAA that there is a good possibility that you might actually need to make use of your insurance if another hurricane were to impact your area of the Gulf Coast. While we are extremely sympathetic to the plight of Louisiana homeowners who have lost homes as a result of hurricane damage, AAA has decided that actually providing the insurance that you have been paying for is no longer a viable business model for us.

You should know that if you were a hurricane policy holder with us for 3 years or more, that we would not be able to legally remove this coverage from your policy. However, because the legislators in your state have decided to not protect or encourage new homeowners in Louisiana, we are able to take this action without penalty. We do hope that you continue to use AAA for Home and Flood insurance and that you understand that even though we are removing coverage from your policy, that it is logical for us to keep your premium at the same level or possibly even increase this premium in the future.

I understand that you have discussed this situation with our phone representatives that they have outlined some possible options to help you feel more at ease with our decision. To recap, these options include:

1. Use the Citizens Property Insurance Corporation, Louisiana's state run hurricane insurance provider. This option will cost you an additional $3,000 a year. As you have seen in local news stories, this agency is a little reluctant to award insurance claims to individuals suffering from damage related to Katrina or Rita, so we understand if this option does not seem desirable at first.

2. Call all insurance companies operating in Louisiana and try to find another company that may be willing to write this policy. Please keep in mind that they will have the right to cancel this policy at any time because you lack the requisite 3 years of coverage history.

3. Open a savings account and begin saving money in case your house gets damaged by a hurricane. Placing money under your mattress is a good back-up just in case the local banks suffer damage as well.

Mr. Wilablog, your patience and understanding in this matter is greatly appreciated. Even though you may not be able to find a viable option for hurricane coverage, please understand that we personally recommend that you find some way to protect yourself from this risk. After all, hurricane related damage is extremely likely when you live on the Gulf Coast of Louisiana.

Sincerely,

Robert L. Darbelnet