Katrina to cause auto insurance increase

Drivers in the affected areas of Louisiana, Mississippi and Alabama may see an auto insurance rate increase of 5% to 10% as a result of the anticipated $1 billion in losses for cars damaged by Katrina.Homeowners will likely see an insurance rate increase of 10% to 30%.In total, the Insurance Information Institute says insurers will be responsible to cover approximately US$26 billion for damaged homes, businesses and cars. While insurance policies generally do not cover flood damages to homes, comprehensive auto coverage does cover flood damage.”There will be tens of thousands of cars with flood damage,” Tom Larsen, senior vice president of Eqecat, says. “You’ll have fleets where people didn’t go in to save the company cars.”