Insurance commissioner doubles down as State Farm refuses to cover evacuation costs

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For the second time in a week, Louisiana Insurance Commissioner Jim Donelon has said he plans to impose fines on insurance companies that continue to refuse to comply with his emergency directive to cover the temporary living expenses of insured persons who have evacuated during Hurricane Ida.

“What I would do is find that they are not complying with a legal order that I have issued and take action to suspend their license, which is unlikely, or fine them, which is more likely, for their non-compliance, ”Donelon said. said, referring by name to the company at the center of the litigation: State Farm.

Donelon made the remarks during a virtual town hall discussion hosted by the Lawyer Thursday, just a few days later make similar remarks as a featured guest at the Baton Rouge Press Club luncheon.

The problem stems from a provision in most homeowners’ insurance policies that covers living expenses only if the policyholder is subject to a mandatory evacuation order. Before Hurricane Ida, only certain parishes in southeast Louisiana were placed under a mandatory evacuation order. Most of New Orleans and Jefferson Parish were not, despite the lack of running water or electricity for several days after the storm.

Many parishes and municipalities did not issue mandatory evacuations before Hurricane Ida because there was not enough time for such evacuations to be carried out safely. The rapid storm took many by surprise, and officials feared mandatory evacuations could create situations reminiscent of Hurricane Ivan in 2004.

“It was a horrible experience for these people, especially the elderly people in it,” Donelon said in his previous Press Club speech.

During Ivan’s mandatory evacuations, many residents of southeast Louisiana were trapped in traffic jams for periods of up to 8 hours, running out of fuel, food and water, Donelon said.

“It was part of the decision-making process for officials trying to decide whether to order an evacuation or not,” he said.

After Ida made landfall on August 29, Donelon urged insurance companies to voluntarily waive this provision after receiving an email from Allstate indicating that the company is already planning to do so. USAA and other companies joined with Allstate in meeting Donelon’s demand, but State Farm failed to do so, prompting Donelon to transform your request into a mandate.

He said he was waiting for State Farm to respond to consumer complaints his office has received regarding the company’s refusal to cover food, hotel and other evacuation expenses claimed by owners. parishes that were not subject to a compulsory evacuation order.

Under state law, insurance companies have 30 days to comply with the commissioner’s emergency directives before the commissioner can take other regulatory action such as imposing a fine. or suspension of the company’s license. Such action may be further delayed if the company challenges the directive in court or appeals the fine to the Administrative Law Division, in which case the fine would be suspended pending a judge’s decision.

Donelon’s emergency directive went into effect on September 7. State Farm had not filed any challenges or appeals on Thursday, he said.

“That remains to be seen, and quite frankly, at this point in State Farm court,” he said. “Once we have a response from them regarding the complaints we have received, we will take our action and this may precipitate a response in the court system by State Farm.”

In response to a request for comment, a State Farm spokesperson emailed the following statement:

“State Farm is working alongside our customers to help them recover in the states affected by Hurricane Ida. Our hearts go out to all who are affected. We work with our clients one-on-one to determine their individual situation and provide assistance in their recovery process. We are committed to paying what we owe and encourage our policyholders who have suffered a loss to submit a claim. “

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