Though the Louisiana insurance commissioner ordered insurers to cover temporary living expenses of homeowners displaced by Hurricane Ida, State Farm clients could have a hard time getting this coverage.
According to Insurance Business Magazine, State Farm is resisting the order at the risk of being suspended from operating in the state altogether.
Louisiana Insurance Commissioner Jim Donelon issued a bulletin earlier this month, around the time when the Category 4 hurricane hit, requesting all insurers operating in the state to cover for prohibited use claims.
These claims are related to mandatory evacuation orders that prohibit policyholders from living in their homes.
While Allstate, USAA, PURE, and Louisiana Citizens all indicated that they would support the commissioner’s order, State Farm did not, said Insurance Business. In light of the company’s reluctance, Donelon turned the bulletin into a mandate.
State Farm now plans to challenge the mandate in court, according to Donelon. He said State Farm executives told him that they intend to only follow the language in their policies.
“State Farm stands with our customers to help them recover in those states impacted by Hurricane Ida. Our hearts go out to all those impacted,” said a State Farm representative said in a statement. “We are working with our customers one-on-one to determine their individual circumstances and provide assistance in their recovery process. We are committed to pay what we owe and encourage our policyholders who have suffered a loss to submit a claim.”
The company did not say why it did not plan to comply with Donelon’s mandate.
Donelon has the authority to fine or suspend an insurer. For example, he fined Allstate $250,000 when policyholders reported difficulties dealing with the company following Hurricane Katrina. However, Donelon can’t actually force a company to pay policyholder’s claims.
“I have a plethora of authority over the companies licensed to do business in our state,” the commissioner said. “That includes the fining authority. It includes the suspending authority. It includes the revocation of their authority to do business in our state.”