Louisiana judges rule state cannot compel insurance companies to pay for evacuation costs – The Observer

Administrative Law Judge Patrick Moore wrote last week that Donelon went out of bounds when he issued Directive 218 in September 2021, which required insurers to waive policy language that required a civil evacuation order to trigger prohibited use coverage, or payments for living expenses associated with an evacuation, Insurance Journal reports.

The directive came less than a week after a bulletin from the Louisiana Department of Insurance that encouraged insurers to voluntarily pay claims for prohibited use, even though not all parishes affected by Hurricane Ida issued certificates. formal evacuation order required.

Allstate called for the directive to comply, and the USAA and other insurers also stepped up efforts to cover claims of prohibited use, while State Farm, the state’s largest homeowners insurer, had refused in the absence of an official declaration of evacuation.

Many local officials were hesitant to issue evacuation orders due to the approaching speed of the storm and the risk of creating traffic jams that could have endangered residents. The directive applied to policies in the 25 parishes listed in Emergency Rule 47, a measure intended to protect policyholders from cancellations and non-renewals in the wake of the storm. The same 25 parishes were listed in Gov. John Bel Edwards’ Hurricane Ida emergency declaration, according to the Journal.

The initial notice followed Donelson’s tour of St. John the Baptist Parish with President Joe Biden, during which policyholders complained that companies were denying loss-of-use claims. The directive came after Donelson and Biden urged insurers to voluntarily cover costs and not all complied.

“Hurricane Ida was a clear and present danger to the citizens of Louisiana,” Donelon said in announcing Directive 218. stay in a safe place.Insurers must treat the many diverse actions taken by public officials as an order to leave and pay people who have coverage for their expenses.

Farm Bureau and Dover Bay Specialty challenged the directive in court, and Moore concluded that Donelon’s interpretation of the prohibited use policy was “wrong, manifestly wrong and shocking to the conscience of the court”.

Moore said Directive 218 was an “inappropriate exercise” of Donelon’s discretion, the Journal reports.

The decision fell the same week Donelon tenuous a press conference to highlight new laws passed in the 2022 legislative session to improve policyholder protection and strengthen the state insurance market.

These reforms included House Bill 83, now Bill 434, sponsored by Rep. Laurie Schlegel, R-Jefferson, which changed how insurance companies cover additional living expenses due to a evacuation. Instead of requiring a formal declaration of emergency to trigger coverage, the new law requires consideration of all of the circumstances.

Other reforms included an increase in the minimum capital and surplus requirement for insurers to $10 million by 2031, an insurance incentive program to attract more businesses to Louisiana, a rule to three adjustments with new requirements for insurance companies, new disclosures for catastrophic claims, a disaster response plan required for each insurance company, and a new Louisiana Fortify Homes program to provide subsidies homeowners to upgrade the roof to higher standards.

Kristan F. Talley