State Farm will seek a legal hearing to explain disagreement with an order from the Louisiana insurance commissioner requiring insurers to pay evacuation expenses for policyholders affected by Hurricane Ida.
Commissioner Jim Donelon issued his Directive 218 Sept. 7 in an effort to ensure that insurance companies would pay loss claims related to evacuation expenses, including food and lodging. The order applies to 25 parishes and affects insurers with customers in locations where no formal local evacuation order was issued.
“We have filed a request for a hearing in an administrative law court because we believe we should follow the policy language as approved for customers in the state,” Roszell Gadson, a State Farm spokesman, told the Louisiana Record in an email. “Following the terms of the contract ensures fair treatment for all of our customers, regardless of the storm or their location.”
The company is concerned that following the commissioner’s directive could lead to rate increases nationwide, according to Gadson.
“If we were to retroactively change what we agreed to do for our customers, it could have a negative long-term impact on insurance prices across the country,” he said.
At the same time, State Farm is moving forward on contacting policyholders, making damage assessments and issuing payments, Gadson said. The company has received more than 100,000 Hurricane Ida-related claims across multiple states, and as of Sept. 23, more than 90% of homeowner policyholders have been contacted, with settlements issued in a quarter of those claims, according to State Farm.
In addition, State Farm has paid out $750,000 in disaster-relief grants to Louisiana community organizations. Among the groups receiving funds were the Red Cross chapter in southeast Louisiana and Second Harvest Food Bank of Greater New Orleans.
In a recorded radio address about his order, Donelon said policyholders who evacuated due to Hurricane Ida had the right to be reimbursed for lodging, food and other costs related to their evacuation.
“There were enough advance warnings from elected officials to justify your decision to evacuate,” he told residents who fled the region to get out of the storm’s path.