A quasi-judicial Louisiana panel will decide whether State Farm will be required to pay evacuation costs for policyholders fleeing the path of Hurricane Ida even when no local evacuation order was given.
The dispute between State Farm and the Louisiana Department of Insurance (LDI) dates back to September, when Insurance Commissioner Jim Donelon issued Directive 218, which requires property insurers to pay policyholders’ food, lodging and other expenses as they fled parishes that were in the path of Hurricane Ida.
The directive notes that in some of the affected parishes, no formal evacuation orders were given. But that should not be an impediment for insurers to compensate policyholders for evacuation costs during Hurricane Ida, it says.
“The use of that limitation was not intended to unjustly deny coverage to a policyholder who legitimately evacuates to protect their life and health and where it was impracticable for a civil authority to issue a formal order of evacuation,” the Sept. 7 directive states.
State Farm attorneys, however, argued before the Division of Administrative Law, which reviews disputes between state agencies and the companies they regulate, that Donelon had exceeded his authority in issuing the directive. The LDI then challenged the division’s jurisdiction to hear the case, arguing that it should instead be decided by a Louisiana district court, according to The Advocate.
Administrative Court Judge Patrick Moore rejected the department’s motion, meaning the division will hear arguments in the case at a future hearing.
“We appreciate the ruling of the court,” Roszell Gadson, a State Farm spokesman, told the Louisiana Record in an email.
In previous comments, Gadson said that requiring the company to cover evacuation costs during Hurricane Ida could lead to property insurance rate hikes in the future throughout the nation.
The LDI did not immediately respond to requests for comment about the administrative judge’s opinion.
“There were enough advance warnings from elected officials to justify your decision to evacuate,” Donelon said in recent radio messages to residents. “Getting out of danger’s way was the right decision, and now our insurance companies must live up to their agreement to cover your evacuation expenses.”