Louisiana Insurance Commissioner Jim Donelon said Wednesday that policyholders who were affected by Hurricane Ida and Tropical Storm Nicholas – and who might have to weather more storms before this year’s hurricane season ends – should file claims early and be prepared to fight for them.
Already there are signs that some insurers are pushing back on Ida claims. State Farm, the largest home insurer in Louisiana with a market share of about 26%, has refused to waive its policy clause that limits evacuation cost claims to people who were subject to an evacuation order.
Donelon said that Allstate, followed by others with large Louisiana market shares, including USAA, Progressive and Liberty Mutual, have all indicated they would waive the clause. So far, State Farm is the only major insurer explicitly refusing.
“Frankly, I expected and thought they would all do it,” said Donelon. “I was shocked when [State Farm officials] told me they would not and would stick to the language in polices. I pushed hard, and they have not backed off.”
State Farm did not immediately respond to requests for comment for this story.
If you applied for FEMA assistance following Hurricane Ida but received a letter saying you don’t qualify or your application was still under …
The insurance costs for Hurricane Ida will not be tallied for some months to come. But catastrophe modelling firms such as AIR Worldwide and Karen Clark & Co. estimate them at $18 billion to $30 billion. Louisiana will still bear 90% of those costs, Donelon said.
A $30 billion storm would be the eighth most expensive in U.S. history.
Already, the Insurance Department has fielded more than 200 complaints from policyholders about Ida claims. That is a fairly typical rate; for hurricanes Laura, Delta and Zeta in 2020 storms, there were 1,700 complaints out of a total of 315,000 insurance claims. As a result of complaints to the Insurance Department, policyholders gained about $50 million, an average of $29,212 per complaint, Donelon said.
How many did you experience?
Donelon will be fielding insurance questions on Thursday from Peter Kovacs, editor of The Times-Picayune | The Advocate, starting at 10 a.m. The interview will be shown live on NOLA.com and theadvocate.com
Pushback from insurance companies is part of a familiar dance after hurricanes and other major natural disasters, said Suzette Bagneris, a New Orleans lawyer who specializes in insurance claims.
“We’re seeing the same type of behavior play out this time in terms of insurance companies and how things are being adjusted,” she said. Insurers sometimes send multiple adjusters to a property, with the wind specialist attributing damage to water and vice versa, as one tactic to minimize the damage assessment.
Bagneris, who will be participating in an insurance question-and-answer session hosted by the New Orleans Regional Black Chamber of Commerce on Thursday at noon, advises policyholders to be proactive. She suggests hiring an independent local assessor firm, which typically charges about $75 an hour for a two-hour visit, and get a contractor’s estimate for repairs. Keep receipts or value estimates of items that need to be replaced.
“You don’t have to accept the damages assessed by the insurance company,” Bagneris said. “I’ve seen private damage assessments elevate a claim by as much as $50,000.”
Donelon said most of the complaints that the Insurance Department has received are about lack of communication from insurers and slow payment.
The Insurance Department has begun to track complaints by company and score them against their market share to see if they attract an outsized number. Last year, State Farm racked up the most complaints, at 163, but that was about in line with its market share. Allstate and USAA were among the larger insurers that had far fewer complaints than would be expected given their market share.
On the other hand, Allied Trust Insurance, which has just under 1% of the market, had more than six times the number of complaints expected given its share.
After Hurricane Ida, Bridget McDowell tarped the damaged roof of her raised brick house in the University City neighborhood of Kenner, emptied…
Donelon said Louisiana policyholders should be reminded of recent insurance laws that have been enacted to combat abuse by insurance companies. A 2009 law, means that a homeowner’s deductible covers an entire hurricane season – not just one storm.
“If you’ve got evacuation costs or damages of, say, $4,000 and your deductible is $5,000, file it anyway,” said Donelon. “It means that if you’re unfortunate enough to be hit by another storm in the same season, your deductible will then only be $1,000.”
Another law enacted after Hurricane Katrina in 2005 means that any “act of God” claims – hurricanes, tornadoes, floods and the like – cannot be used to increase your premiums or to cancel your insurance. “That means that if you are in doubt, you should file it anyway,” Donelon said. “You could benefit, and it can’t hurt.”
South Louisianans are going to be cleaning up from Hurricane Ida for a while — and it’s going to cost money.
One thing policyholders should avoid, however, is artificially inflating claims to overcome insurers that might try to lowball the damage assessments, Bagneris said.
“You need to be a savvy policyholder, but resist that temptation,” she said. “You don’t want to end up in an orange jumpsuit.”