Louisiana: Department of Insurance Will Inspect Some Allstate Insured Properties

Commissioner of Insurance Jim Donelon will send department of insurance staff to inspect the properties of 18 policyholders in Jefferson, Orleans and St. Bernard Parishes who complained to the department of insurance that their homeowners insurance was improperly canceled. To date, the department of insurance has received 386 complaints from Allstate policyholders regarding the cancellation of their homeowners policies.

The cancellations come following the sunset of Emergency Rule 23, a policyholder protection measure put in place by the Commissioner of Insurance following Hurricanes Katrina and Rita. Emergency Rule 23 did the following:

Suspended the right of any insurance company to cancel or non-renew properties in Louisiana that sustained damage as a result of the hurricanes until December 31, 2006, as long as the property owners paid their premium.
Required insurers to complete a physical inspection of the subject property no earlier than December 1, 2006 or 30 days prior to the cancellation or non-renewal of a policy after the sunset of Emergency Rule 23.
Required insurers to send a preliminary letter to the policyholder advising them of the specific damage to the property that still remained that would entitle the insurer to cancel the policy due to "a material change in the risk being insured." The homeowner had 30 days to respond to the company and provide documentation that repairs had already been completed or were in the process of being completed, thereby negating any cancellation.

By close of business Monday, the department of insurance had received 180 complaints against Allstate regarding homeowner policy cancellations. Of those 180 complaints, department of insurance staff selected 18 complaints (or 10%) where policyholders stated they had been back in their homes at the time of the alleged home inspection by Allstate.

Donelon directed Allstate to provide proof of inspections on those 18 homes by the close of business yesterday. After reviewing the documentation from Allstate this morning, Donelon said he has serious reservations about the validity of Allstate's inspection program.

"I do not believe Allstate has provided me with sufficient documentation to validate the inspection of these homes," Donelon said. "My staff will visit these 18 properties, conduct interviews with each of the homeowners and photograph their property as part of this department's investigation of Allstate. Should our findings show that Allstate misrepresented the inspection program, I will impose severe penalties against the company," Donelon added.

Donelon said in the meantime the department of insurance is conducting a one-on-one investigation of every complaint it receives against Allstate. Department staff are in contact with Allstate officials twice daily, providing the company with the name and policy number of each policyholder who has registered a complaint. So far, of the 182 complaints worked to date, the department of insurance has been successful in having Allstate reinstate homeowners insurance for 76 policyholders. Of the remaining 106 complaints handled so far, Allstate’s present position is that the company does not have the proper documentation to render a final decision. The department of insurance is working with the homeowner to get that proper documentation to Allstate in order to compel reinstatement where deemed appropriate.

Donelon said homeowners receiving a premium refund with their cancellation should hold the check and not cash it until they get final word as to whether or not they will be reinstated.

If any homeowner feels they have been improperly canceled by Allstate or any other insurance company, they should call the department of insurance at 1-800-259-5300.

Source: Lousiana Department of Insurance news release

Posted: Friday, March 02, 2007 12:00:00 AM. Modified: Friday, March 02, 2007 1:54:58 PM.

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