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Insurers Don’t Have to Pay Hurricane Ida Expenses

Judge ruled carriers don’t have to cover homeowners’ loss-of-use expenses in Louisiana.
  • Timothy Darragh
  • August 2022

An administrative law judge has ruled that the Louisiana Department of Insurance overstepped its bounds in ordering insurers to cover loss-of-use claims filed by residents fleeing Hurricane Ida despite not being under a mandatory evacuation order.

Judge Patrick Moore's ruling said Insurance Commissioner Jim Donelon's Directive 218 exceeded his authority. Donelon argued parish officials along the Louisiana coast did not have enough time to assess the conditions to determine if a formal evacuation order was necessary.

“Only 74 hours elapsed between the time of the first advisory from the National Hurricane Center about the formation of Tropical Depression Nine and the landfall of Hurricane Ida as a Category 4 hurricane with winds up to 150 mph,” the directive, issued Sept. 7, 2021, said.

The directive ordered carriers to cover homeowners' loss-of-use expenses regardless of whether their policies included a civil authority requirement.

“To the extent any insurance contract may contain any language that implies the need for a civil authority to issue an evacuation order, they shall treat the multiplicity of actions taken by all public officials and the spirit and intent of all communications issued by all public officials as being tantamount to an order to evacuate that fulfills any such policy requirement,” it said.

The ruling is a victory for State Farm, the biggest homeowners writer in the state, which, after the hurricane hit, said it would not follow a blanket order but follow the policies it wrote for homeowners.

The company appreciates the judge's ruling, State Farm said in a statement. “Following the terms of the contract ensures fair treatment for all of our customers, regardless of the storm or their location. We know this has been a difficult time for many Louisiana residents and we empathize with all those who were impacted by Hurricane Ida.”

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