Does State Farm have to cover the costs of evacuating Hurricane Ida? This Louisiana court will decide | News


Did Louisiana’s main insurance regulator have the power to order State Farm and others to cover the short-term living expenses of policyholders who fled Hurricane Ida from parishes that failed? not issued mandatory evacuation orders?

This is a question for the Louisiana quasi-judicial regulatory courts to decide, after a judge in the Administrative Law Division dismissed a motion by Insurance Commissioner Jim Donelon to refer the legal dispute to a court. state district court.

The jurisdictional ruling has little bearing on policyholders awaiting reimbursement from State Farm for hotels, gasoline and food for the first few weeks after the storm. State Farm is exempt from paying while the case is pending – and it is not known when it will be resolved.

Indeed, Donelon, who is 77, joked at a Jefferson Parish town hall on Tuesday that he may be dead before a final decision is made.

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Most homeowners’ insurance policies include cover for evacuation costs, but only if the policyholders are subject to a mandatory government order to leave. Before Hurricane Ida, some parishes in the storm’s path issued such orders, while others resisted, fearing that they would not be able to implement a counter-current plan and safely evacuate all residents before the storm arrived.

Given how quickly Ida has escalated, Donelon ordered insurers to treat the “multiplicity of actions” taken by public officials before Ida as “tantamount to an evacuation order” and to cover living expenses. short-term policyholders in 25 parishes located within the perimeter of the storm. path.

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However, in late September, State Farm, which controls about 26% of Louisiana’s property insurance market, challenged the validity of Donelon’s directive in the Division of Administrative Law – a Baton Rouge court that adjudicates disputes. between government agencies and the entities they regulate.

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State Farm attorneys argued that Donelon overstepped his authority in issuing Directive 218, and that if authorized, he would have “unfettered power” to meddle in contracts after the fact, which “could serve to destabilize the insurance market in Louisiana.”

“The directive undermines one of the most basic principles of insurance coverage: that the coverage owed is based on actual policy language,” State Farm attorneys wrote in the petition for a hearing.

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Donelon argued that by the time the threat from Hurricane Ida became clear to local authorities, it was too late to issue a binding order. In the three days before it made landfall, Ida went from a newly named storm to a Category 4 hurricane.

Parishes that have not issued mandatory evacuation orders, and whose residents have been denied evacuation funding by State Farm, include all or part of Jefferson, Livingston, Orléans, Saint-Jean-Baptiste, Saint -Tammany and Tangipahoa.

“If they had ordered a mandatory evacuation everything would have stalled and people would have been stuck in deadly 150 mph winds in their cars on the freeways in southern Louisiana,” Donelon said.

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After State Farm appealed to the Administrative Law Division, the Insurance Department filed its own petition arguing that the regulatory court lacked jurisdiction to rule on the case, claiming it was was a constitutional question which should instead be decided by the civilian district. to research.

But administrative court judge Patrick Moore dismissed those arguments, writing in a Dec. 15 order that appellants like State Farm are required to exhaust the administrative hearing process before taking the case to district court. Lawyers for State Farm and the Department of Insurance will now submit legal briefs on the merits of the case. The next hearing has not yet been set.

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