The Louisiana Department of Insurance said it will investigate Allstate homeowner policy cancellations on damaged houses and where necessary force the insurer to reinstate them.

As of Thursday the department said it has received 386 complaints from homeowners who say Allstate improperly canceled its coverage with them. The insurer meanwhile said it is committed to contacting 9,000 policyholders to determine if they have made repairs and want to remain insured.

According to the department, complaints of cancellations started coming from customers of the Northbrook, Ill.--based company soon after an emergency rule delaying cancellations expired on Dec. 31.

Under the emergency order, insurers are required to send a preliminary letter to the policyholder advising them of the specific damage to the property that still remained that entitled the insurer to cancel the policy due to a material change in the risk being insured.

On Monday, the department said received 180 complaints from Allstate customers.

Commissioner of Insurance Jim Donelon announced he would closely examine 10 percent of the complaints by dispatching department inspectors to examine the property of 18 policyholders in three parishes to determine if the cancellations were justified. A spokeswoman said the inspections would be completed by Saturday.

Mr. Donelon directed Allstate to provide proof of inspections of the 18 homes. After reviewing the documents, Mr. Donelon said he had 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," he said in a statement. "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," he added.

Commissioner Donelon said in the meantime the department 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, the department said.

So far, of 182 complaints worked to date, the department said it 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 is working with the homeowner to get that proper documentation to Allstate in order to compel reinstatement where deemed appropriate.

Commissioner 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.

A spokeswoman said that in some cases it appears policyholders received letters from the company asking if they had vacated their house. The homeowners did not respond believing since they never left their home it was not vacant.

She added that the company has been cooperative the department. It also appears that Allstate is the only insurer qualifying the continuation of policies with its customers.

Michael Trevino, a spokesman for Allstate, said the company is in the process of contacting 9,000 customers to determine if they want to remain insured or have made necessary repairs to continue being insured with the company.

To date 4,500 customers have contacted the company, either saying they have made repairs or no longer wish to remain insured because they have moved or other reasons. The company has not received word from 4,500 others. It is those customers the company is making every effort to contact but is going ahead with cancellations where no contact or reply was made.

"We are trying our best to contact everyone and let us know if the repairs have been made or if they are repairing their homes and want to remain insured with Allstate," said Mr. Trevino. "We are actively trying to understand the state of affairs of [our policyholders]."

Special Reports /

La. Probes Allstate Cancellation Complaints

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