State Farm receives cease and desist order

As a result of the Louisiana DOI’s investigation, a cease-and-desist order from applying the Hurricane Duration Deductible to insured homeowners in the state of Louisiana when the policy indicates that deductible is not applicable was imposed upon State Farm Fire and Casualty. (Photo: State Farm)

It seems that lately, more and more insurance departments are taking closer looks at insurance company actions in response to consumer complaints or regional catastrophes that impact the industry. Recently, the Louisiana Department of Insurance (DOI) announced that Commissioner Donelon issued a cease-and-desist order against State Farm Fire and Casualty for applying a Hurricane Duration Deductible outlined in their homeowners policies when the application of that deductible was considered “incorrect” by the DOI.

The policy language states that the deductible applies to certain damages that occur during a “hurricane duration” and result from a storm system that triggered the duration. The storm must have obtained hurricane status, as classified by the National Weather Service (NWS), within 48 hours before causing damage or after first causing damage as long as hurricane status was designated while a hurricane watch or warning was in effect in the state. A hurricane duration period starts when a watch or warning is issued by the weather service.