Allstate Reviewing La. Order

Allstate is still reviewing yesterday's order from Louisiana's insurance commissioner to reinstate more than 4,700 policies of homeowners with hurricane damage which the company cancelled, a company spokeswoman said.

Kate Hollcraft, a spokeswoman for the Northbrook, Ill.-based insurer, said the company has made no decision on how it will respond to an order issued yesterday by Louisiana Commissioner of Insurance Jim Donelon to reinstate more than 4,700 homeowner policyholders canceled by the company recently.

The cancellation notices were issued after the customers failed to respond to letters requesting information on whether they were repairing their home or had abandoned it as their dwelling.

The homeowners were given the option of contacting Allstate with proof of a repair effort or occupancy by either letter, fax or e-mail.

Near the end of 2006, Ms. Hollcraft said, teams of two, consisting of a company underwriter and local claim employee, were sent out to look at the homes and determine their status.

In cases where it appeared either no repairs were made or were in the process of being made, or no one was living on the property, a letter was sent to the homeowner requesting additional information for proof of occupancy or repair.

The customers were not contacted by the inspectors, but the company said publicly in November that it planned to begin inspections.

Of the 40,000 homes inspected, there were 8,853 requests for proof of occupancy or repair. Owners were given two months to reply to the notice, said Ms. Hollcraft. There were 4,772 mailings that drew no response and the homeowners received cancellation notices.

Since the notices went out, the department said it received 486 complaints from policyholders saying they were improperly canceled by the company.

After reviewing the company's documentation and a department inspection of 18 homeowners who were canceled, Mr. Donelon decided the company had not made a reasonable effort to inspect the homes and determine if they were inhabited or being repaired.

The commissioner said in all 18 cases the policyholders were living in FEMA trailers next to the homes.

Ms. Hollcraft said Allstate was surprised by the order and added that a lot can happen in the three months between inspections. She suggested that the homeowners may have moved back onto the property after the inspections took place or repairs were begun that the company was unaware of.

Allstate's action came after the commissioner lifted a ban on insurers canceling policies in the wake of the 2005 hurricane season that devastated New Orleans.

The properties in question cover four counties, called parishes in Louisiana. They are Jefferson, Orleans, Plaquemines and St. Bernard Parishes.

Ms. Hollcraft said Allstate has had an inspection process in place for the past seven-to-nine years where inspectors make a visual inspection to determine if there is an apparent change in the original risk. In this case, inspectors would be looking for obvious damage, such as a tree on the roof, with no apparent effort of removal.

She said if there was a tarp on the roof, or other sign of ongoing repair, or a FEMA trailer on the property, the inspectors would assume the homeowner still planned to inhabit the home.

She said the company is willing to review cancellation notices individually.

"We want to hear from our customers and are willing to review their policies on a case-by-case basis," she said.