Allstate Reinstates Cancelled La. Insureds

Allstate will reinstate more than 4,000 Louisiana policyholders with hurricane-damaged homes whose policies were cancelled after flawed inspections indicated their premises were abandoned, the state's insurance commissioner announced last week.

The Northbook, Ill.-based carrier agreed to reinstate the customers retroactively, said Commissioner James J. Donelon. Customers will have until the end of April to contact the company and have their policy reinstated, he added.

Customers must show proof they are living in the home or are in the process of rebuilding, according to Mr. Donelon.

In return, he said the department would withhold issuing any penalties against the company. If any questions arise over whether a customer should be reinstated, Mr. Donelon said he would be the final arbiter in the dispute.

Any customers who incurred any expense–such as securing new insurance through another insurer–would be reimbursed by Allstate, he said.

Customers will be notified by mail of the reinstatement, but the customer must either notify the department or Allstate that they want coverage to be reinstated.

The controversy erupted earlier this month after Allstate inspected over 40,000 homes, then began cancelling the policies of homeowners who did not respond to letters sent by the company requesting information on rebuilding or residence.

After Mr. Donelon had lifted a ban on cancellation of policies, the company made inspections in Jefferson, Orleans, Plaquemines and St. Bernard Parishes

Mr. Donelon said the company is continuing to inspect homes in other counties, and he believes Allstate will avoid the problems it encountered in the other locations. “I hope they will do a better job of inspecting as they go forward than they did in these four parishes,” he said.

For its part, Allstate issued a statement saying that under the agreement it does not admit to any wrongdoing or violation of any laws. Customers can also request a new inspection of their home. The agreement does not apply to those who requested their insurance not be renewed.

In addition to letters, the company will be issuing public service announcements and purchasing advertising to inform customers of the settlement.

Customers who are unable to show that they are repairing their home or living in the home by April 30 will have the opportunity to buy a new policy once repairs are made or they can prove residency. Eligibility will extend to the end of 2008, Allstate said.