La. Settles State Farm Slab Claims Procedure

Louisiana's insurance regulator said the department has reached an agreement with State Farm over procedures to reevaluate hurricane damage claims from business owners and homeowners left with only a foundation slab.

Louisiana Commissioner of Insurance Jim Donelon said yesterday that the Bloomington, Ill.-based insurer has agreed to reevaluate denied claims by both home and business policyholders whose claims were denied by company from Hurricanes Katrina and Rita.

The settlements calls for the company to pay approximately 350 affected policyholders the equivalent of 50 percent of their coverage "A" limits, which covers the structure, minus any prior payments including flood payments.

In a statement, Mr. Donelon said the process requires State Farm to perform the reevaluation within 60 to 90 days. He said the department would monitor the process to ensure it is carried out.

In a separate statement, State Farm said policyholders would soon receive information about the procedure.

Letters are to go out to affected policyholders on May 17, State Farm and the commissioner said.

The agreement does not include those policyholders with windstorm exclusions, flood only policies, or anyone who has filed suit against the carrier and has not reached a settlement.

State Farm said policyholders will have to mail a form back to the company to begin the review process and an offer would be made based on new information about the claim and guidelines laid out by the insurance department.

Until a settlement is accepted, policyholders are free to pursue other recourse, or enter mediation.

Jeff McCollum, a State Farm spokesman said the agreement is similar in spirit to the arrangement made with Mississippi's Insurance Commissioner George Dale in March, though the number of policyholders is much smaller in Louisiana.

Mr. McCollum said, "It has not been as contentious a question as it has in Mississippi," where 35,000 policyholders disputed State Farm's claim determination.

Less than 1,000 policyholders' claims are left to be resolved in Mississippi after going through the re-evaluation process there, Mr. McCollum said.

He added that State Farm is committing $50 million to the settlement, but expected to exceed that figure. He added that the reevaluation does not include policyholders whose homes were damaged by levee failures.

"We want to move on and we want to resolve these claims in a fair and efficient manner," Mr. McCollum emphasized of the claims in both states. "We are looking to resolve these claims as fairly and efficiently as possible."