Louisiana Bill Would Require Insurers To Cover Evacuation Expenses

By then, the Saturday before Sunday's landfall, forecasters were warning that Ida would develop into an "extremely dangerous" Category 4 storm. Parish leaders were urging residents to leave, if at all possible.

So, alongside her elderly parents, Tybussek fled for safety, spending thousands of dollars on gas, food and hotels during her two-week stay out of harm's way.

But, as she later learned, her insurer, State Farm, wouldn't cover those evacuation expenses, only because officials called for a voluntary evacuation — not mandatory.

"Why should we have to suffer for something the officials didn't do?" Tybussek said. "It's not our fault it wasn't mandatory."

Following the storm, state Rep. Laurie Schlegel, a Metairie Republican, was inundated with complaints from constituents facing similar issues getting reimbursed.

She filed House Bill 83, which would require homeowners' insurers that offer loss of use coverage to pay for short-term living expenses when an evacuation is voluntary, and the area is later deemed unsafe for return.

Most homeowners insurance policies include up to two-weeks of coverage for evacuation expenses, but only if policyholders are under a mandatory order from public officials to leave.

Ahead of Hurricane Ida, some parishes within the storm's path issued such orders, while others held off, fearing they couldn't implement a contraflow plan and safely evacuate all residents before the storm arrived.

Parishes that didn't issue mandatory evacuation orders include all or parts of Jefferson, Livingston, Orleans, St. John the Baptist, St. Tammany and Tangipahoa.

Ida was a "mandatory evacuation type of storm," Schlegel said. But because it developed so quickly — making landfall just three days after becoming a named storm — mandatory evacuations weren't feasible.

"It just wasn't safe to call a mandatory evacuation in such a short period of time," Schlegel said, adding that "with the climate the way it is, those cases may happen more often than not."

Insurance Commissioner Jim Donelon, a Jefferson Parish resident himself, agreed that the decision not to order a mandatory evacuation was the right one.

"If they had ordered a mandatory evacuation, everything would have gridlocked, and people would have been stuck in 150 mile per hour killer winds in their cars on highways all over south Louisiana," Donelon said.

Donelon in September directed insurers to treat the "multiplicity of actions" taken by public officials ahead of Ida as "tantamount to an order to evacuate," ordering them to cover short-term living expenses for policyholders who fled the 25 parishes within the storm's path.

Most insurers complied with his directive. Tybussek said her parents, who are in their 80s and evacuated from Westwego, quickly received a check from AllState.

But State Farm, the largest property insurer in Louisiana and her insurer, refused to follow the directive, arguing that Donelon overstepped his legal authority. Their challenge is still pending in the Division of Administrative Law, a quasi-judicial court in Baton Rouge which adjudicates disputes between government agencies and those that they regulate. The next hearing in the case is scheduled for Tuesday, though a final decision is likely months away.

Schlegel's HB83 is an attempt to codify Donelon's directive into law. It passed out of committee on Wednesday and is scheduled for debate on the House floor next week. A similar measure, Senate Bill 134, sponsored by state Sen. Kirk Talbot, R-River Ridge, is awaiting a committee hearing in the upper chamber.

The text of Schlegel's bill requires three conditions be met for policyholders with loss of use coverage to receive short-term living expenses: a state of emergency must be declared; either a mandatory evacuation is ordered or voluntary evacuation is advised; and the area is subsequently declared to be unsafe.

It adds that a formal evacuation order does not need to be in writing. Instead, insurers should "interpret, in globo, all actions of a civil authority," including their public media announcements.

In committee, the legislation faced opposition from insurance industry lobbyists. They argued that it amounts to an "expansion of coverage" that insurers didn't price for in rate setting and said the language in the bill is too ambiguous and could lead to confusion.

Jimmy Ordeneaux, a lobbyist with Louisiana Farm Bureau Insurance, said he wasn't sure how much the measure would cost insurers, but he said there's no doubt it will cause policyholders to face increased prices.

Donelon, for his part, said short-term living expenses amount to about 1 percent of insurer costs. "I dare say that fits under the balance of not overburdening the industry while protecting consumers in our state," Donelon said.

Schlegel said, "We're not dealing with a lot of dollars here when it comes to the insurance companies, but we are to our people." She said some constituents told her they didn't have the budget to cover a couple of nights in a hotel room.

"And so for people that have this coverage, it should be satisfied," Schlegel said. "It's not up to them to call a mandatory evacuation, it's up to our civil authorities, and if they can't do it because it safely can't be called, then what's the coverage for?"

She added that insurers are trying to get off on a "technicality."

"Our people are looking at us. They want some insurance reform that comes of this session," Schlegel said, closing on her bill. "We can't leave this session and not help the people that we represent."

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