Donelon Settlement with Allstate Achieves Added Consumer
Released: March 20, 2007
Commissioner of Insurance Jim Donelon announced today that he has reached a favorable
settlement for the 4,772 Allstate policyholders in four south Louisiana parishes
whose homeowners insurance was cancelled as part of the company's flawed home inspection
process. The cancellations have resulted in 775 policyholder complaints being filed
with the Department of Insurance.
Commissioner Donelon stated that the Consent Agreement not only grants prompt reinstatement
to those policyholders who were wronged by the flawed inspection process, but adds
two favorable provisions: an additional six weeks to qualify for reinstatement and
to begin the repair process; and the right for Allstate insureds not ready to repair
their homes the option to still obtain new coverage until December 31, 2008.
The terms of the Consent Agreement include the following:
(1) By Friday, March 23, Allstate will mail a "Notice of Right to Reinstatement"
to each of the 4,772 homeowners in Jefferson, Orleans, Plaquemines and St. Bernard
Parishes who received a cancellation letter due to an alleged substantial change
in the risk. This does not include those homeowners who have voluntarily agreed
to cancel their coverage or those who have already been reinstated by Allstate.
This notice will give the cancelled policyholder the right to full reinstatement
of their original policy without a lapse in coverage if the policyholder provides
one of the following to Allstate by Monday, April 30:
Satisfactory evidence that the insured premises is currently inhabited by
the policyholder and in insurable condition; or
Satisfactory evidence that the insured location is currently under active
Satisfactory evidence shall include a copy of: a properly issued building permit
for the insured premises; a 2007 utility bill for the insured premises; a signed
agreement with a contractor for the insured premises; or material receipts indicating
the policyholder's intent to reconstruct or repair the insured premises. Homeowners
are also entitled to have their property reinspected as satisfactory evidence of
(2) Allstate will reimburse any cancelled policyholder who was forced to retain
substitute insurance coverage with another carrier in the interim period between
notice of cancellation and reinstatement.
(3) Allstate will maintain a separate database of all policyholders requesting reinstatement
but who are unable to establish their right to reinstatement under this Consent
Agreement. Until December 31, 2008, these policyholders have the option of purchasing
a new 12-month homeowners insurance policy, which shall include coverage for wind
and hail, subject to applicable deductibles in force at that time for policyholders
living in the same rating area, once they have reconstructed their home.
(4) Allstate must also advise its policyholders of the terms and conditions of this
Consent Agreement through radio commercials and in ads in local newspapers.
(5) In the event of a disagreement as to reinstatement between Allstate and any
cancelled policyholder, Commissioner Donelon shall render a final and non-appealable
decision in the conflict, which shall be binding upon Allstate as to reinstatement.
(6) Commissioner Donelon reserves his right to consider monetary sanctions against
"I will carefully monitor Allstate's actions throughout this process to ensure
that policyholders entitled to reinstatement are fully protected," Commissioner
Commissioner Donelon added, "The Department of Insurance will continue to investigate
all complaints as they are received. If any homeowner feels they have been improperly
cancelled by Allstate, or any other insurance company, they should call the Department
of Insurance at 1-800-259-5300."