This week, the Louisiana Insurance Commissioner extended an emergency regulation limiting all insurance companies from canceling or terminating policies in the state in an effort to protect those whose homes and businesses were damaged by the August flooding across south Louisiana. The regulation is intended to provide home and business owners with flexibility by barring insurance companies from canceling policies in federally-declared disaster areas.
The regulation will remain in effect until August 14th of this year and applies to all homeowners and/or anyone with residential property insurance, as well as commercial, fire, and other types of property insurance.
History in Court
The origin of the emergency rule-making ultimately stems from property owners in Louisiana unfairly being denied coverage: The appeals court recently ruled that Hurricane Katrina victims whose homes and businesses were destroyed when the levees were breached in the 2005 storm could not recover compensation from their insurance companies for the damages. The court found that the “event” was purposely excluded from coverage under their insurance policies, and thus it was simply enforcing those terms, regardless of how unfair they were.
The decision overturned a previous ruling which held that that the terms of these policies excluding water damage were ambiguous and should thus be found in favor of the policyholders; specifically, that the policies did not distinguish between floods caused “by an act of God” and those caused “by an act of man,” which could include the Katrina levee breaches. However, the appeals court overturned this finding and essentially held that this was irrelevant, as the flood exclusions were unambiguous and precluded recovery.
Emergency Rule 33
Insurance companies often restrict property coverage to damage caused by wind, fire, and similar hazards. This is why Congress created the National Flood Insurance Program in order to help homeowners living in flood-prone areas to obtain flood insurance in an effort to complement private policies.
However, this does not mean that homeowners are not still unfairly denied coverage in some circumstances, including insurance companies canceling or choosing not to renew policies due to historic flooding issues for some property owners.
Emergency Rule 33 was designed to address this issue: It states that any statutory or regulatory provisions that authorize any insurer—on the grounds of a material change in the risk being insured— to deny any personal residential, commercial residential, or commercial property insurance to a property that sustained damages as a result of the August 2016 historic flood or its aftermath, are now suspended or unenforceable, and such cancellations or nonrenewals shall be prohibited through August 14, 2017.
Insurance Dispute Attorneys in New Orleans
At Harrell & Nowak, it is our goal to give local families and businesses excellent representation when they are unfairly denied coverage by their insurance companies, or find themselves in the position of having their policies unfairly cancelled. We regularly represent families and local businesses in courthouses throughout Louisiana on these important issues. If you have questions or are involved in an insurance dispute, contact us today for a free consultation to find out how we can help you.