U.S. President Joe Biden arrives on Jan.
Carlos Barria | Reuters
WASHINGTON – Two of the best-known US insurance companies have responded to President Joe Biden’s request to cover additional living expenses for Louisiana policyholders who evacuated their homes prior to Hurricane Ida but were not under certain mandatory evacuation orders.
Allstate and USAA have agreed to pay additional living expenses for policyholders in the state who have evacuated their homes, a White House official told CNBC.
More companies are expected to follow suit, said the official, who requested anonymity to discuss the ongoing effort.
Typically, insurance only covers the additional cost of living for policyholders evacuating their homes before major storms, not those who leave their homes voluntarily.
Biden first addressed the issue on Thursday in a White House speech about the storm.
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“Right now we are hearing reports that some insurance companies may refuse to cover additional living expenses unless the homeowner has been on a mandatory evacuation,” Biden said.
Homeowners in the path of the storm, he said, “left their homes because they felt they were fleeing or risking death. Nothing about that is voluntary.”
Biden then appealed to home insurers: “Do the right thing. Pay your policyholders what you owe them and cover the cost of temporary housing amid the disaster. Help the needy. “
On Friday, Biden visited Louisiana, where he said his government was “putting as much pressure as possible” on insurance companies.
State Insurance Commissioner James Donelon issued a bulletin Friday to all insurers in the state saying they should “refrain from using the language in their insurance policies that requires mandatory evacuation to trigger civil coverage”.
Donelon also directed insurers to let his office know whether or not they would comply, and increased the stakes on companies if they choose to refuse coverage.
After the story was published, a USAA spokesman told CNBC, “Some USAA homeowner policies offer limited coverage for evacuation costs when damage is covered. Members can provide receipts for reimbursement. “
The episode is a rare example of a US president effectively shaming large corporations for changing a fundamental piece of the way they do business – how insurance companies assess eligibility for coverage.
The origins of political change can be traced back to Cedric Richmond, a former Louisiana congressman who is a senior official in the Biden White House.
In the days following the storm, Richmond learned from homeowners that their insurance policies would not cover temporary housing costs unless their homes were subject to mandatory evacuation orders.
Ida hit land in most of southeast Louisiana last Sunday as a Category 4 hurricane. However, the evacuation orders were very different from community to community.
Some coastal communities, such as Grand Isle, made mandatory evacuations for all residents. Others, however, issued evacuation orders that were only compulsory for people in low-lying areas and voluntary in areas that are better isolated from floods.
In New Orleans, Mayor LaToya Cantrell issued a mandatory evacuation order for people living outside the city’s levee system, but a voluntary one for those protected by the levees.
“We are not asking for a mandatory evacuation because time is just not on our side,” Cantrell said on the Friday before the storm. “We don’t want people on the street and therefore in greater danger due to lack of time.”
During his visit, Biden encouraged anyone affected by Ida to contact the Federal Emergency Management Agency and see what kind of help they might be eligible for, and promised to keep the federal resources there until they settle have fully recovered.
“We will be there for you,” he said.
The home insurance industry’s leading trading group said its members are aware of Ida’s suffering and would like to help.
“Ida has devastated communities along the Gulf Coast and along the east coast. Insurers recognize the tragedy and fear faced by many American families, individuals and businesses as wildfires and storms rage amid uncertainty over the pandemic, “said David Sampson, president and CEO of the American Property Casualty Insurance Association, said in one Statement to CNBC.
“Insured who have suffered a claim should call their insurer as soon as possible to initiate the claim process. Call your insurer if you have been evacuated voluntarily or compulsorily to discuss your coverage. Policies can vary by company and state, ”he said.