Louisiana Voice

Funny how things can come full circle sometimes.

It was way back in April of 2017 that LouisianaVoice FIRST ALERTED YOU to the cruel, hard fact that you weren’t always in good hands with Allstate, that you didn’t necessarily have a good neighbor in State Farm and Nationwide wasn’t necessarily on your side.

Now, nine years after we first sounded the alarm, The Guardian has taken up the mantra that, as the Rolling Stones song goes, You Can’t Always Get What You Want. But unlike the song, you also don’t always get what you need, either.

While the emphasis of the LouisianaVoice story was on floods and hurricanes, The Guardian today ran a STORY about the problems homeowners have had with insurance claims from the devastating Los Angeles fires of a year ago that reads very much like the story we ran nearly a decade ago. It was the familiar story about delays, lowball settlement offers and outright denials of claims.

Right after Hurricane Katrina inflicted catastrophic damage on New Orleans and the Mississippi Gulf Coast in September 2005, State Farm instructed its adjusters that “where wind acts concurrently with flooding to cause damage to the insured property, coverage for the loss exists only under flood coverage.” That was a convenient (for State Farm) way to deny a claim even though the flooding may have been caused, say, by the wind ripping the roof off a home.

Allstate likewise relied on “insufficient physical evidence to determine the proportion of wind versus storm surge that destroyed [a] structure.”

Not to be outdone in denying claims, Nationwide said less than a week after Katrina, “If a loss is caused by both flood and wind, there is no coverage.” So, in other words, regardless of how much damage may have been cause by wind, if there was any damage at all from flooding, then all bets were off and the property owner was SOL.

It’s not like insurers hadn’t already taken measures to protect themselves by declaring if damage is caused by a named storm, the homeowner’s deductible, instead of being a set fee of say, $1,000 or even $5,000, immediately converts to a PERCENTAGE of the home’s insured value. So, a homeowner’s deductible could suddenly become somewhere in the neighborhood of $25,000—or more—for a $250,000 home. And the sad truth is our Louisiana politicians sat back and let the insurance companies dictate the policy terms despite the existence of a so-called Insurance Rating Commission.

It didn’t take long for the perils of “DELAY, DENY, DEFEND” strategy of insurance companies that we warned about back in 2017 to become stark reality to Louisiana residents. A year after successive hurricanes slammed southwest Louisiana, homeowners were still wrestling with insurance companies to get claims settled while the insurance companies were offering pennies on the dollar.

The strategy is no secret. A Baton Rouge injury attorney has an effective TV ad in which he poses the questions, “Why do billion-dollar insurance companies constantly delay and deny claims?” Then he answers his own rhetorical question, declaring, “because that’s how they got to be billion-dollar insurance companies.”

No matter how warm and fuzzy those insurance companies’ TV commercials may appear, it’s important to remember when it comes to paying out claims, they ARE NOT YOUR FRIENDS.

Of course, it’s not like the politicians don’t get in on the act themselves. When an attorney, a former state senator, told the State Licensing Board for Contractors that companies bidding for a contract to manage the state’s $1.6 billion flood-recovery program following the 2016 flooding in south Louisiana needed to have a residential contractor’s license, it meant the two low bidders for the work were immediately disqualified.

But the attorney FAILED TO MENTION that his son worked as an affiliate for the number-three-ranked bidder, which, by default, was in a position to be awarded the work for about $350 million. That company, SLS, was owned by three Texas brothers who also owned DRC Emergency Services, for whom the attorney’s son worked as a regional manager.

So, while The Guardian is one of the most reliable and most credible news sources out there, it was not exactly breaking new ground with its story about what it called a “broken insurance industry.”