The Allstate [deny help to Katrina victims] Sugar Bowl

As the second largest property/casualty insurance company with 22 percent of the marketshare in Louisiana, Allstate has used the “wind versus flood” claim to escape responsibility to their homeowners policyholders. As Rebecca Mowbray of the New Orleans Times-Picayune reports:

“Allstate has clashed so much with state insurance regulators throughout the year over its rising insurance rates that the Louisiana Insurance Rating Commission held a special hearing earlier this month on Allstate’s business practices. Meanwhile, [Allstate’s]… ratios of [1,287] complaints to the amount of business it does in the state were high enough to trigger an investigation by the Louisiana Department of Insurance.”

Mowbray continues:

“Amy Bach, executive director of the California advocacy group United Policyholders, says insurance companies sponsor events and advertise heavily when they need to shore up their reputations and distract the public from how they handled claims. She said the Sugar Bowl is no exception.

‘The way they have historically countered bad publicity on claims is advertising during sporting events,’ Bach said. ‘I would hope that the citizens of your state would be smart enough to see it for what it is: a naked bribe to get people to forget how they’ve been treated. I hope people don’t fall for it. If they want to throw their money around, they should throw it around so that someone could get a roof back on their house. Someone else could sponsor it,’ Bach added.”

Americans for Insurance Reform (AIR) provides a background report on the insurance industry’s response (highlighting Allstate, among others) to Hurricane Katrina:

“Hurricane Katrina was one of the worst disasters in our nation’s history, killing over 1,300 people (with thousands more still unaccounted for), displacing millions, and leaving hundreds of thousands without jobs or income. With the impact compounded by Hurricane Rita shortly thereafter, hundreds of thousands of homes were destroyed or significantly damaged. In the days and first few weeks following the disaster, many individuals were left destitute, without food, water or a roof over their heads. The entire world watched this horror unfold on their television screens. There was no denying the magnitude and human suffering caused by this catastrophe.

In a disaster as devastating as Katrina, the availability of insurance can literally become a matter of life or death, especially regarding the promise of temporary living expenses under ‘loss of use’ clauses in homeowners policies, which many residents in Louisiana and Mississippi had. Many homeowners policyholders who were hungry, exhausted, traumatized and homeless, immediately looked to their insurance carriers to come to their aid with living expenses as they struggled to survive.

However, what many of these residents found was not help, but rather resistance by their insurance carriers to pay them anything at all. It was soon after Katrina hit that insurance companies began looking for ways to escape responsibility to their homeowners policyholders altogether, publicly declaring that most, if not all, of the damage was due to flooding [rather than wind and wind-driven rain, which are covered]. That meant that only those who carried separate flood insurance (far less than half the residents), which is underwritten by the federal government, would get any coverage, leaving insurers entirely off the hook for paying Katrina-related claims. This included payment of temporary living expenses, which flood insurance does not provide. This was despite the fact that neither the law nor the facts justified insurers’ behavior.”

Americans for Insurance Reform on Allstate:

“Allstate seems to have been the recipient of an unusual number of complaints. In fact, on October 7, 2005, acting on a petition filed by the Texas Attorney General and Insurance Department, a Texas court ordered Allstate ‘to obey the law and start covering the living expenses of its Texas policyholders who were displaced by Hurricane Rita…. The insurance department said it had received scores of complaints from Allstate customers. A spokesman for the insurance department said Allstate has refused to cover “additional living expenses” — such as hotel or motel charges — for families displaced by Hurricane Rita.’

The AIR hotline has received similar complaints about Allstate from Louisiana and Mississippi residents:

– A Louisiana woman had been trying to get an adjuster to come to her home for over a month after the hurricane but had no luck in getting suitable answers from her homeowners insurer Allstate. She said that many people in her area were having the same problem with Allstate. Allstate had assigned her an adjuster, but this adjuster had not returned calls or been responsive. ‘I called and called and called, she said. After having to go ahead and have her roof fixed and having other repairs done to the house prior to her adjuster’s visit, she is concerned that she will not be properly reimbursed. An adjuster finally came in November but they are still working on her case. She says that Allstate told her that they needed new software in order to work quicker, and she noted that this has taken ‘way too damn long.’

– A New Orleans woman was repeatedly told by Allstate that they’ve sent out the checks due her but she did not receive them. When she has pressed Allstate representatives on what dates the checks were sent she was told a different date every time leading her to believe that they are simply stalling in paying out the large sum she is due. This went on for at least two months.

– A woman’s home in Harvey, LA sustained severe roof damage, effectively making the home unlivable until she could get a new roof. After receiving her initial check for living expenses from her homeowners insurer Allstate, she was unable to speak to anyone at the company regarding the status of her claim and was therefore unable to go forward with roof repair. In the meantime, Hurricane Rita further damaged her home. For weeks, Allstate had been unable to tell her when she could expect an adjuster to visit her home. ‘There wouldn’t be half as much water damage if they had been able to get an adjuster out here in a reasonable amount of time,’ she explained.

– A woman from New Orleans whose home suffered significant roof damage says she had been told multiple times by representatives at her homeowner insurer Allstate that they had sent her temporary living expenses. For four weeks, Allstate representatives repeatedly told her that they would overnight the check to her family members’ home where she was staying, but the check did not arrive. ‘I could never get the same person on the phone,’ she said. ‘Every time I got through to their offices it was like I had to start the whole process over again.’

– The roof of a Houma, LA woman’s house was blown off. In an effort to minimize the damage, she tried to get an adjuster out to her home for an assessment for several weeks after the storm, but while she was repeatedly told by her homeowners insurer Allstate that an adjuster would visit her property within 72 hours, no one came for several weeks. Before the adjuster made it to her property she had three contractors give her estimates on what it would cost to repair the damage she had sustained. When an adjuster finally came and presented her with the total amount that Allstate was willing to provide her, it was only half of the amount of the estimates she had received. As a result, she has been forced to dip into her savings to pay for the reconstruction. ‘With all the back and forth I feel like I lost 20 years of my life trying to deal with Allstate insurance,’ she said.

– When a Gulfport, MS man finally closed on his home in May of 2004, he decided on purchasing homeowners and flood protection insurance through Allstate and filled out the necessary paperwork for both. However, after filing his homeowners and flood claims in the wake of Katrina, he was told that while there was a record of his requesting flood insurance there was no record of his being granted flood insurance. He is told that he will recoup nothing for the extensive damage to his property.

– An elderly Pass Christian, MS man and his wife, who has recently been diagnosed with breast cancer, initially had a terrible time getting their ‘loss of use’ funds from Allstate. Their home had been completely wiped out by the storm and they were forced to move into a temporary residence, putting a strain on them financially. Months later, they have received the final assessment from Allstate, only offering them one-quarter of the amount of their total homeowners and flood polices, despite the fact that their home had been completely wiped out. Out of desperation they decided to accept the reduced amount on their flood payment, but have decided to retain an attorney to challenge this decision.

– A Bay St. Louis, MS, man was told that it was ‘case closed’ as far as his homeowners claim with Allstate is concerned. The damage to his home was declared entirely the result of flooding despite the fact that two separate inspections of his house showed a waterline of only 8 and 10 inches respectively and the fact that there is a hole in his roof from a tree falling on it.

– A New Orleans woman’s home in the lower ninth ward was heavily damaged by Hurricanes Katrina and Rita. While she received a $2,500 advance from her home insurer State Farm just weeks after the first storm, the insurer servicing her flood insurance, Allstate, repeatedly put off sending her the advance check she had been promised. In the month following Hurricane Katrina she burned through all of her savings and was reduced to spending some of her evenings sleeping in her car. It was over a month before she received the advance she had been promised from Allstate. Now, four months after the storm, she has had adjusters out to her property but has not received any compensation from her insurers and is struggling to get by on her savings. She told AIR, ‘I haven’t paid premiums to two companies all these years to be starving, struggling, and homeless.’

Company Response: These and other stories were reported to an Allstate
spokesperson who said that it would be inappropriate for him to discuss Allstate policyholders’ problems with a third party. He said, ‘I can tell you, I am not going to discuss people’s private matters with you … or the press.’ He also said that it would not be practical to discuss these cases because they are only partial facts and not the whole story. He stated that Allstate stands ready to deal with all of their customers directly. AIR called Allstate headquarters again and a representative gave a phone number for aggrieved policyholders to call. AIR contacted these policyholders and passed along the phone number.

… Insisting that the 2005 hurricanes financially hurt the industry, insurers have been indicating that huge industry-wide rate hikes and cutbacks in coverage were to come…. It now seems that the property/casualty insurance industry’s profitability for 2005 will be extraordinarily high even with hurricane losses…. The Consumer Federation of America has estimated that 2005 was the third greatest profit year in the property/casualty industry’s history, despite the hurricanes of 2005.”

So as Allstate uses the Sugar Bowl in New Orleans to advertise their way around how they handled claims resulting from Hurricanes Katrina and Rita, just remember that Allstate’s “good hands” have very slippery fingers, and are only “good” for a slap in the face.