Say what y’all want but Jim Donelon has our backs. If it weren’t for his interpretation of how State Farm’s HDD applies, this never would’ve gone to court.

TLDR version — State Farm’s endorsement explaining the HDD and its application is ambiguous and offers more than one way to apply the deductible, therefore all claims regarding the matter must be in the insured’s favor. They use more than one definition of when the HDD kicks in and that’s illegal in Louisiana.

The ruling can be found HERE

quote:
The content of Policy Endorsement 3387 sets forth as follows in pertinent part: The Hurricane Duration deductible applies to Losses Insured that: 1. are caused by wind, wind gusts, hail, rain, tornadoes, lightening (except covered fire losses caused by lightening), cyclones, civil authority, or power outage; and 2. occur within the Hurricane Duration and result from the storm system that triggered the Hurricane Duration. provided this storm system has hurricane status, as classified by the National Hurricane Center of the National Weather Service: 1. sometime within the 48 hour period prior to first causing damage to property within this state; or 2. anytime after first causing damage to property within this state, so long as this hurricane classification occurs while a hurricane watch or warning is still in effect for this state. (Emphasis original)4 The endorsement includes the following definition of “Hurricane Duration:” “Hurricane Duration” means a period of time 1. beginning when a hurricane watch or warning is issued for any part of this state because of a storm system that has been declared to be a hurricane by the National Hurricane Center of the National Weather Service; and 2. ending 72 hours after the termination of the last hurricane watch or warning for any parts of this state.5 At 4:00 p.m. on July 10, 2019, the National Hurricane Center of the National Weather Service issued a hurricane watch for the southern coast of Louisiana as a result of a storm system that was developing in the Gulf of Mexico.6 At that time the storm system at issue, which had maximum sustained winds of 30 miles per hour (mph), was referred to as Tropical System Two.7 At 4:00 p.m. on July 11, 2019, the National Hurricane Center issued a hurricane warning for portions of the Louisiana coast. At that time, maximum sustained winds were 40 mph. At 10:00 a.m. on July 13, 2019, the National Hurricane Center declared that the tropical system had developed maximum sustained winds of 75 mph and had become Hurricane Barry.8 At 1:00 p.m. on July 13, 2019, the National Hurricane Center announced that Hurricane Barry made landfall near Intercoastal City, Louisiana, and had weakened to a tropical storm with maximum sustained winds of 70 mph.9

quote:
On July 17, 2019, LDI received a complaint from Sonny Lieu, a Baton Rouge resident who indicated that the chimney on his house fell on Saturday, July 13, 2019, and caused damage.10 Mr. Lieu complained that his homeowners insurer, Appellant, had informed him that the HDD applied to his loss and that as result, his deductible would exceed $30,000.11 Mr. Lieu contended that the loss was caused by conditions that were unrelated to the storm, and that as a result the HDD should not apply to raise his deductible. Two additional complaints by Appellant’s policyholders followed, both regarding Appellant’s imposition of the HDD on their claims.12 LDI later determined in all three instances that Appellant did not violate the insurance code when adjusting the claims.

quote:
Jeffrey W. Zewe, Deputy Commissioner of Insurance, investigated the policyholders’ complaints. In doing so, he reviewed the terms of Policy Endorsement 3387, the National Weather Service bulletins, and file documents that were accumulated when Policy Endorsement 3387 was approved by LDI in 2011.14 As a result of his investigation and based on his interpretation of Policy Endorsement 3387, Mr. Zewe concluded that the HDD was never triggered by Hurricane Barry because no hurricane watches or warnings were issued after the tropical system was upgraded to a hurricane.15 As part of the investigation and to discuss Appellant’s use of the HDD, Mr. Zewe arranged for a meeting of several LDI senior personnel that occurred on July 10, 2019. At that meeting, LDI Deputy General Counsel Liz Butler indicated that she interpreted the language of Policy Endorsement 3387 to mean that the HDD was triggered by Hurricane Barry, and it applied to claims arising from insured losses that occurred after 4:00 p.m. on July 10, 2019, the time that the National Hurricane Center issued a hurricane watch for the southern coast of Louisiana.16 Another meeting to discuss the HDD was hosted at LDI on July 26, 2019. The meeting was attended by representatives of Appellant, as well as Mr. Zewe, Ms. Butler, Insurance Commissioner James J. Donelon, and several other senior LDI personnel.17 At the meeting Appellant maintained, like Ms. Butler, that the HDD applied to insured losses that occurred after 4:00 p.m. on July 10, 2019, when the National Hurricane Center issued a hurricane watch for the southern coast of Louisiana

quote:
At that meeting, or shortly thereafter, Commissioner Donelon indicated that he interpreted the HDD differently from Mr. Zewe and Appellant. Specifically, Commissioner Donelon interpreted Policy Endorsement 3387 to mean that the HDD was triggered by Hurricane Barry, and it applied to claims arising from insured losses that occurred after 1:00 p.m. on July 13, 2019, the time that the National Hurricane Center of the National Weather Service upgraded the tropical storm system to a hurricane.18 On August 20, 2019, LDI issued the Order, indicating therein that Appellant was incorrectly imposing the HDD on claims made by Louisiana homeowner policy holders for losses attributable to Hurricane Barry that occurred prior to the time that Hurricane Barry was declared a hurricane.

In the Order, LDI maintained that the HDD did not commence until after Hurricane Barry was declared a hurricane. In accordance with authority granted under La. R.S. 22:1969, the Order indicated that Appellant’s imposition of an HDD to the claims of Appellant’s Louisiana policyholders for losses sustained before 10:00 a.m. on July 13, 2019, constituted a violation of La. R.S. 22:1892, La. R.S. 22:1964(1)(a), and La. R.S. 22:1964(14)(a).20

Basically, frick State Farm. The biggest takeaway here is that a legal standard has been set!

This post was edited on 1/12/22 at 10:44 am