U.S. President Joe Biden arrives to host a virtual briefing on Hurricane Ida in the Eisenhower Executive Office Building’s South Court Auditorium at the White House in Washington, August 30, 2021.
Carlos Barria | Reuters
WASHINGTON – Two of the most prominent U.S. insurance companies have responded to President Joe Biden’s call to cover additional living expenses for policyholders in Louisiana who evacuated their homes ahead of Hurricane Ida, but were not under specific mandatory evacuation orders.
Allstate and USAA have agreed to cover additional living expenses for policyholders in the state who evacuated their homes, a White House official told CNBC.
More companies were expected to follow suit, said the official, who requested anonymity in order to discuss efforts still underway.
Typically, insurance policies only cover additional living expenses for policyholders who have been ordered to evacuate their homes ahead of major storms, not for those who choose to leave their homes voluntarily.
Biden first raised the issue Thursday in a speech at the White House about the storm.
“Right now we’re hearing reports that some insurance companies may deny coverage for additional living expenses unless the homeowner was under a mandatory evacuation,” Biden said.
Homeowners in the storm’s path, he said, “left their homes because they felt it was flee or risk death. There’s nothing voluntary about that.”
Biden then appealed to home insurers: “Do the right thing. Pay your policyholders what you owe them and cover the cost of temporary housing in the midst of disaster. Help those in need.”
On Friday, the state’s insurance commissioner, James Donelon, issued a bulletin to all insurers in the state, saying they “should waive the language contained in their insurance policies requiring mandatory evacuation to trigger civil authority coverage.”
Donelon also directed insurers to inform his office of whether or not they would abide by the request, raising the stakes for companies if they decide to deny coverage.
After this story was published, a USAA spokesperson told CNBC, “Some USAA homeowners’ policies provide limited coverage for evacuation expenses, when there is damage that is covered. Members can provide receipts for consideration of reimbursement.”
The episode is a rare example of a U.S. president effectively shaming huge corporations into changing a bedrock piece of their operations — namely how insurance companies gauge coverage eligibility.
The policy shift’s origins can be traced back to Cedric Richmond, a former Louisiana congressman who is a top official in the Biden White House.
In the days following the storm, Richmond heard from homeowners that their insurance policies were not going cover the cost of temporary housing unless their homes had been under mandatory evacuation orders.
But even as Ida made landfall last Sunday as a Category 4 hurricane, evacuation orders varied widely from parish to parish.
Some parishes on the coast, like Grand Isle, issued mandatory evacuations for all residents. But others issued evacuation orders that were only mandatory for people in low lying areas, and voluntary in areas better insulated from flood waters.
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 people protected by the levees.
“We’re not calling for a mandatory evacuation, because the time simply is not on our side,” Cantrell said the Friday before the storm. “We do not want to have people on the road, and therefore in greater danger, because of the lack of time.”
Biden visited Louisiana on Friday to survey the flood damage and meet with residents and first responders. Earlier in the week, he outlined a vast federal response to the storm, pledging to keep federal resource there for “as long as it takes.”
The leading trade group for the homeowners insurance industry said its members were aware of the suffering caused by Ida, and are eager to help.
“Ida has devastated communities along the gulf coast and up the eastern seaboard. Insurers recognize the tragedy and anxiety that many American families, individuals, and businesses are facing as wildfires and severe weather are raging in the midst of uncertainty over the pandemic, David Sampson, president and CEO of the American Property Casualty Insurance Association, said in a statement to CNBC.
“Policyholders who have sustained damage should call their insurer as soon as possible to start the claims process. Call your insurer if you evacuated, whether it was voluntary or mandatory, to talk through your coverage. Policies may vary by company and by state,” he said.
