September 9, 2021
Written by Jose R. Ruiz

In the days leading up to Hurricane Ida making landfall on August 29, 2021, many residents of Southeast Louisiana evacuated their homes even though their parish had not issued a mandatory evacuation order. And in the days following the hurricane’s landfall, many of these same residents found themselves unable to seek reimbursement of expenses they incurred because their homeowners’ insurer was denying the claim on the grounds that no express civil authority evacuation order was in place.

In response to these claim denials, on September 7, 2021, Louisiana Insurance Commissioner issued Directive 218, directing all authorized insurers and surplus line insurers operating in Louisiana to pay expenses incurred by policyholders who evacuated or were prohibited from using their premises following Hurricane Ida. Specifically, Directive 218 provides: “to the extent any insurance contract may contain any language that implies the need for a civil authority to issue an evacuation order, [the insurer] shall treat the multiplicity of actions taken by all public officials and the spirit and intent of all communications issued by all public officials as being tantamount to an order to evacuate that fulfills any such policy requirement.” Under this Directive, the policyholder still retains an obligation to demonstrate that the expenses incurred during the evacuation were reasonable. Additionally, this Directive is only applicable to policyholders residing in the twenty-five parishes identified in Emergency Rule 47. A list of those parishes can be found in our previous article here.

Based on the language of this directive, any insurer in Louisiana who denies a claim for evacuation expenses owed a policyholder who resides in one of the twenty-five parishes identified in Emergency Rule 47 on the basis that the particular policyholder was not under a mandatory evacuation order could potentially be opening themselves up to a claim for bad faith claim handling practices under La. R.S. §§ 22:1892 and 22:1973. Insurers operating within the state would therefore be best served to ensure their property/casualty adjusters are familiar with Directive 218 in order to avoid potential bad faith claims and litigation in the future.  

The full text of Directive 218 can be accessed here.