Mandatory Payment of expenses incurred by Policyholders

LOUISIANA DEPARTMENT OF INSURANCE
JAMESJ. DONELON
COMMISSIONER
DIRECTIVE 218

ALL AUTHORIZED INSURERS AND ALL SURPLUS LINES INSURERS
DOING BUSINESS IN LOUISIANA

JAMES J. DONELON, COMMISSIONER OF INSURANCE

MANDATORY PAYMENT OF EXPENSES INCURRED BY

POLICYHOLDERS WHO EVACUATED AND/OR WERE PROHIBITED
FROM USING THEIR PREMISES DUE TO HURRICANE IDA
SEPTEMBER 7, 2021

After having issued Bulletin 2021 -07, it has come to my attention that some insurers
have advised that they will not pay those loss of use claims where no express civil
authority order to evacuate was in place.

The civil authority provision in the insurance policy form is placed in the contract for
the protection of the insurer. This is to prevent an insured from making a claim for
expenses that were not justified by a legitimate need to protect their safety by evacuating.

However, the use of that limitation was not intended to unjustly deny coverage to a
policyholder who legitimately evacuates to protect their life and health and where it was
impracticable for a civil authority to issue a formal order of evacuation .

As stated in Bulletin 2021-07, only seventy-four hours elapsed between the time of
the first advisory from the National Hurricane Center about the formation of Tropical
Depression Nine and the landfall of Hurricane Ida as a Category 4 hurricane with winds
up to 150 mph. There is no doubt Hurricane Ida placed in danger the lives and property
of the people in the twenty-five (25) parishes set forth in Emergency Rule 47 and
referenced in

Bulletin 2021 -07.
P. 0 . Box 94214 • BATON ROUGE, LOUISIANA 70804-9214
PHONE (225) 342-5900 • FAX (225) 342-3078
https:Ilwww.ldi./a .gov
Directive 218

Not only were the advance warnings of impending peril sufficient for any policyholder
to evacuate, but the aftermath of Hurricane Ida demonstrated that the warnings of federal,
state and local officials, as well as the National Hurricane Center, were correct. Hurricane
Ida was a catastrophic event that justified evacuation to protect life and health.

As predicted by civil authorities, Hurricane Ida caused loss of life, massive property damage
and loss of essential services. Based on the foregoing , it was entirely appropriate for
policyholders to evacuate their premises and remain evacuated to protect their health,
safety and welfare and that of their families.

I note that La. R.S. 29:730.3 provides, in
pertinent part, that when an evacuation is ordered, it shall be lifted, in whole or in part,
only at such time as public services are available in the area and that area is opened for
reentry as determined by the parish homeland security and emergency preparedness
agency.

Accordingly, pursuant to the statutory authority vested in me by La. R.S. 22:2(A)(1)
and (E}, 22:11 (A}, and 22:861 , I direct all authorized insurers and all surplus lines insurers
that, to the extent any insurance contract may contain any language that implies the need
for a civil authority to issue an evacuation order, they 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. Further, the policyholder retains the obligation to demonstrate that the
expenses incurred during the evacuation were reasonable. Directive 218 is limited to the
twenty-five parishes listed in my previously issued Emergency Rule 47 and referenced in
Bulletin 2021 -07.

You are hereby directed to immediately bring your practice into compliance with the
unequivocal purpose and intent of Directive 218.

Please be governed accordingly.
Baton Rouge, Louisiana, this 7th day of September 2021 .