La. directives aim for more consumer protection

Louisiana Commissioner of Insurance Jim Donelon issued two directives designed to further protect consumers impacted by Hurricanes Katrina and Rita. Directives 195 and 196 extend the time period for the repair of damaged property and add protections for affected residents from any negative impact on their credit reports that resulted from the storms, respectively.

Directive 195 requires insurance companies to pay policyholders full replacement cost for their covered hurricane-related property damage even if repairs are not completed within the six-month time period required under some policies. Directive 195 extends “the repair deadline from six months to one year from the date of the claim,” Donelon said.

Replacement cost coverage is available to policyholders who actually purchased this type of coverage.

Many property owners with a covered loss that is the subject of a a hurricane-related claim have been unable to get their covered damages repaired by a building contractor. Some residents have also been unsuccessful in finding a contractor who can give them a bid for their repair work.

Directive 196 aims to protect affected residents from a storm-related negative impact on their credit reports. The two hurricanes caused many residents statewide financial strain, and some have been late in paying their bills.

Since Hurricanes Katrina and Rita were proclaimed “catastrophic events,” state law bans insurers from using an adverse entry on an individual’s credit report when setting that person’s insurance rates. This applies only to personal lines of insurance but Donelon urged insurers writing commercial lines of insurance in Louisiana to abide by the spirit and intent of Directive 196.