Maybe the Commission can’t carry a tune in a bucket – or maybe there’s something else in the bucket he’s carrying. Whatever the reason, Jim Donelon is definitely out of tune with the voters when he lip synchs the State Farm song.
The Times Picayune has the story: State Farm tries again for a rate increase on Louisiana homes.
State Farm Fire and Casualty Co., the state’s largest residential insurer, is asking for an average 9.9 percent rate increase for homeowners coverage in Louisiana.
The filing with the Department of Insurance comes just over a month after Insurance Commissioner Jim Donelon rejected the company’s request for an average 19.1 percent rate hike. Donelon called that proposal unreasonable and unjustified…
That “unreasonable and unjustified proposal” has been replaced with the same song, second verse:
Although the average rate hike would be 9.9 percent, hurricane-vulnerable coastal areas would bear the brunt. The New Orleans region would see a 17.7 percent increase while rates in the Lake Charles region would go up 22.5 percent, said State Farm spokeswoman Brooke Cluse.
Alexandria homeowners could expect a 5.5 percent increase. Rates in the Monroe and Baton Rouge areas would be unchanged, while the Shreveport-Bossier City area would see rates go down 6 percent.
The largest overall increase — 26 percent — would affect homeowners in St. James and St. John the Baptist parishes, including LaPlace. The largest overall decrease — 6.7 percent — would be seen in Assumption, Iberia, St. Charles and Vermilion parishes.
State Farm’s spokesman said, “the proposed rates are based on future loss projections and not past claims experience”. Our ever faithful reader CLS connected the dots on those “future loss projections” to another Times Picayune story Orleans judge says policy exclusions used to deny Chinese drywall insurance claims don’t apply. Rebecca Mowbray gets right to the point:
In what’s believed to be the first Chinese-manufactured drywall insurance ruling in Louisiana, an Orleans Parish judge said this week that the policy exclusions that insurers have commonly been using to deny claims for drywall damage don’t apply.
On Monday, Lloyd Medley, chief judge of Orleans Parish Civil District Court, told Audubon Insurance Co. that the three items in its policy that the company had used to deny the homeowners insurance claim that New Orleans residents Simon and Rebecca Finger had made did not apply.
Remember the lead in the first story, State Farm is “the state’s largest residential insurer” and think of Audubon as the “opening act”.
…Insurers have universally been denying claims, and because of the challenges of bringing a product liability claim against a foreign manufacturer, many people are stuck with unlivable homes that they can’t afford to fix.
About 803 people in Louisiana have notified the Louisiana Recovery Authority that they have corrosive drywall in their homes and 3,700 people nationwide have reported wallboard problems to the U.S. Consumer Product Safety Commission, which is conducting the largest investigation in its history into what makes the drywall bad and how to fix it.
In his ruling, Medley said that the “pollution or contamination” exclusion didn’t apply because it was intended to apply to “environmental damage” rather than damage to a home from substandard building materials.
Although Audubon had initially cited the pollution exclusion as one reason the policy didn’t cover damage at the Fingers’ State Street home, it later withdrew that assertion, but Medley decided to rule on the applicability of the clause anyway.
Medley also found that the “gradual or sudden loss” exclusion, also known as an exclusion for “latent defect,” didn’t apply. The clause was meant to protect the insurance company from having to protect the insurance company from wear and tear or gradual deterioration, Medley said, and that’s not what’s happening with the drywall.
Although Audubon had argued that the exclusion refers to corrosion, Medley said it didn’t matter, because in this case corroded wiring and appliances in the home are the result of the bad drywall rather than corrosion being the cause of other problems. For example, a corroded pipe in a house that bursts and causes other damage might be properly excluded under the policy, but in the Fingers’ home, corroded fixtures are the result of the bad drywall.
Medley notes that Audubon doesn’t define what a “latent defect” is in the policy. He said there’s no evidence that the drywall is destroying itself, as something with a latent defect might, so it doesn’t apply.
In the last category, the “faulty, inadequate or defective planning” exclusion, Medley also talked about defects. He said that even if the drywall is emitting sulfuric gases, it still effectively functions as drywall in a home, because it can be used as product for finishing the interior of a home, holding paint, and supporting hardware for hanging picture frames.
Because Medley found that coverage exists on the policy, he did not tackle the issue of “ensuing losses” from drywall. Many plaintiffs attorneys have argued that if drywall was founded to be defective and not covered on the policy, that “ensuing losses,” or other damage caused by the bad drywall, such as corroded wiring or appliances, should be covered…
Donelon certainly can’t question the loss projection model on this rate increase – the handwriting is on the (dry)wall. However, “future losses” do not include past claims that weren’t paid prior to Judge Medley’s ruling.