August 22, 2019


Donelon Issues Cease and Desist Order to State Farm Following Hurricane Barry

Commissioner James J. Donelon, acting under his authority to regulate insurance in the public interest as outlined in the Louisiana Insurance Code, issued a Cease and Desist Order and Notice of Proposed Regulatory Action for State Farm Fire and Casualty Company to protect the interests of Louisiana policyholders affected by Hurricane Barry. This action prohibits the enforcement of a hurricane deductible for losses occurring prior to 10:00 a.m. on Saturday, July 13, 2019.

Commissioner Donelon notes that “every word in an insurance policy matters” and further cautioned that State Farm’s interpretation “ignores the irregular, but relevant aspects associated with the development of the Barry storm event prior to its designation as a hurricane.”

Donelon’s actions follow a consumer complaint which questioned State Farm’s interpretation of their Hurricane Duration Deductible Endorsement (HDD) language.  The LDI commenced an investigation of the claim, reviewing the timeline of notifications and other milestones associated with Barry’s atypical development. Notable to the LDI review was the distinction that Barry only briefly achieved hurricane strength and was recognized as a hurricane by the National Weather Service just before striking Louisiana.

Following several conversations with representatives of State Farm, Commissioner Donelon requested a meeting with the insurer to review the LDI’s findings. State Farm contended that because the storm ultimately achieved hurricane status, their hurricane deductible was appropriate for all losses rather than the less costly “all-peril” deductible for policyholder claims sustained prior to being declared a hurricane on Saturday, July 13, 2019 at 10:00 a.m.

Commissioner Donelon informed State Farm that based on the LDI’s interpretation of the insurer’s own policy language, the company was incorrectly applying the hurricane deductible to losses which occurred prior to the storm reaching hurricane strength on July 13, 2019 citing the HDD definition included in the State Farm endorsement. State Farm took the LDI’s comments under advisement, but later notified Commissioner Donelon of their disagreement, asserting that (State Farm’s) interpretation of the deductible language was proper.

The Louisiana Department of Insurance fully investigates every consumer complaint and reminds all policyholders of the importance of reading and reviewing their insurance documents.

A copy of the order is available here.

 About the Louisiana Department of Insurance: The Louisiana Department of Insurance works to improve competition in the state’s insurance market while assisting individuals and businesses with the information and resources they need to be informed consumers of insurance. As a regulator, the LDI enforces the laws that provide a fair and stable marketplace and makes certain that insurers comply with the laws in place to protect policyholders. You can contact the LDI by calling 1-800-259-5300 or visiting