AUTO HAIL REPAIR NEWS: ALLSTATE INSURANCE POLICY CHANGES

More Allstate policyholders say they feel duped

Posted by The Times-Picayune January 16, 2008 8:02PM

8:04 p.m., Wednesday

By Rebecca Mowbray
Business writer

Marianna LaNasa, a Terrytown resident and Allstate homeowners insurance customer since 1994, believes that she may have been part of a bait and switch that is about to cost her the wind and hail coverage on her house.

In April 2005, LaNasa accepted a discount offer from Allstate that the company now says turned her into a new customer rather than a 14-year customer, making her eligible to lose her all-important hurricane coverage.

"My agent told me that because I was such a faithful customer and always paid on time, they wanted to offer me a policy with Allstate Indemnity and it would save with me a couple hundred dollars, which it did," said LaNasa, who is in her 70s.

Now her insurance agent tells her that having her policy re-written carries other implications, and she is slated to lose her wind and hail coverage this spring. She will have to purchase that coverage in a separate and more expensive policy from Louisiana Citizens Property Insurance Corp.

"I never made one penny's claim," said LaNasa, who feels jilted by the company, which also has her auto and flood insurance.

LaNasa is one of four new people who filed complaints with the Louisiana Department of Insurance this week, saying that Allstate took advantage of administrative changes it was making in policies in recent years to cut their most vital insurance coverage.

The suburban Chicago company says that customers who were shifted from Allstate Insurance Co. to Allstate Indemnity Co. were essentially taking out brand new policies. As a result, they were considered new customers and not eligible for state consumer protection rules that kick in once a person has been with an insurance company for more than three years.

"We have two homeowners insurance companies in Louisiana. A customer in one company may request a change in coverage and apply for a new policy in the other company. There may be benefits to making that switch such as additional discounts, a lower deductible or a lower premium. When a customer requests a move to another company, he or she is choosing to begin a new policy with a new policy number, a new effective date, written on a separate policy form and thus, new tenure of the policy," Allstate spokeswoman April Eaton said in an email.

On Dec. 19, state insurance regulators ordered Allstate to reinstate wind and hail coverage on 17 longtime customers who lost their wind and hail coverage when they took advantage of discount offers. The insurance department is also pursuing a similar issue with Encompass, the Allstate product sold through independent insurance agents, that appears to affect many more people.

Meanwhile, the Louisiana Department of Insurance has extended to Jan. 25 the deadline by which the state's second largest residential insurer must respond to the allegations. "They have until next Friday," said Warren Byrd, executive counsel at the insurance department.

Eaton said her company has received the insurance department's letter and is reviewing it.

Kenner resident Jo-Ann Trapani isn't really sure when or why her homeowners insurance policy was stamped with the name Allstate Indemnity Co. All she knows is that she's been a deluxe homeowners customer at her David Drive home for at least 30 years.

But last spring, Trapani, who is elderly and has emphysema and Parkinson Disease, got a note from Allstate saying that because her policy was written with that particular Allstate brand, she would lose her all-important hurricane coverage.

"Your Allstate Indemnity Co. property policy includes a new endorsement which excludes coverage of loss from windstorm or hail. Please keep in mind that you must obtain windstorm or hail coverage from another provider," the letter reads, and suggests that she purchase wind and hail coverage from the high-priced Louisiana Citizens Property Insurance Corp., the state-sponsored insurer of last resort.

Hybrid insurance policies written between Citizens and a private carrier are a bad deal for consumers. Getting coverage from two places instead of one is expensive, and the Citizens wind-only policies offer depreciated value coverage instead of replacement and don't cover living expenses for policyholders who are displaced from their homes by a hurricane.

The Allstate letter also said that it was canceling the landlord's policy that she had at another house she owns in Kenner where her son lives.

Trapani wasn't happy about the results of her hurricane claim, and isn't happy with what's happening to her policies, which now cost $942 for her windless Allstate homeowners insurance and $1,672 for her Citizens wind and hail coverage.

She also feels trapped -- when she told her insurance agency she was thinking about going with the AARP for her auto insurance, the agency told her she risked losing her homeowners coverage if she did.

"I could have gone with AARP and gotten it cheaper. But when I told my insurance agency, they said if I wanted to change to AARP, they might come back later and say, "Since we're not handling your auto insurance we're not going to handle your property,'¤" Trapani recounted. "I'm on a fixed income. I'm living on social security."

Belle Chasse homeowner Brent Ballay is one of the original 17 complaints at the insurance department.

When Allstate came out to check out a water leak at his house in 2004, the inspector said that Ballay was underinsured, so Ballay went to his insurance agent to get more coverage. Extra coverage was expensive, so when the agent said that Ballay might be eligible for a discount because of good credit, Ballay took him up on the offer.

But little did Ballay, a 16-year Allstate homeowners customer, know that the price of being properly insured when Katrina hit would cost him his hurricane coverage in 2007.

"All I asked them for was more insurance. I didn't ask for a new policy," said Ballay. "Naturally I'm not going to say, 'No, I'd like to pay more.'¤"

Rebecca Mowbray can be reached at rmowbray@timespicayune.com or at (504) 826-3417.