Louisiana Insurance Commissioner issues cease-and-desist order against State Farm

Collen Schiller and Wesley Vinson wade through storm surge from Lake Pontchartrain on Lakeshore Drive in Mandeville, La., Saturday, July 13, 2019. The waves are caused by the wind and storm surge from Hurricane Barry in the Gulf of Mexico. Mandeville is on the north shore of the lake while New Orleans is on the south shore. | Photo Source: AP Photo / Matthew Hinton

BATON ROUGE, La. (AP) - Louisiana Insurance Commissioner James Donelon has issued a cease and desist order against State Farm in a dispute over hurricane deductibles before Hurricane Barry.

The state Department of Insurance received a complaint July 17 from a policyholder who claimed the company was requiring a hurricane deductible for losses that happened before the storm was declared a hurricane July 13.

Donelon said State Farm claimed it would impose a hurricane deductible on losses rather than a less expensive out-of-pocket deductible known as "all peril."

The average all peril deductible is between $500 to $1000.

On average, hurricane deductibles are between 2% and 5%, which could cost policyholders more out of pocket before insurance kicks in to pay for damages.

The Advocate reported that State Farm has 30 days to appeal the order.

Copyright 2019 The Associated Press. All rights reserved.

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