Big Win For Homeowners

by Jessica Taloney

Published: Mon, March 03, 2008 - 5:17 pm CST Last Updated: Mon, March 03, 2008 - 6:15 pm CST

Homeowners have said it's wrong all along. Now, Alabama's insurance commisioner is saying it's not just wrong, it's illegal. Commissioner Walter Bell issued an order to insurance companies, saying they can not drop a homeowner's policy simply because the homeowner doesn't have an auto or life policy with them.

"These activities, we strongly believe, are prohibited by the Alabama Trade Practices Law," said Commissioner Bell in press release posted on the department's website. Bell says the practice was used by some insurers last year to reduce hurricane exposure in Mobile and Baldwin counties. The Department of Insurance estimates more than 10,000 residents received non-renewal notices.

"I was furious," said Edward Thomas, who got the letter from Allstate. Thomas said he immediately called his insurance agent, but it did no good. "He said, well sir, I'm sorry, there's nothing I can do just as of February 19th you'll no longer have insurance with Allstate," said Thomas.

In the order to insurance companies, Bell said insurers must stop the illegal practice immediately and reinstate customers whose policies were dropped. "By this action we are taking, we are telling every insurer that has non-renewed a policy using this method to rescind the non-renewal and offer the consumer coverage again," said Bell.

We contacted Allstate Insurance about the commissioner's order. Shane Robinson, a spokesman for the company, said they've received the commissioner's letter, but would not comment other than to say Allstate is discussing the order with the state agency.

A Deparment of Insurance spokesman said consumers who were dropped as a result of the illegal practice can expect a letter from their insurer reoffering coverage. Though, he says it may take several weeks for insurers to send the letters, and they would only be required to offer coverage at the current rates, not necessarily the rate the customer was paying before they were dropped.

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asda Says:

Wed, Mar 05, 2008 at 8:15 am

skip149 I can not believe your comment. Don’t you get the whole point to this? Insurance companies are illegally cancelling policies. Please go to Mississippi and talk to people on the coast about how fair insurance companies are. You are not from here and do not live here because if you did then your homeowners policy would have doubled in price if not more. That is not fair at all I am in business and wish I could just decide to double my prices and tell my customers pay up or too bad. I can not I would be out of business. All these insurace companies talk to each other and decide to just stick it to everyone here. And don’t give me the they need to make a profit too because in the past years when we had horrible natural disasters these companies have still shown large profits and no losses. How is this possible that the worst natural disaster in History happens and they are still able to make a profit and you think it is alright that they are doing this.

Sandra Says:

Wed, Mar 05, 2008 at 7:46 am

Regarding the Alabama Insurance topic with Allstate: We had our mobilehome insurance cancelled by Allstate in Feb. 2008 because we live south of I-10 which was the boundary I understand for Allstate to use to cut policy holders in Baldwin County if they didn’t have auto or life insurance with them also. Their auto insurance was too high and so was life insurance since we are retired. We and many others I’m sure were forced to either do without coverage or go with another mobilehome insurance company for more premium and lower coverage just to have “something” if we had a loss. If we get reinstated by Allstate and cancel the new policy we just got, it will still cost us for the time the new policy was in force and we will be penalized by them for cancelling mid-term. Allstate needs to “make things right” with their previous “loyal customers.”

skip149 Says:

Tue, Mar 04, 2008 at 11:28 pm

So let met get this straight, in our free market economy, you want the government to force a company to sell you a product at a specific price? Seems to me that you all are bent out shape because you were getting a steal of a deal and now you want the government to help you keep your below market price. If this wasn’t the case, I imagine you would obtain insurance from another company and move along.

Heaven help us if Obama is elected We’ll probably get a lot more of this government is here to solve the country’s problems policies.

bell Says:

Tue, Mar 04, 2008 at 11:58 am

Just this morning I emailed all of the posted comments from the initial story to not only Walter Bell Insurance Commisioner, but to all of our Alabama Senate Members. If there are any Lawyers listening. We are interested in a Class Action Suit. NOW! If something is not done SOON, many people will loose their homes! Allstate needs to reinstate coverage to us at same rate.

magnolia Says:

Tue, Mar 04, 2008 at 10:56 am

Regarding the Alabama Insurance Bill: My husband and I were dropped by Allstate which forced us to buy at a higher rate. Allstate needs to be made to reinstate us, along with everyoneelse they dropped, at the same policy and policy rate we had when we were dropped. This increase is a strain on all of the people. We need a class action suit also for the money it has cost us and the pain and suffering, as many people were forced to sell their homes. Jean & Norm Reinoehl,19160 James Road, Gulf Shores, Al. 36542

Lindie Says:

Tue, Mar 04, 2008 at 10:15 am

The commissioner played right into their hands. Allstate knew that this was a illegal. It was nothing but a ploy to raise rates by reinstating homes at the current rate. If the commissioner was any good, he would demand that Allstate renew the policies at the same rate when they sent out letters of non-renewal.

Anthony, call Gene Taylor’s office or Jim Hood’s office. Be sure you reference what is happeneing in Alabama.

asda Says:

Tue, Mar 04, 2008 at 10:07 am

I would like to know why the Attorney General is not getting involed and either fining the Insurance company or bringing charges against them. They should have some consequences for these illegal activities or else they will continue to do this and worst.

antlove Says:

Tue, Mar 04, 2008 at 9:50 am

I was excited to hear that the Alabama Insurance Commissioner is doing something about the illegal practice of insurance companies. I am a Mississippi resident and we are dealing with the same issues. I called my insurance company, Allstate, a while back and informed them I was going to drop my auto policy because I found some for the same coverage but cheaper. I was informed that if I did, my wind coverage would be dropped from my homeowner’s policy. I do not think it is right and it is the same thing that Alabamians were dealing with. Any follow up would be appreciated.

Thanks,

Anthony
228-497-5970