Appeals Court Order Has Allstate Payments in Texas on Hold

November 15, 2005

An appeals court order has put on hold payments from Allstate Insurance Co. to some victims of Hurricane Rita.

A district judge in Austin had ordered Allstate to pay living expenses to customers displaced by the storm, but the company obtained a hold on that order six days later.

Although an Allstate spokesman had said the company would pay the claims as ordered by the judge, Allstate has put off the payments until a new appeals hearing is set.

“From a customer standpoint, it’s in limbo,” Allstate spokesman Joe McCormick said. “Obviously we want to get this resolved as quickly as possible. We’re hoping the appeals process will give us some resolution prior to December, but really I don’t have any idea whether or not that will occur.”

The Texas Department of Insurance, which took Allstate to court, will argue for a permanent injunction against the company next month.

“TDI believes that Allstate is obligated to pay additional living expenses in this situation, and we’re going to continue to pursue it,” said Jerry Hagins, spokesman for the agency. “It’s up to the courts to decide.”

Allstate, the state’s second-largest insurer, has refused to pay living expenses for the displaced homeowners unless their homes were made uninhabitable by direct damage, a practice the company says it has always followed.

The state argues that homes are considered uninhabitable if a homeowner suffered power outages for significant periods of time, couldn’t get home safely, or was barred from coming home by authorities.

Allstate continues to process claims and asks consumers to save documentation and receipts, but won’t make payments until the court’s final ruling.

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