Insurance companies heed Biden call to help victims cover more costs

WASHINGTON – Two of the most prominent insurance companies in the U.S. have responded to President Joe Biden’s call that they cover additional living expenses for policyholders in Louisiana who evacuated their homes ahead of Hurricane Ida, but who were not under specific mandatory evacuation orders.

Allstate and USAA have both agreed to cover additional living expenses for policyholders in the state who evacuated their homes, a White House official told CNBC.

More companies were expected to follow suit, said the official, who requested anonymity in order to discuss efforts still underway.

CNBC reached out to Allstate and USAA about the policy shift. Representatives for the companies did not reply to a request for comment.

Typically, insurance policies only cover additional living expenses for policyholders who have been ordered to evacuate their homes ahead of major storms, not for those who choose to leave their homes voluntarily.

Biden first raised the issue on Thursday in a speech at the White House about the storm.

“Right now we’re hearing reports that some insurance companies may deny coverage for additional living expenses unless the homeowner was under a mandatory evacuation,” said Biden.

Homeowners in the storm’s path, he said, “left their homes because they felt it was flee or risk death. There’s nothing voluntary about that.”

Biden then appealed to home insurers, “Do the right thing. Pay your policyholders what you owe them and cover the cost of temporary housing in the midst of disaster. Help those in need.”

The episode is a rare example of a U.S. president effectively shaming huge corporations into changing a bedrock piece of their operations — namely how insurance companies gauge eligibility for coverage.

The origins of the policy shift can be traced back to Cedric Richmond, a former Louisiana congressman who is a top official in the Biden White House.

In the days following the storm, Richmond heard from homeowners that their insurance policies were not going cover the cost of temporary housing unless their homes had been under mandatory evacuation orders.

But even as Ida made landfall last Sunday as a Category 4 hurricane, evacuation orders varied widely from parish to parish.

Some parishes on the coast, like Grand Isle, issued mandatory evacuations for all residents. But others issued evacuation orders that were only mandatory for people in low lying areas, and voluntary in areas better insulated from flood waters.

In New Orleans, Mayor LaToya Cantrell issued a mandatory evacuation order for people living outside the city’s levee system, but a voluntary one for people protected by the levees.

“We’re not calling for a mandatory evacuation, because the time simply is not on…