Big Win For Homeowners

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.