The home insurance drama continues.

In an article reported by The Advocate in Louisiana, Allstate has officially ticked off Insurance Commissioner, Jim Donelon.

The mega-insurer says that Louisiana state law allows the company to drop basic hurricane coverage—including hail and wind damange—for 30,000 policyholders in 18 coastal parishes. Donelon maintains that a state consumer protection law prevents insurance companies from changing or dropping a policy if a homeowner has been insured for at least three years and filed no more than two claims not considered "acts of God".

Allstate's legal representative, Lorrie Brouse, said that the law deals only with policy cancellations and nonrenewals.

"We're not disputing the statue. We're saying what we're planning to do doesn't apply [to it]."

In his rebuke, Commissioner Donelon said that the consumer law doesn't allow insurers to "gut" policies and that Allstate wrote policies with full knowledge of that law. He expects the issue to be settled by the Louisiana Supreme Court.

Check out the full story courtesy of the Insurance Journal here; also be sure to take a look at the thread of comments following the article. Feel free to leave your thoughts and impressions via comments. I'll keep an eye out for updates and post them here!

[POST AMENDED AND UPDATED 7.31.2006]

[8.2.2006] Check out an update of this story via the Insurance Journal, here.