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Calculating Payouts for Bad Faith Insurance Claims

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The law states that if an insurance company fails to pay your claim in bad faith, it will owe you the amount of your claim, plus a multiple of your claim of at least a minimum amount (depending on the state), and possibly punitive damages.

Hurricane Rita Case for Drilling Platform

In this case, the insurance company refused to pay for the damage, saying they had insured the well, but not any of the damaged parts of the well.  A Texas jury awarded over $40 million in this case, with nearly one-fourth of it being charged to the company’s bad faith.

Auto Insurance Bad Faith Case

In 2003 an insurance company declined to settle a car accident case and advised its insured that they had no liability in the case. The insurance company offered to settle for the relatively small policy limit of $50,000, but the victim declined the offer. The insurance company represented the insured at trial, where damages of $200,000 were awarded against them.  The insurance company would not pay the excess.  When the insured sued the insurance company and was found to have acted in bad faith, the insured was awarded $1 million in compensatory damages and $145 million in punitive damages.

Punitive Damages for Bad Faith

Louisiana generally prohibits punitive damages, absent a statutory provision permitting them. There are two Louisiana statutes relating to bad faith insurance claims, and they both allow punitive damages. The state does not cap punitive damages amounts, thus allowing for what can be significant punitive awards in cases like the ones cited above.

Louisiana Revised Statutes § 22:1892

This statute provides a provides a penalty (of up to 50%) plus reasonable attorney fees and costs and a minimum of $1000. It does not, by its terms, provide for consequential damages. Those are damages that flow from the failure to pay.

Louisiana Revised Statutes § 22:1973

This statute provides for mandatory damages and discretionary damages. Attorney fees are not allowed. Section 1973 has compulsory liability of  “any damages sustained as a result of the breach,” thus mandating the payment of consequential damages. A penalty of the greater of two times the damages sustained or five thousand dollars may also be imposed.

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Contact a Bad Faith Insurance Claim Attorney Today

If you think your Louisiana insurance company may be handling your claim in bad faith, you should contact experienced bad faith claim attorneys as soon as possible. With a free initial consultation, you can get assistance in dealing with your insurance company and recovering the damages you are entitled to.

FAQs

1. Does Louisiana permit punitive damages?

Yes, if there is a statute permitting them. Two bad faith insurance claim statutes in Louisiana allow for punitive damages.

2. Is there a cap on punitive damages?

No. There is no limit on punitive damages in Louisiana.

3. How can I tell if I have a good claim?

A bad faith insurance claim attorney can evaluate your case and let you know whether you may be able to pursue legal action

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