Posted on January 26, 2024
ICHQ | Site Author
Most homeowners purchase insurance to protect themselves against the financial risks of owning a home. When an accident or catastrophe happens, homeowners rely on the insurance company to settle claims in good faith. Unfortunately, sometimes that doesn’t happen. This guide from our bad faith insurance lawyers serving New Orleans will help you understand the Louisiana bad faith statutes.
What Are the Bad Faith Statutes in Louisiana?
The Louisiana insurance laws that govern bad faith insurance practices in the state are in the RS 22:1892 and RS 22:1973 statutes. It is important to understand the provisions of these statutes if you have an issue with your insurance company.
RS 22:1973
RS 22:1973 establishes a legal duty for insurance companies to act in good faith when settling claims. Insurance companies that fail to act in good faith may face penalties.
RS 22:1892
RS 22:1892 provides details about which actions or lack of action are a breach of the insurer’s duty to act in good faith. It also describes the penalties.
To Whom Do the Louisiana Bad Faith Statutes Apply?
Most domestic insurance companies, including foreign line and surplus line insurers, must comply with the bad faith statutes. Some sections of the statutes do not apply to health and accident insurance policies.
There are also some exemptions for the Louisiana Insurance Guaranty Association and the Louisiana Citizens Property Insurance Corporation.
How Can an Insurance Company Violate the Bad Faith Statutes?
An insurance company may be guilty of bad faith if it knowingly:
- Misrepresents pertinent facts or provisions of an insurance policy that relate to coverage
- Doesn’t pay a settlement within 30 days of a written agreement
- Denies coverage or attempts to settle a claim based on an application that someone altered without the insured’s consent
- Misleads a claimant about the applicable prescriptive period
- Doesn’t pay a claim within 60 days of the date of proof of loss arbitrarily, capriciously, or without probable cause
RS 22:1892 gives insurance companies longer to respond to claims during specific emergency and disaster situations and for arson-related claims.
How Long Does the Insurance Company Have To Adjust Your Claim?
According to the Louisiana bad faith statutes, the insurance company must begin adjusting your claim within 14 days after you notify them of the loss. If your claim is for a catastrophic loss, the insurance company has 30 days to begin adjusting the claim.
If your claim is due to a presidential or gubernatorial declared emergency or disaster, the insurance company may take an additional 30 days to begin adjusting the claim.
After that, the insurance company can only get one extension, and the Senate and House Committees on Insurance must approve it. Once the insurance company has assessed the damage, it must provide you with a copy of the field adjuster’s report within 15 days of receiving your request.
How Long Does the Insurance Company Have To Pay Your Claim?
RS 22:1892 gives the insurance company 30 days from receipt of satisfactory proof of loss to pay your claim. This provision does not apply if your loss is arson-related and state or local officials are actively investigating.
The 30-day requirement resumes when the investigating authority certifies there is no or insufficient evidence of arson. Once you have your check, the insurance company may not unreasonably delay processing payment of a properly endorsed and executed settlement check for more than three business days.
What Must You Prove To Win a Bad Faith Claim?
To win a bad faith claim against your insurance company, you must prove:
- You provided the insurer with satisfactory proof of your loss and damages.
- The insurance company did not pay you within the time frame specified in the statutes.
- The insurance company’s failure to pay was capricious, arbitrary, or without probable cause.
A bad-faith insurance lawyer can help you prove your case.
What Can You Recover if You Win a Bad Faith Claim?
The Louisiana bad faith statutes impose a penalty of the greater of $1,000 or 50% of damages when an insurer fails to pay a claim in bad faith. The insurer must pay this penalty in addition to the settlement amount.
The penalty increases to the larger of $2,500 or 50% of damages for a catastrophic loss. If the insurance company made a partial payment, the insurance company owes a penalty of 50% of the difference between what it paid and what it owed, plus reasonable attorney fees or $2,500, whichever is larger.
Additionally, an insurer who unreasonably delays payment on a settlement check must pay a penalty of the greater of $200 or 15% of the face value of the check. The court may impose additional penalties, the greater of up to two times the damages sustained or $5,000, on a case-by-case basis.
What Can You Do if Your Insurance Company Violates the Louisiana Bad Faith Statutes?
Proving that your insurance company violated the Louisiana bad faith statutes capriciously or arbitrarily and without probable cause can be difficult. The Louisiana bad faith lawyers at Insurance Claim HQ can help you hold your insurance company accountable. Contact us today to schedule a consultation.
