Hurricane Laura Claims: Your Rights and the Insurer’s Obligations
It has been nearly four weeks since Hurricane Laura made landfall in Cameron Parish, Louisiana. Since then, most of our roadways have been cleared of trees and debris and, in some areas of Southwest Louisiana, power lines have been removed and line workers are restoring power to the hundreds of thousands of affected Louisiana residents. Most people have found that their communities, homes, schools, and businesses have been decimated. Of those that have returned “home,” the vast majority have found hope in knowing that they had insurance to help with the rebuilding process.
Many will find solace in an immediate response from their insurer, which will be followed by a swift tender of proper payment. However, some will have trouble communicating with their insurance companies and others will feel that the tendered payment will barely cover the cleanup of their property – much less repairs or replacement. These homeowners and business owners are then left asking, “What am I entitled to and is the insurance company allowed to do this?” In this blog post we will answer those questions and go in-depth describing Hurricane Laura Claims: Your Rights and the Insurer’s Obligations.
Louisiana’s Policyholder Bill of Rights (La. R.S. 22:41)
Louisiana’s Policyholder Bill of Rights, La. R.S. 22:41, was enacted after Hurricane Katrina to protect homeowners and business owners from undesirable practices by insurance companies, and states in relevant part:
(13) Policyholders shall have the right to receive payment of the amount of any property damage claim, or a portion of the claim, due or a written offer to settle any property damage claim within thirty days after receipt of satisfactory proof of loss in accordance with the provisions of R.S. 22:1892 and 1973. If a claim is denied, policyholders shall have the right to receive a written explanation as to the reason for denial, in whole or in part, of any claim made under their policy of insurance.
(14) Relative to first party property damage claims, policyholders shall have the right to request and receive from the insurance company any estimates, bids, plans, measurements, drawings, engineer reports, contractor reports, statements or documents that are not legally privileged that the insurance company prepared, had prepared, or used during its adjustment of the policyholder’s claim. A company may keep confidential adjuster notes, logs, and any documents prepared in conjunction with a fraud investigation.
(15) Policyholders shall have the right to file a complaint against any insurance company, producer, or adjuster with the Department of Insurance, and have that complaint investigated by the department.
(16) Policyholders shall have the right to a readable policy, to receive a complete property insurance policy, and to request a duplicate or replacement policy as needed.
(17) Policyholders shall have the right to the remedies provided for in R.S. 22:1892 if an insurer violates that Section in the handling of the claim.
While the Policyholder Bill of Rights does not provide insureds with remedies for the failures of the insurance companies, it cites the two predominant statutes used in forcing insurance companies to satisfy their legal obligations: La. R.S. 22:1892 and La. R.S. 22:1973.
Good Faith and Fair Dealing (La. R.S. 22:1973)
La. R.S. 22:1973 bluntly states that “[t]he insurer has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both.” An insurer who fails to act fairly and promptly shall be liable for damages resulting from their failure. Any of the following acts, if knowingly committed by an insurance company, will be a breach of its duties under La. R.S. 22:1973:
(1) Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.
(2) Failing to pay a settlement within thirty days after an agreement is reduced to writing.
(3) Denying coverage or attempting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of, the insured.
(4) Misleading a claimant as to the applicable prescriptive period.
(5) Failing to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.
(6) Failing to pay claims pursuant to R.S. 22:1893 when such failure is arbitrary, capricious, or without probable cause.
If the insurance company breaches one of those imposed duties, the insured may be awarded penalties in an amount not to exceed two times the damages sustained or five thousand dollars, whichever is greater.
Statutory Time Delays (La. R.S. 22:1892)
In addition to an insurance company’s overarching duties under La. R.S. 22:1973, an insurer is also obligated to comply with the time delays ordered by Louisiana’s State Legislature in La. R.S. 22:1892. Pursuant to La. R.S. 22:1892, a first party property insurer is bound by the following time delays in adjusting a property damage claim (emphasis added):
(1) All insurers … shall pay the amount of any claim due any insured within thirty days after receipt of satisfactory proofs of loss from the insured or any party in interest. The insurer shall notify the insurance producer of record of all such payments for property damage claims made in accordance with this Paragraph.
(3) Except in the case of catastrophic loss, the insurer shall initiate loss adjustment of a property damage claim … within fourteen days after notification of loss by the claimant. In the case of catastrophic loss, the insurer shall initiate loss adjustment of a property damage claim within thirty days after notification of loss by the claimant except that the commissioner may promulgate a rule for extending the time period for initiating a loss adjustment for damages arising from a presidentially declared emergency or disaster or a gubernatorially declared emergency or disaster up to an additional thirty days. … Failure to comply with the provisions of this Paragraph shall subject the insurer to the penalties provided in R.S. 22:1973.
(4) All insurers shall make a written offer to settle any property damage claim, including a third-party claim, within thirty days after receipt of satisfactory proofs of loss of that claim.
If the insurance company fails to comply with these time delays and such failure is arbitrary capricious, or without probable cause, La. R.S. 22:1892(B)(1) demands that the insurance company be assessed a penalty of 50% of the unpaid amount due to the property owner, or $1,000 (whichever is greater), as well as the property owner’s reasonable attorney fees and costs.
Burden of Proof for Property Damage Claims (La. R.S. 22:1893)
Louisiana’s State Legislature, in La. R.S. 22:1893, also provided clear boundaries for adjustment of property damage involving immovable property (i.e. a residence or commercial property):
(1) No insurer shall use the floodwater mark on a covered structure without considering other evidence, when determining whether a loss is covered or not covered under a homeowners’ insurance policy.
(2) No insurer shall use the fact that a home is removed or displaced from its foundation without considering other evidence, when determining whether a loss is covered or not covered under a homeowners’ insurance policy.
- If damage to immovable property is covered, in whole or in part, under the terms of the policy of insurance, the burden is on the insurer to establish an exclusion under the terms of the policy.
2. Any clause, condition, term, or other provision contained in any policy of insurance which alters or attempts to alter the burden on an insurer as provided in Subsection B of this Section shall be null and void and of no effect.
Much like the above-referenced statutes, the insurance company’s violation of the provisions of La. R.S. 22:1893 shall be deemed a violation of the insurance company’s duties of fair dealing in La. R.S. 22:1973.
Homeowners and business owners should take some solace in the knowledge that Louisiana has made an attempt to protect insureds rights when going toe-to-toe with large insurance companies. However, documentation and guidance is often pivotal in making sure that the insurance company does not, and has not, overstepped its statutory boundaries or violated its insured’s rights. In order to enforce your rights, it is very important for insureds to know what to say, when to say it, and what to remain silent on. Please refer to our prior articles which address “7 Tips for Insurance Claims following Hurricane Laura” and “4 Steps of Hurricane Laura Claims“.
Mansfield Melancon Attorneys can Help: Call Today!
If you have any questions about your insurance claim, contact the Louisiana insurance attorneys at Mansfield, Melancon, Cranmer & Dick LLC. We have proven experience with many types of Insurance claims and have helped many Louisiana citizens receive the compensation to which they were entitled. If you found our “Hurricane Laura Claims: Your Rights and the Insurer’s Obligations” blog post helpful then contact us by phone by calling one of our offices: New Orleans at (504) 500-1108, Baton Rouge at (225) 612-0800, or Lafayette at (337) 409-0003. You can also request a consultation by using our “Contact Us” page.