Earlier this year, Louisiana Governor Jeff Landry signed a series of insurance bills into law. In addition to repealing the state’s “three-year rule, newly signed Act No. 3 (formerly Senate Bill 323) introduces significant changes to how bad faith claims and insurance disputes are handled in Louisiana. The changes repeal certain provisions and add reciprocal duties of good faith while also providing guidelines and timelines for resolving claims, especially in catastrophic loss scenarios.
Here is a summary of some of the key changes introduced in Act No. 3.
- Repeal of La. R.S. 22:1973 – One of the two statutes in Louisiana dealing with bad faith in claims handling has been repealed. Recovery of actual proven economic damages due to a breach of good faith duty remains, but the 200% penalty provision has been removed.
- Reciprocal Duty of Good Faith – The duty of good faith for insurers remains in effect, and a new duty of good faith for insureds and claimants has been added. Examples of a breach of good faith duty include failing to comply with policy duties, misrepresenting facts or policy provisions, or submitting baseless or unsupported damage claims
- Catastrophic Loss Payment Periods – New time periods have been instituted for catastrophic losses. For residential losses, payment is due within 60 days of receiving satisfactory proof of loss. For commercial losses, payment is due within 90 days of receiving satisfactory proof of loss (and is extendable by 30 days for policies covering multiple locations).
- Penalties and Damages – The law maintains a 50% penalty plus proven economic damages. It also establishes a two-year prescription period for bad faith claims.
- Notice Provision – Insurers must receive a 60-day written notice (Cure Period Notice) before a bad faith claim can be filed.
- Attorney Fees and Penalties – If the insurer pays the full amount within 60 days after receiving the cure period notice, attorney fees are capped at 20% of the amount due and no additional bad faith penalties will be applied.
- Partial Payments – If a partial payment is made within 60 days of receiving the cure period notice, the penalty on the amount paid may be halved.
Contact Our Law Firm at Kandell, Kandell & Petrie with Questions About Louisiana Insurance Law
Changes to the state’s insurance laws can be confusing for homeowners. To ensure your rights are protected and that you receive fair treatment when filing an insurance claim for your property damage, consult an experienced insurance law attorney for guidance. That’s why we’re here. If you have questions or need help filing an insurance claim with your provider, contact our New Orleans team at KK&P Law Firm right away to discuss your options.
