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Insurance Disputes & Bad Faith Claims

Though it is an unfortunate reality, during Hurricane season in the South it is important to understand the general principles and laws pertaining to insurance claims. In 2006, the Louisiana legislature amended the bad faith insurance laws to include firmer penalties and sanctions against insurance carriers who mistreat their policyholders. Under Louisiana’s bad faith statutes, an insurance carrier who fails to timely or adequately adjust their policyholders’ claims may be subject to additional penalties/fines. Although Louisiana’s bad faith statutes had been in effect for many years prior, they were amended in 2006 following Hurricanes Katrina and Rita to mirror the Louisiana legislature’s intolerance policy surrounding insurance companies’ mishandling of claims.

Under Louisiana’s bad faith statutes, policyholders may recover statutory damages and penalties if the insurance carrier fails to either timely or adequately adjust their claims. In most cases, the insurance carrier may be subject to bad faith damages when it fails to tender an undisputed amount due to the insured within 30 days of satisfactory proof of loss. Bad faith damages and attorney’s fees may also be awarded in cases where the insurance company misrepresents pertinent policy information to its insured or fails to disclose such information.

Finally, a finding of bad faith can only be made by a judge or jury and, as such, bad faith damages cannot be awarded to policyholders unless their claims are litigated. For questions regarding Louisiana bad faith laws or other insurance issues, contact Matthew Sherman.