After the events of Hurricane Katrina in 2005, in 2006, the Louisiana Legislature actually recognized that insurance companies in the State were not treating Louisiana policy holders fairly. The legislatures at that time changed the existing Louisiana Insurance Bad Faith, Bad-Faith laws to heighten the penalties against insurance companies for arbitrary, unreasonable, or bad faith conduct against their insured.
In short, the State of Louisiana through its representatives heard the voices of many people affected by fires, storms, flooding, property damage claims, sewer leaks, smoke damages, etc. and how their insurance companies were unfairly treating them during the claim process. Under the statutes promulgated in 2006, additional penalties and attorney’s fees can be obtained against an insurance if the company fails to pay a claim within thirty (30) days after being apprised of a claim and knowing that payment is owed. This is also referred to as the company receiving a satisfactory proof of loss that it owes money. Both of these statutes are codified in La.R.S. 22:1892 and La.R.S. 22:1973.
I have obtained bad faith Judgments in Court in the past against insurance companies, notably Louisiana Citizen’s Property Insurance Company twice in the past year. Both of these cases were twelve member jury trials, and the jury panel on each case held that Louisiana Citizen’s was in bad faith based on their conduct in treating their insureds after Hurricane Isaac. I commonly get questions as to what “Bad faith” actually is. There is no glass slipper in proving bad faith against an insurance company, other than an insurance company’s failure to make any type of payment within thirty (30) to sixty (60) days after receiving a satisfactory proof of loss. Here is a short list of what bad faith conduct could by a homeowners insurance company during a homeowner fire damage, water, or windstorm claim:
1) Failing to make any undisputed tenders of payment within thirty to sixty days after being notified about the claim;
2) Failing to maintain the policyholders normal standard of living by failing to pay adequate additional living expenses, also referred to as loss of use coverage;
3) Failing to allow the appraisal process to take place when there is a dispute about the measure of damages to a home. The appraisal process clause is contained in virtually all policies, even automotive policies, I help insureds get this process started to hopefully ascertain more money quickly to fully repair a home;
4) Failing to pay sufficient contents payments under this coverage or assigning a high degree of depreciation when issuing out a payment. I have seen instances where insurance carriers assign a depreciation threshold over sixty (60%) percent before issuing out a contents damage check. That is bad faith absent sufficient knowledge of the condition of the contents;
5) Failing to sufficiently document a claims file. I will typically subpoena the insurance carrier’s entire claims file and underwriting file, along with their claims manual, during any claim I am seeking for my client. I oftentimes see a claims file rife with wrong names, wrong addresses, and knowledge illustrating that the claims adjuster knew that a payment was owed but forgot to send it out;
6) Failing to sufficiently adjust a peril after an event. There is a case decision from the Louisiana Fourth Circuit inAghighi v. Louisiana Citizens Prop. Ins. Corp., 2012-1096 (La. App. 4 Cir. 6/19/13), 119 So. 3d 930, 934 writ denied sub nom. Aghighi v. Louisiana Citizens Ins. Corp., 2013-1737 (La. 10/30/13), 124 So. 3d 1102 which states that an insurance carrier cannot show up to a home after a peril and basically pretend to adequately adjust a claim and assign a low value, and then later raise the total damage assessment. That is a huge decision for policyholders in Louisiana.
There are countless more actions, conduct, and more by your homeowners insurance company which could render them in bad faith in a Court of Law. The carrier will usually send you gobs and gobs of letters saying that they are being reasonable and have rights under their policy. Many times, the endless steps they make you go through to get the money you paid for is bad faith conduct. That is why is it imperative to have legal representation with you from the outset on ANY claim, like a fire event, storm event, flood, theft, accident, sewer, water, pipe leak, cracked slab, home elevation defect, you name it. Once I get involved, I will cover every legal base in existence and ultimately file a lawsuit if needed to get your claim paid.