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Disaster Relief: Is a post-loss mission clause banned in Louisiana? | Legal insurance blog about property insurance



In the aftermath of a devastating storm, when life is exalted and memories spread, light and hope emerge. They arrive in many forms, including: through first responders clearing the way and answering the call from every state in our great nation and beyond; through family and friends who make a way to take care of their own; through those who have made it their life's work and activity to assist in disaster recovery efforts; and through the many volunteers who freely provide energy and resources to help their fellow human beings in their most challenging times. But unfortunately among them there are also wolves in sheep's clothing.

We have seen this many times, including after Hurricanes Katrina, Rita, Ike and most recently Michael. We have heard the beautiful stories of selflessness, but also the stories of grief over grief aroused by unscrupulous predators who claim to be entrepreneurs or to be able to provide other disaster-related services in exchange for a quick check or an award of insurance benefits. (AOB). We urge this caution: Beware of self-proclaimed contractors who are truly licensed or predators or trying to provide services from public regulators, who are heavily regulated by the state of Louisiana to protect their citizens.

With that caution, we also realize that there are many licensed contractors who are much appreciated and desperately needed after a devastating storm and often spend many months away from their loved ones to assist in the recovery work. They provide much needed services and relief. It is often difficult for a policyholder immediately after a storm to pay for necessary repairs out of pocket while waiting for expected insurance income. As a means of relief, and too simplistic here for the purpose of this blog, some licensed contractors offer to enter into a contract with the insured to collect the disaster repair costs from the insurance company through an allocation of the insurance income. Given that, as with all agreements, a careful reading of the agreement and legal advice should be sought.

While the majority of states annul clauses in insurance after loss of public order, Louisiana follows the minority rule. that the clauses on loss-making assignments are enforceable. After Hurricane Katrina, the Louisiana Supreme Court considered and distinguished precedent for loss and precedent after loss of insurance and found:

[W] while Louisiana lawmakers have clearly stated an intention to give the parties the freedom to grant contract law by adopting La CC Art. 2653, it also clearly stated an intention to give the parties the freedom to prohibit the allocation of rights under a contract. We recognize the large amount of national case law that distinguishes between pre-loss and post-loss assignments and reject limitations for post-loss assignments, but we find no public order in Louisiana that favors claims over claims. 1
[19659006] Although the Court provided for the legislature's decision on public policy, it declared that in order for loss – making insurance clauses to be enforceable, they must "clearly and unequivocally state that the non-assignment clause applies to loss – making assignments." 2

Our thoughts and prayers are with those affected by Hurricane Laura, and as before we have been ready to help.
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1 In re Katrina Canal Breaches Litig . 63 So. 3d 955, 962-63 (La. 2011).
2 Id.


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