How do property insurance adjusters typically handle this scenario?
“A tornado severely damages a structure, and three days later a second tornado damages the structure further. No one fully measured the first damage before the second occurred.”
Most property insurance adjusters would add up the damages knowing that two policies may apply to pay for all damages and then take two deductibles. Easy as pie. Right?
Not if you’re in Louisiana. A case that was decided last week1 followed two other Louisiana cases and announced this rule:
Regarding coverage A, the court disagrees. “Louisiana law does not permit double recovery of the same portion of damages,”; which is in the nature of a criminal or exemplary judgment. Albert v. Farm Bureau Ins. Co., 940 So.2d 620, 622 (La. 2006). The policy covers only one home and the limits under coverage A represent the replacement cost of that home as agreed to by the plaintiffs when they purchased the policy. The court allows that recovery under separate policy limits would be warranted in the event that the plaintiff had begun repairs after one event and then suffered further damage in the other. Here, however, the plaintiff has admitted that they did not make any repairs to the home. Accordingly, holding UPC liable for two insurance limits covering the same residence would constitute exemplary damages. Plaintiffs already have such a remedy available under Louisiana Revised Statutes §§ 22:1892 and 22:1973.
That last sentence should be a warning to insurance adjusters handling claims in Louisiana that “easy peasy” would have been a much faster and easier method of resolving the dispute. It is often difficult to know the exact amount of damages caused by each loss, and taking two deductibles while allowing two policy limits with two deductibles is a practical way to solve the dilemma.
The last sentence of the ruling is a reference to Louisiana’s bad faith law that allows for punitive damages where the full damages are not paid within 30 days of proof of loss. Louisiana property insurance companies are often surprised that when they inspect a loss it is “proof of loss” and the thirty day period is ticking away.
I want to give a shoutout to Insurance Law360, who brought this case to my attention. This publication does an excellent job of finding current and relevant first party insurance cases that provide valuable lessons on a regular basis.
I also want to warn readers committed to Louisiana about it The end is near for Louisiana’s Hurricane Ida victims. The statute of limitations is fast approaching and unresolved matters should be referred to competent legal counsel immediately. Merlin Law Group has full-time attorneys based in Louisiana ready to help.
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1 First Assembly of God Church v. Church Mutual Ins. Co., No. 2:21-CV-378 (WD La. June 23, 2023).