I spoke to a lawyer from Jefferson Parish in Louisiana about Hurricane Laura. He told me that the word that best suits insurance companies' payments for that storm is "sour". If this is the case, insurance companies that incorrectly delay payment of damages in Louisiana for more than thirty days may be subject to an automatic penalty.
A new judgment in Lamar Advertising v Zurich 1 stated the following:
Zurich's failure to provide an explanation as to why it did not pay within the thirty day period is the definition of the "unjustified but reasonable or probable cause or excuse "conduct that Louisiana's Supreme Court considered was a in itself violation of Louisiana Revised Statutes 22: 1892…. Kief Hardware, Inc. v. Hartford Fire Ins. Co ., No. CV 16-15762, 2018 WL 2289902, at (E.D. La. 18 May 2018). (& # 39; In the absence of reasonable and legitimate questions about the extent of the insurer's liability, an insurer that does not pay the undisputed amount has acted in a manner that is by definition arbitrary, capricious or without probable cause and will be punished under the statute. & # 39; 39;). Therefore, Zurich will be subject to penalties under the Statute for its failure to pay the undisputed amount within the 30-day period.
Disputed amounts due must be paid within thirty days. The Court of Lamar cited other Louisiana precedents in this matter:
Although an insurer does not have to pay for amounts that are reasonably in dispute, this court has expressly found that there can be no good reason – or no probable cause – to withhold an undeniable amount. If there is a significant, reasonable and justified dispute about the extent or size of the damage, the insurer can avoid penalties only by unconditionally leaving the undisputed part of the claim … If the exact extent of the damage is unclear, the insurer must leave the reasonable amount due . We have defined the amount to be paid as a figure above which reasonable minds could not differ.
In summary, an insurer does not have to pay a disputed amount in a claim for which there are significant, reasonable and legitimate issues. as regards the liability of the insurer or the loss of the insured. However, an insurer must pay all undisputed amounts that reasonable minds could not differentiate. Any insurer that fails to pay the undisputed amount has acted in a way that is by definition arbitrary, capricious or without probable cause and will therefore be subject to penalties for the difference between the amount paid or the tender amount and the amount considered due.
Insurance companies that adjust the requirements for hurricane Ida can not delay investigation, assessment of damage and prompt payment without subjecting themselves to statutory penalties. Insurers must pay undisputed amounts immediately or suffer the consequences.
Thought For The Day
A much bigger factor than eradicating poverty is the deterrent effect of quick and certain consequences: quick arrest, quick trial, some punishment and – at some point – the finality of the judgment.
—Warren E. Burger
1 Lamar Advertising v. Zurich American Ins. Co. 473 F.Supp.3d 632 (M.D. La. 2020).