HURRICNE IDA LOUISIANA INSURANCE BAD FAITH CLAIMS
Louisiana law imposes penalties on insurers who arbitrarily or capriciously fail to pay a claim. See LA.REV.STAT. SS 22:1892, 22:1973(b)(5).
Louisiana Supreme Court has noted that both statutes incorporate the same standard and proscribe the same conduct. The cases interpreting the two provisions are used them interchangeably.
WHAT YOU NEED TO PROVE
In order to recover the statutory penalties, a claimant must:
- submit satisfactory proof of loss and
- show that the insurer failed to pay the claim within the applicable statutory period either without probable cause or in an arbitrary and capricious manner.
LAW IS STRICTLY CONSTRUED
The bad faith statutes are penal in nature and should be strictly construed. The sanctions of penalties and attorney fees are not assessed unless a plaintiff’s proof is clear that the insurer was, in fact, arbitrary, capricious, or without probable cause in refusing to pay.
In bad faith actions, the insured is seeking extra-contractual damages, as well as punitive damages. Therefore, the insured’s burden is great. The court should impose penalties only when the facts negate probable cause for nonpayment.
The statutes penalize an insurer whose willful refusal of a claim is not based on a good-faith defense. While an insurer cannot “stonewall” the insured because she cannot show her exact amount of damage, the insurer is not required by the bad faith statutes to pay all of the insured’s claim within the statutory period to avoid penalties.