Understanding Changes to Louisiana Property Insurance

Navigating the complexities of Louisiana’s insurance laws can be overwhelming, especially with recent legislative changes impacting homeowners across the state. Whether you’re dealing with the aftermath of property damage or preparing for next season’s storms, it’s crucial to understand how these legal updates affect your coverage. 

Changing insurance law updates can directly impact how much you pay out of pocket for damages and the type of coverage you’re entitled to. In this article, we’ll break down some of these changes to help you better understand how Louisiana insurance law affects your insurance policies so you can best protect your property.

Specifically, we’ll discuss:

• What the repeal of the “Three-Year Rule” means for residents
• Changes to how bad faith claims and insurance disputes are handled in Louisiana
• Key provisions under the state’s single deductible statute

If you have questions or need immediate support for your homeowner’s insurance claim, contact our team of experienced insurance law attorneys at Kandell, Kandell & Petrie today. One of our New Orleans claims advisors is standing by to help you get started. 

What Louisiana Residents Need to Know About the Repeal of the “Three-Year Rule”

In the wake of Hurricane Katrina, Louisiana lawmakers instituted what became known as the “three-year rule”in which insurers were barred from dropping a policy or raising its deductible after it had been renewed for three years. This law, unique to Louisiana, has recently been repealed. 

Formerly House Bill 611, Louisiana Act No. 9 gradually relaxes the three-year-rule by repealing it for policies written after August 1, 2024, and allowing carriers to cancel or non-renew up to 5% of their legacy policies that are subject to the three-year rule. Most other provisions of the bill are scheduled to go into effect on January 1, 2025.

What the Repeal Means for Consumers

The new law means insurance companies will be able to cancel up to 5% of their policies annually as long as they aren’t in a single parish, but they could drop even more if they receive approval from the state. Additionally, insurers may also increase deductibles for homeowners’ policies issued after August 1, 2024. 

These changes, which lawmakers claim will bring more competition back to the state, mean homeowners need to pay even closer attention to their policy coverage and be prepared to shop around for new insurance. Their rates may increase or their coverage could be dropped altogether. 

Good Faith, Bad Faith and Revised Louisiana Insurance Laws

In addition to repealing the state’s “three-year rule,” newly signed Act No. 3 (formerly Senate Bill 323) signed by Louisiana Governor Jeff Landry in early 2024 introduces significant changes to how bad faith claims and insurance disputes are handled in the state. The changes repeal certain provisions and add reciprocal duties of good faith while also providing guidelines and timelines for resolving claims, especially in catastrophic loss scenarios. 

Here is a summary of some of the key changes introduced in Act No. 3.

• Repeal of La. R.S. 22:1973 – One of the two statutes in Louisiana dealing with bad faith in claims handling has been repealed. Recovery of actual proven economic damages due to a breach of good faith duty remains, but the 200% penalty provision has been removed.

• Reciprocal Duty of Good Faith – The duty of good faith for insurers remains in effect, and a new duty of good faith for insureds and claimants has been added. Examples of a breach of good faith duty include:
  • Failing to comply with policy duties
  • Misrepresenting facts or policy provisions
  • Submitting baseless or unsupported damage claims

• Catastrophic Loss Payment Periods – New time periods have been instituted for catastrophic losses. For residential losses, payment is due within 60 days of receiving satisfactory proof of loss. For commercial losses, payment is due within 90 days of receiving satisfactory proof of loss (and is extendable by 30 days for policies covering multiple locations).

• Penalties and Damages – The law maintains a 50% penalty plus proven economic damages. It also establishes a two-year prescription period for bad faith claims.

• Notice Provision – Insurers must receive a 60-day written notice (Cure Period Notice) before a bad faith claim can be filed.

• Attorney Fees and Penalties – If the insurer pays the full amount within 60 days after receiving the cure period notice, attorney fees are capped at 20% of the amount due and no additional bad faith penalties will be applied.

• Partial Payments – If a partial payment is made within 60 days of receiving the cure period notice, the penalty on the amount paid may be halved.

Changes to the state’s insurance laws can be confusing for homeowners. To ensure your rights are protected and that you receive fair treatment when filing an insurance claim for your property damage, don’t hesitate to consult an experienced insurance law attorney for guidance. 

What to Know About Louisiana’s Single Deductible Statute

Lastly, another insurance law to be aware of is the state’s single deductible statute. Those of us living here know it’s not uncommon to be hit with multiple damaging storms in a single season. If you have to pay your named-storm or hurricane deductible for each insurance claim you make in a single season, you could quickly go broke. To that end, states like Louisiana have enacted laws to offer some financial protection in these situations. 

Key Provisions Under the Single Deductible Statute

La. R.S. § 22:1337

(informally known as the single deductible statute) states that for homeowners’ insurance policies issued or renewed after January 1, 2010, any separate deductible that applies for named storms or hurricanes must only be paid on an annual basis. 

That means if you incur damage from multiple named storms or hurricanes within a single calendar year, the separate deductible only needs to be met once for all such events in that year.

For most insurance policies with separate deductibles, a hurricane deductible kicks in when a storm is declared a hurricane by the National Hurricane Center (NHC). A named-storm deductible applies when a storm is designated as a named storm by the NHC.

Good Documentation is Imperative

If you experience losses from multiple named storms or hurricanes in a given year, the deductible for subsequent storms will be either the remaining amount of the separate deductible or the standard all-perils deductible, whichever is greater. 

Be aware that your insurer will likely require you to keep records of losses to apply them to future claims within the same year. Maintaining good documentation of your damage and any correspondence with your insurance company is also a best practice in the event you need to pursue litigation against your insurer due to bad faith practices. 

Contact Our Law Firm at Kandell, Kandell & Petrie with Questions About Louisiana Insurance Law

Changes to the state’s insurance laws can be confusing for homeowners. To ensure your rights are protected and that you receive fair treatment when filing an insurance claim for your property damage, consult an experienced insurance law attorney for guidance. That’s why we’re here. If you have questions or need help filing an insurance claim with your provider, contact our New Orleans team at KK&P Law Firm right away to discuss your options.