Louisiana Revised Statutes 22:1973 – A. An insurer, including but not limited to a foreign line and surplus line insurer, owes to his insured a duty of good faith and fair dealing. The insurer has an affirmative duty to
Terms Used In Louisiana Revised Statutes 22:1973
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Insured: means the party named on a policy or certificate as the individual with legal rights to the benefits provided by such policy. See Louisiana Revised Statutes 22:1962
- Insurer: means any person, reciprocal exchange, interinsurer, Lloyds insurer, fraternal benefit society, industrial and burial insurer, or any insurer that markets under the Home Service Marketing distribution method and issues a majority of its policies on a weekly or monthly basis, or any other legal entity engaged in the business of insurance, including insurance producers. See Louisiana Revised Statutes 22:1962
- Person: means any natural or artificial entity, including but not limited to individuals, partnerships, associations, trusts, or corporations. See Louisiana Revised Statutes 22:1962
- Probable cause: A reasonable ground for belief that the offender violated a specific law.
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
A. An insurer, including but not limited to a foreign line and surplus line insurer, owes to his insured a duty of good faith and fair dealing. The insurer has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both. Any insurer who breaches these duties shall be liable for any damages sustained as a result of the breach.
B. Any one of the following acts, if knowingly committed or performed by an insurer, constitutes a breach of the insurer’s duties imposed in Subsection A of this Section:
(1) Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.
(2) Failing to pay a settlement within thirty days after an agreement is reduced to writing.
(3) Denying coverage or attempting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of, the insured.
(4) Misleading a claimant as to the applicable prescriptive period.
(5) Failing to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.
(6) Failing to pay claims pursuant to La. Rev. Stat. 22:1893 when such failure is arbitrary, capricious, or without probable cause.
C. In addition to any general or special damages to which a claimant is entitled for breach of the imposed duty, the claimant may be awarded penalties assessed against the insurer in an amount not to exceed two times the damages sustained or five thousand dollars, whichever is greater. Such penalties, if awarded, shall not be used by the insurer in computing either past or prospective loss experience for the purpose of setting rates or making rate filings.
D. The provisions of this Section shall not be applicable to claims made under health and accident insurance policies.
E. Repealed by Acts 1997, No. 949, §2.
F. The Louisiana Insurance Guaranty Association, as provided in La. Rev. Stat. 22:2051 et seq., shall not be liable for any special damages awarded under the provisions of this Section. Neither the Louisiana Insurance Guaranty Association, as provided in La. Rev. Stat. 22:2051 et seq., nor the Louisiana Citizens Property Insurance Corporation, as provided in La. Rev. Stat. 22:2291 et seq., shall be liable for any penalties awarded pursuant to the provisions of Subsection C of this Section.
Acts 1990, No. 308, §1, eff. July 6, 1990; Acts 1997, No. 949, §2; Acts 2006, 1st Ex. Sess., No. 12, §1, eff. Feb. 23, 2006; Redesignated from La. Rev. Stat. 22:1220 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2012, No. 271, §1; Acts 2023, No. 290, §1.