In the aftermath of a devastating storm, when lives are upended and memories are scattered about, light and hope do arrive. They arrive in many forms, including: through first responders who clear the way and answer the call from every state in our great nation and beyond; through family and friends who make a way to care for their own; through those who have made it their life’s work and business to aid in disaster recovery efforts; and through the many volunteers who freely give of their energy and resources to aid their fellow beings in their most challenging times. But, sadly, among them also are wolves in sheep’s clothing.
We have seen this many times, including in the aftermath of Hurricanes Katrina, Rita, Ike, and most recently, Michael. We have heard the beautiful stories of selflessness, but also the stories of grief-upon-grief brought on by unscrupulous predators claiming to be contractors or to be able to provide other catastrophe related services in exchange for a quick check or an assignment of insurance benefits (AOB). We offer this caution: Be wary of self-proclaimed contractors who are really unlicensed or predatory or attempt to provide the services of public adjusters, who are heavily regulated by the State of Louisiana in order to protect its citizens.
With that caution, we also recognize there are many licensed contractors who are greatly appreciated and desperately needed after a devastating storm and often spend many months away from their loved ones to assist in the recovery efforts. They provide much-needed services and relief. It is often difficult for a policyholder immediately after a storm to pay for needed repairs out of pocket while they wait for anticipated insurance proceeds. As a means of relief, and overly simplified here for the purposes of this blog, some licensed contractors offer to enter a contract with the insured to collect the disaster repair costs from the insurance company through an assignment of the insurance proceeds. Considering that, as with any contract, a careful reading of the contract and legal advice should be sought.
While the majority of states void post-loss anti-assignment clauses in insurance policies as against public policy, Louisiana follows the minority rule that post-loss anti-assignment clauses are enforceable. After Hurricane Katrina, the Louisiana Supreme Court considered and distinguished pre-loss assignments and post-loss assignments in insurance policies and found:
[W]hile the Louisiana legislature has clearly indicated an intent to allow parties freedom to assign contractual rights, by enacting La. C.C. art. 2653, it has also clearly indicated an intent to allow parties freedom to contractually prohibit assignment of rights. We recognize the vast amount of national jurisprudence distinguishing between pre-loss and post-loss assignments and rejecting restrictions on post-loss assignments, however we find no public policy in Louisiana favoring assignability of claims over freedom of contract.1
Though the court deferred public policy determinations to the legislature, it did proclaim that for post-loss anti-assignment clauses in insurance contracts to be enforceable, they “must clearly and unambiguously express that the non-assignment clause applies to post-loss assignments.”2
Our thoughts and prayers are with those impacted by Hurricane Laura, and as in times before, we stand ready to assist.
1 In re Katrina Canal Breaches Litig., 63 So. 3d 955, 962-63 (La. 2011).