In recent weeks we have been hosting seminars and community events in Lake Charles, Louisiana to educate policyholders of their potential rights and obligations under their insurance policies. Along with the concern that most insureds do not yet have a copy of their full policy—including all forms and endorsements—to guide them through the process, is that those insureds who do have copies of their policies may be misled by the standard terms and provisions of their policies.
By statute insurers admitted or approved to issue residential policies in Louisiana are required to make certain disclosures to policyholders, including that the policy contains a process for providing the insurer with a notification of a loss and that there may be time limitations for repairs to be made in order to receive full replacement cost for losses.1 Below is one insurer’s attempt at compliance in a policy issued in the year 2020:
CLAIM FILING PROCESS There may be time limitations for filing a claim and filing of a satisfactory proof of loss. There may also be time limitations for repairing and replacing damaged property that could cause you to not recover the replacement cost for the insured loss of your property, if applicable.2
It would reasonable to expect a “disclosure” to be informative. The disclosure above does not provide any significant information. And worse, a review of the policy language in the section regarding the condition to submit a proof of loss after a catastrophe is misinformative:
3. What You Must Do After A Loss3
In the event of a loss to any property that may be covered by this policy, you must:
g) within 60 days after the loss, give us a signed, sworn proof of the loss. This statement must include the following information:
1) the date, time, location and cause of loss;
2) the interest insured persons and others have in the property, including any encumbrances;
3) the actual cash value and amount of loss for each item damaged, destroyed or stolen;
4) any other insurance that may cover the loss;
5) any changes in title, use, occupancy or possession of the property that have occurred during the policy period;
6) at our request, the specifications of any damaged building structure or other structure;
7) evidence supporting any claim under the Credit Card, Bank Fund Transfer Card, Check Forgery And Counterfeit Money protection. State the cause and amount of loss.
In 2006, after Hurricanes Katrina and Rita, the Louisiana legislature addressed the issue of unreasonable proof of loss and replacement cost deadlines in the event of a catastrophe:
§ 1264. Presumption of coverage4
A. For losses that arose due to a catastrophic event for which a state of disaster or emergency was declared pursuant to law by civil officials, for those areas within the declaration, no damages to covered property shall be automatically denied by the inability of the policyholder to provide sufficient proof of loss within the time limits and requirements of the policy. The time limit for the submission of proof of loss shall be not less than one hundred eighty days. The time limit shall not commence as long as a declaration of emergency is in existence and civil authorities are denying the insured access to the property.
B. For losses that arose due to a catastrophic event for which a state of disaster or emergency was declared pursuant to law by civil officials, for those areas within the declaration, any policyholder with replacement cost provisions shall be entitled to complete repairs to the property within one year from the date of the loss or the issuance of applicable insurance proceeds, whichever is later. Adherence to this provision shall entitle the policyholder with a replacement cost provision to receive full value of the covered damage that has been repaired, without reduction due to depreciation.
C. The provisions of this Section shall be applicable to all new policies and renewal policies delivered in the state of Louisiana after April 18, 2006.
Renumbered from R.S. 22:682 by Acts 2008, No. 415, § 1, eff. Jan. 1, 2009. Added by Acts 2006, 1st Ex. Sess., No. 23, § 1.
Though we have seen a couple of policies incorporate the 180-day statutory extension for catastrophic events into the proof of loss provisions, most policies do not, and the amendatory endorsements do not include the statutory provisions, either. This has led to additional anxiety for Louisiana policyholders who may believe they must act within 60 days to provide a sworn statement of proof of loss, while their insurers have received by Governor’s Proclamation an additional 30 days, for a total of 60 days, even to initiate Hurricane Laura claims upon notification of a claim by an insured.5 Many insureds we spoke with were told to expect an adjuster in mid-October or later. We have also had public adjusters contact us regarding the impossible policy time limitation of 60 days for submission of sworn proofs of loss.
As completion of the adjustment of the claim necessarily affects the time required to repair or replace damage as a result of the catastrophe, the legislature also extended the typical 180-day repair or replace deadline to one-year, as indicated above. We have not seen this extension language in any policy reviewed, as of yet.
While most policyholders acknowledge the widespread impact of Hurricane Laura and have been very patient, the lack of information and guidance from insurers is extremely frustrating. Insurers have an affirmative duty to provide their insureds with a full copy of their policy upon request and to inform and advise them of any Louisiana Changes necessary to adequately represent their coverages.
In further efforts to assist Louisiana policyholders in their recovery, we have written to Commissioner Donelon of the Louisiana Department of Insurance to request an Advisory Letter to insurers and claims adjusters advising of the statutory extensions of the proof of loss and replacement cost deadlines applicable to Hurricane Laura losses.6 We are thankful to the many who work to bring these issues to light and are happy to address any issues or concerns to help move the recovery process forward.
1 L.R.S. § 22:1332. Delivery of homeowners’ insurance; disclosures.
2 Ref., Allstate Deluxe Plus Homeowners Policy AP3340, Effective January 1, 2010.
4 L.R.S. § 22:1264.
5 Emergency Rule 45, L.R.S. § 37:4543. Sixty Day Period to Initiate Adjustment of Property Claims.
6 Correspondence to Insurance Commissioner Donelon, October 7, 2020.