Louisiana Insurance Commissioner Issues Bulletin on Statutory Extensions for Proof Of Loss And Replacement Cost Coverage Deadlines

Last October we pointed out the alarming number of Louisiana insurers adding to the grief of Hurricane Laura insureds by requesting Proofs of Loss within 60 days and repairs to be completed within 180 days in order to receive replacement cost benefits under their policies. We also sent correspondence to Louisiana’s Insurance Commissioner, James J. Donelon, requesting an Advisory Letter be sent to Louisiana insurers reminding them of Louisiana’s statutory extensions for Proofs of Loss and Replacement Cost Coverage deadlines. On February 11, 2021 Louisiana’s Insurance Commissioner issued Bulletin 2021-02:¹

[T]o provide notification and guidance to all authorized property and casualty insurers and all surplus lines insurers (hereinafter jointly referred to as ‘insurers’) of the statutory requirements placed upon them relative to the submission of proof of loss documentation by their policyholders for claims caused by any of the multiple hurricanes that struck Louisiana in 2020. The ancillary purpose of Bulletin 2021-02 is to urge and request that all insurers recognize the monumental impact that these multiple hurricanes have had upon their insureds and to act responsibly in granting extensions of time to their policyholders who, despite their best efforts, are struggling to make the necessary repairs to their property and justifiably need additional time to complete repairs.

In the Bulletin, Commissioner Donelon explains the effect of Proof of Loss extension in La. R.S. 22:1264(A):

One hundred eighty days is the minimum time period which insurers must allow for the filing of the proof of loss for damages sustained as a result of a qualifying catastrophe. In determining the appropriate time period to allow for submission of proof of loss for specific claims, insurers should take into account the negative impact that multiple hurricanes within a short period of time have had on the policyholder’s ability to engage contractors to oversee the repairs, the shortage of materials and equipment to accomplish the repairs, and the dearth of qualified labor to effectuate the repairs.

Commissioner Donelon also explains the effect of the Replacement Cost Coverage extension in La. R.S. 22:1264(8):

The statute clearly indicates that the one year time period within which the insured must complete repairs to his property damaged as a result of a qualified catastrophe to receive full replacement cost coverage does not begin to run until payment by the insurer of the applicable insurance proceeds. Additionally, Louisiana policyholders in the areas affected by multiple hurricanes within a short period of time face serious challenges in attempting to complete repairs to storm damaged property within one year due to the extent of the devastation and the limited availability of contractors available to perform the repairs. Insurers are urged to work with policyholders and to grant reasonable extensions of time when warranted for the completion of repairs under the replacement cost coverage of their policies.

The need for guidance and direction from the Louisiana Department of Insurance to Louisiana insurers cannot be understated. Just recently, we received correspondence enclosing a supplemental payment based upon a revised estimate of covered damage from Hurricane Laura six months ago advising the insured that in order to receive replacement cost benefits the repairs must be made within 180 days.

We are grateful to Commissioner Donelon and those at the Louisiana Department of Insurance who tirelessly work to protect Louisiana insureds, and hope, by this Bulletin the Louisiana insurers are guided accordingly.
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¹ LDI Bulletin 2021-02, Time Periods For Proof Of Loss Submission And For Completion Of Repairs Under Replacement Cost Coverage For Damages Related To Catastrophic Events, James J. Donelon, Commissioner of Insurance.