How do property insurance adjusters typically treat this scenario?

“A tornado severely damages a structure, and then three days later, a second tornado further damages the structure. Nobody fully measured the first damage before the second one happened.”

Most property insurance adjusters would add up the damages knowing that two policies could apply to pay for all the damages and then take two deductibles. Easy peasy. Right? 

Not if you are in Louisiana. A case decided last week1 followed two other Louisiana cases and announced this rule:  

As it relates to Coverage A, the court disagrees. ‘Louisiana law does not allow for double recovery of the same element of damages,’ which is in the nature of a punitive or exemplary award. Albert v. Farm Bureau Ins. Co., 940 So.2d 620, 622 (La. 2006). The policy covers only one dwelling and the limits under Coverage A represent the replacement cost for that dwelling, as agreed to by plaintiffs when they purchased the policy. The court allows that recovery under separate policy limits would be justified in the event that plaintiffs had begun repairs following one occurrence and then suffered additional damage in the second. Here, however, plaintiffs have admitted that they made no repairs to the dwelling. Accordingly, holding UPC liable for two policy limits covering the same dwelling would amount to exemplary damages. Plaintiffs already have such a remedy available under Louisiana Revised Statutes §§ 22:1892 and 22:1973.

The last sentence should be a warning to insurance company adjusters handling claims in Louisiana because “easy peasy” would have been a much faster and easier method to resolve the dispute. It is often difficult to know the exact amount of damages caused by each loss, and taking two deductibles while allowing for two policy limits with two deductibles is a practical way to resolve the dilemma. 

The last sentence of the ruling is a reference to Louisiana’s bad faith law allowing for punitive damages where the full amount of damage is not paid within 30 days of a proof of loss. Property insurance carriers in Louisiana are often surprised that when they inspect a loss, that is the “proof of loss” and the thirty-day time is ticking.  

I want to give a shoutout to Insurance Law360, which brought this case to my attention. This publication is doing an excellent job of finding current and relevant first-party property insurance cases which provide valuable lessons on a regular basis. 

I also want to warn readers engaged in Louisiana that The End Is Near For Louisiana Hurricane Ida Victims. The statute of limitations is quickly approaching, and cases not resolved should be sent to competent legal counsel right away. Merlin Law Group has full-time attorneys based in Louisiana ready to help. 

Thought For The Day 

A daily routine built on good habits and disciplines separates the most successful among us from everyone else.

—Darren Hardy

1 First Assembly of God Church v. Church Mutual Ins. Co., No. 2:21-CV-378 (W.D. La. June 23, 2023).