Articles Posted in Insurance Law

Louisiana’s No Pay / No Play statute, provides that an owner or operator of a motor vehicle who fails to own or maintain compulsory motor vehicle liability security can not recover for the first $15,000 of bodily injury damages and for the first $25,000 of property damage caused by a motor vehicle accident, unless the driver of the other vehicle:

(i)  Is cited for a violation of R.S. 14:98 (DWI/DUI) as a result of the accident and is subsequently convicted of or pleads nolo contendere to such offense.

(ii)  Intentionally causes the accident.

(iii)  Flees from the scene of the accident.

(iv)  At the time of the accident, is in furtherance of the commission of a felony offense.
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Louisiana Revised Statute 32:900 provides for the minimum compulsory auto liability insurance limits:

$10,000 per person / $20,000 per accident regardless of the number of persons (prior to January 1, 2010)

$15,000 per person / $30,000 per accident (effective January 1, 2010)

$25,000 per person/ $50,000 per accident for intrastate motor carriers (except tow trucks, not for hire farm vehicles, and forestry vehicles) weighing 20,001 – 50,000 pounds
$300,000 combined single limit for all persons or 100/300 for intrastate motor carriers (except tow trucks, not for hire farm vehicles, and forestry vehicles) weighing more than 50,000 pounds
For interstate carriers, federal provides the following minimim limits:

Property–49 C.F.R. § 387.9– (1) Property/Dry Freight: $750,000; (2) Oil/Petroleum: $1,000,000; (3) Hazardous Materials: $5,000,000;

Passengers–49 C.F.R. § 387.33– (1) Seating for 15 or less: $1,500,000; (2) Seating for 16 or more: $5,000,000.
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Bodily Injury Liability (BI)
If an insured person is legally liable for an accident, BI coverage pays for injuries/death to people involved in the accident other than the insured driver. BI also pays for legal defense costs if you are sued.

Property Damage Liability (PD)
If an insured person is legally liable for an accident, PD coverage pays for damage to other persons’ property resulting from the accident. PD also pays for legal defense costs if you are sued.

Collision (optional)
When your insured vehicle overturns or collides with another object, collision coverage pays for the damage to your vehicle, regardless of who is at fault. Collision coverage also may extend to a non-owned vehicle or one rented for personal use that is in your custody or that you are operating.

Comprehensive (optional)

If your insured vehicle is damaged due to an event other than a collision, comprehensive coverage will pay for the damage. This includes damages from fire, theft, windstorm, flood and vandalism.

Roadside Assistance/Towing
Roadside Assistance provides services such as towing, flat tire change, locksmith service and battery jump-start.

Rental Reimbursement
Rental Reimbursement provides rental car coverage in the daily rental amount limit purchased.

Medical Payments (Med Pay)
Med Pay pays for medical and funeral expenses for covered persons, as a result of an auto accident.

Uninsured/Underinsured Motorist Liability (UM)
If a driver or owner of a vehicle does not have insurance, or does not have enough, and is legally liable for an accident, you can use UM coverage for injuries, including death, that an insured sustains, up to the limits you select.

Economic Only UM

Covers only economic loss, i.e. medical, funeral, and lost wages. Excludes noneconomic loss which is any loss other than economic loss and includes but is not limited to pain, suffering, inconvenience, mental anguish, and other noneconomic damages otherwise recoverable under the laws of Louisiana.

Uninsured/Underinsured Property Damage (UMPD)
If a driver or owner of a vehicle is legally liable for an accident but does not have insurance or does not have enough insurance, you can use UMPD to cover damage to your insured vehicle, up to the limits you select. UMPD is available as an alternative to collision coverage for PD caused by other persons’ fault.
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In Louisiana, any individual procuring life insurance may name any person as the beneficiary.

No person can procure a life insurance contract upon the life of another person, unless payable to the individual insured or his personal representatives, or to a person with an insurable interest in the individual insured at the time the contract was made. Insurable interest includes only

1. In the case of individual related closely by blood or by law, a substantial interest engendered by love and affection.

Life insurance policies delivered or issued for delivery in Louisiana shall contain a provision that the life insurance policy shall be incontestable after the policy has been in force during the lifetime of the insured for a period of two years from its date of issue, except for non-payment of premium.

Additionally, no policy shall exclude or restrict coverage in the event of death occurring as a result of self-destruction while sane or insane after two years from the date of issue of the policy. There is a presumption against suicide. The insurer bears the burden of proving the deceased insured committed suicide to the exclusion of every other reasonable hypotheses of death by any other means. However, it is not required to offer proof sufficient to eliminate every speculative, fantastic, conjectural, frivolous, and imaginary hypothesis of death in any other way.

Since 1948, the expressed public policy of the State of Louisiana, by the Louisiana Legislature, has been that an insurable interest is required of persons seeking protection from property insurance, so as to differentiate an enforceable indemnity agreement from a wagering pact. La. R.S. 22:614 provides that no contract of insurance on property or any interest therein or arising therefrom shall be enforceable except for the benefit of persons having an insurable interest in the things insured. Insurable interest means any lawful and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage.

Generally, the interest of the insured sought to be protected must have for its object the obviation of pecuniary or financial loss to or liability of the assured which would otherwise result from damage to or destruction of the insured property. If the loss or damage to the insured property does not expose the insured to either direct, immediate, or potential loss or liability, the insured is without insurable interest therein.

“In the absence of bad faith, a liability insurer generally is free to settle or to litigate at its own discretion, without liability to its insured for a judgment in excess of the policy limits. William Shelby McKenzie & H. Alston Johnson, III, 15 Louisiana Civil Law Treatise-Insurance Law and Practice § 218 (1986). On the other hand, a liability insurer is the representative of the interests of its insured, and the insurer, when handling claims, must carefully consider not only its own self-interest, but also its insured’s interest so as to protect the insured from exposure to excess liability. Holtzclaw v. Falco, Inc., 355 So.2d 1279 (La.1978) (on rehearing). Thus, a liability insurer owes its insured the duty to act in good faith and to deal fairly in handling claims. Id.Smith v. Audubon Ins. Co., 679 So.2d 372 (La.1996).

“[T]he determination of whether the insurer acted in bad faith turns on the facts and circumstances of each case. Of course, an insurer is not obliged to compromise litigation just because the claimant offers to settle a claim for serious injuries within the policy limits, and its failure to do so is not by itself proof of bad faith. The determination of good or bad faith in an insurer’s deciding to proceed to trial involves the weighing of such factors, among others, as the probability of the insured’s liability, the extent of the damages incurred by the claimant, the amount of the policy limits, the adequacy of the insurer’s investigation, and the openness of communications between the insurer and the insured. Nevertheless, when an insurer has made a thorough investigation and the evidence developed in the investigation is such that reasonable minds could differ over the liability of the insured, the insurer has the right to choose to litigate the claim, unless other factors, such as a vast difference between the policy limits and the insured’s total exposure, dictate a decision to settle the claim.” Id.

An insurer’s duty to defend its insured is broader than its liability for damage claims. The insurer’s duty to defend suits brought against its insured is determined by the allegations of the injured plaintiff’s petition, with the insurer being obligated to furnish a defense unless the petition unambiguously excludes coverage. American Home Assurance Co. v. Czarniecki, 230 So.2d 253 (La.1970).

Once a petition states one claim within the policy’s coverage, the insurer has a duty to accept defense of the entire lawsuit, even though other claims in the petition fall outside the policy’s coverage. Ellis v. Transcontinental Ins. Co., 619 So.2d 1130 (La. App. 4th Cir.), writ denied, 625 So.2d 1043 (La.1993).

If the insurer chooses to represent the insured but deny coverage, it must employ separate counsel. If it fails to do so, the insurer is liable for attorney’s fees and costs the insured may incur in defending the suit. Dugas Pest Control of Baton Rouge v. Mutual Fire, Marine and Inland Ins. Co., 504 So.2d 1051 (La.App. 1st Cir. 1987).

For insurance policy language which limits coverage to “accidents which occur during the policy period”, the loss occurs at the time the tort is committed, and not when the loss is discovered or becomes manifest. Audubon Coin & Stamp Co. v. Alford Safe & Lock Co., 230 So.2d 278 (La.App. 1st Cir. 1969).

In determining whether the loss was caused by “accident,” the loss must be examined from the viewpoint of the person injured and if the injury was unforeseen, unexpected, and extraordinary it must be held to have been caused by “accident.” Id.

For insurance policy language which limits coverage to “damage which occurs during the policy period,” there is no coverage for damages accidentally occurring after the policy expiration, but resulting from a delictual act committed during the policy period. Oceanonics, Inc. v. Petroleum Distributing Company, 292 So.2d 190 (La.1974).

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