What Is The Time for Responding to a Defense Tender?
La. Rev. Stat. § 22:1892 requires all insurers issuing any type of insurance contract, other than life insurance, health and accident insurance, and workers compensation, to tender payment of any claim due to insured within 30 days after receipt of satisfactory proofs of loss from insured or any party in interest. La. Rev. Stat. § 22:1892 (A)(1).
Does Reserving Rights Create a Conflict of Interest?
One counsel may not represent both insured and insurer where insurer denies coverage or reserves its right to do so. Dugas Pest Control of Baton Rouge, Inc. v. Mutual Fire, Marine and Inland Ins. Co., 504 So.2d 1051, 1059 (La. App. 1st Cir. 1987).
Does a Reservation of Rights Create Additional Duties?
What Must Be Done If A Conflict of Interest Exists?
In cases of conflict, the insured, rather than the insurer, is entitled to assume control of the defense and select its own attorney. Belanger v. Gabriel Chemical, Inc., 787 So.2d 559, 565 (La. App. 1st Cir. 2001).
Who Is Responsible for Fees of Independent Counsel?
The insurer is responsible for the reasonable costs incurred by the insured in defending the action with the independent counsel. Belanger v. Gabriel Chemical, Inc., 787 So.2d 559, 565-566 (La. App. 1st Cir. 2001).
What Are Independent Counsel’s Obligations?
What Settlement Duties Exist?
An insurer has an affirmative duty to adjust claims fairly and promptly and to make reasonable effort to settle claims with insured and/or claimant. An insurer’s breach of these duties may be liable for penalties of amount not to exceed two times damages sustained or $5,000, whichever is greater, in addition to general and/or special damages sustained. La. Rev. Stat. § 22:1973 (A).
What Actions May Result in a Claim for Bad Faith?
The following acts are deemed breaches of insurer’s duties under La. Rev. Stat. § 22:1973: misrepresentation of pertinent facts or insurance policy provisions relating to any coverage at issue; failure to pay settlement within 30 days after agreement is reduced to writing; denial of coverage or attempt to settle claim on basis of application which insurer knows was altered without notice to, or knowledge or consent of insured; misleading claimant as to applicable prescriptive periods; and failure to pay amount of any claim due to any person insured by contract within 60 days after receipt of satisfactory proof of loss from claimant when failure is arbitrary, capricious, or without probable cause. La. Rev. Stat. § 22:1973 (B).
Are Attorney’s Fees Recoverable in Insurer-Insured Dispute?
Penalties and attorney fees are available in situations involving claims of bad faith against insurers. La. Rev. Stat. § 22:1892; La. Rev. Stat. § 22:1973.
Are Punitive Damages Recoverable in Insurer-Insured Dispute?
Failure to tender payment within 30 days, when such failure is found to be “arbitrary, capricious, or without probable cause” subjects insurer to penalty of 50% on total amount of loss or $1,000, which-ever is greater, in addition to amount of loss. La. Rev. Stat. § 22:1892 (B)(1).
Alternative Coverage Options
Insurer may seek declaratory judgment procedure to determine whether insurer must defend insured. Poynter v. Fidelity & Case. Co., 140 So.2d 42, 46 (La. App. 1962).
Declaratory Judgment – La. Code Civ. Proc. art. 1871.
“Courts of record within their respective jurisdictions may declare rights, status, and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for; and the existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate. The declaration may be either affirmative or negative in form and effect; and such declarations shall have the force and effect of a final judgment or decree.”
La. Rev. Stat. § 22:1892; La. Rev. Stat. § 22:1973 (B) (bad faith statutes)