It’s Time for Property Insurance Carriers to Re-Adjust in Louisiana

Taylo Brett | Adams and Reese

After Louisiana citizens endured two consecutive prolific hurricane seasons in 2020 and 2021, state lawmakers made the adjustment of property insurance claims a top priority during this year’s Regular Legislative Session.  On August 1, 2022, two new bills concerning claims adjusters went into effect:  Senate Bill 198 and Senate Bill 214.  Both of these bills have the potential to affect how insurers handle the adjustment of property insurance claims in the state.

Senate Bill 198: Designating an adjuster as the insured’s “primary contact”

Among other things, Senate Bill 198 created a new law which imposes several requirements on insurers when assigning multiple claims adjusters to a personal residential insurance claim in the wake of a “named storm or hurricane for which a state of emergency or disaster is declared.”  These added requirements apply only when the insurer changes the adjuster who is “primarily responsible” for the claim three or more times within a six-month period.  Under those circumstances, the new law requires the insurer to provide the following to the insured:

  • A written status report that includes pertinent information about: (1) the insured’s deductible; (2) the amounts available under each coverage; (3) the amounts paid under each coverage; (4) when, where, and to whom payments were issued; and (5) items presently known to the insurer, but for which the insured must give further information to complete the adjustment process;
  • A primary contact until the insurer closes the claim or a party files suit on the claim; and
  • Two or more direct means of communication with the primary contact.

The insurer’s designation of one adjuster as the “primary contact” on the claim does not preclude other claims personnel from working on portions of the insured’s claim.  Nonetheless, it was clear that the Legislature’s intention behind Senate Bill 198 was to assure that policyholders have a consistent point of contact throughout the life of the claim. 

Although the new statute does not have a penalty provision, an insured may argue that violation of the statute gives rise to a claim for bad faith practices in handling and adjusting the claim.  In such cases, it is certainly foreseeable that the plaintiff (the insured) will issue discovery to the defendant (the insurer) requesting the identities of all adjusters who were involved on the claim.  Thus, the best practice for insurers in the aftermath of a named storm may be to have the initial adjuster serve as the “primary contact” for a claim. The primary contact can pass on details in the file from other vendors or adjusters as well as provide contact information for other adjusters. 

Senate Bill 214: All adjusters must appear and testify in Louisiana in lawsuits arising from insurance claims they adjusted in this state

Senate Bill 214 amended the process for obtaining testimony from non-resident witnesses, by creating an exception for non-resident claims adjusters who adjust an insurance claim in Louisiana in two inter-related ways: 

  • The new law requires non-resident claims adjusters to be available for deposition via telephone or video teleconference in suits arising out of the claim they adjusted in Louisiana, but limits the admissibility of the adjuster’s deposition testimony at trial.
  • Relatedly, the new law requires non-resident claims adjusters to appear and testify at trial in the suit.

Senate Bill 214 essentially places the onus upon insurers to make their assigned claims adjusters available to testify at trial in Louisiana regardless of their state of residence.  As a result, insurers should carefully evaluate their processes for assigning adjusters to claims made in Louisiana, and consider the costs associated with selecting non-resident adjusters to handle those claims.             

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Waive Your Claim Goodbye: Louisiana Court Holds That AIA Subrogation Waiver Did Not Violate Anti-Indemnification Statute and Applied to Subcontractors

Gus Sara | The Subrogation Strategist

In 2700 Bohn Motor, LLC v. F.H. Myers Constr. Corp., No. 2021-CA-0671, 2022 La. App. LEXIS 651 (Bohn Motor), the Court of Appeals of Louisiana for the Fourth Circuit (Court of Appeals) considered whether a subrogation waiver in an AIA construction contract was enforceable and, if so, whether the waiver also protected subcontractors that were not signatories to the contract. The lower court granted the defendants’ motion for summary judgment based on the subrogation waiver in the construction contract. The plaintiffs appealed the decision, arguing that the subrogation waiver violated Louisiana’s anti-indemnification statute. The plaintiffs also argued that even if enforceable, the subrogation waiver did not apply to the defendant subcontractors since they were not parties to the contract. The Court of Appeals ultimately held that the subrogation waiver did not violate the anti-indemnification statute because the waiver did not shift liability, which the statute was intended to prevent. In addition, the Court of Appeals found that the contract sufficiently satisfied the required elements for the defendant subcontractors to qualify as third-party beneficiaries of the contract.

In 2017, plaintiff 2700 Bohn Motor Company, LLC (Bohn) retained defendant F.H. Myers Construction Corporation (F.H. Myers) as the general contractor to renovate its dealership in New Orleans. Bohn and F.H. Myers entered into an AIA construction contract for the renovation project. The contract included a mutual subrogation waiver, which stated the parties “waive all rights against (1) each other and any of their subcontractors, sub-subcontractors, agents and employees, each of the other… for damages caused by fire or other causes of loss to the extent covered by property insurance obtained pursuant to this Section 11.3 or other property insurance applicable to the Work.” F.H. Meyers subcontracted with Orleans Sheet Metal Works and Roofing, Inc. (OSM) and B & J Enterprise of Metairie, Inc. (B & J) on the project. The contract obligated Bohn to secure the property insurance policy for the project.

In November 2019, a fire occurred at the property during the renovation project. As a result of the damage, Bohn’s insurers issued payment to Bohn to make the necessary repairs. Bohn also incurred a deductible. Bohn and its’ insurers filed a lawsuit against F.H. Myers, OSM and B & J, alleging that the defendants’ negligence caused the fire. The defendants filed a joint motion for summary judgment on grounds that the subrogation waiver barred the plaintiffs’ claims. The lower court granted the defendants’ motion and dismissed the case entirely, including Bohn’s claim for its deductible. The plaintiffs filed an appeal with the Court of Appeals.

The Court of Appeals acknowledged that, in Louisiana, a subrogee has no greater rights than those of the subrogor and is subject to all limitations applicable to the original claim of the subrogor. The court also cited several Court of Appeals decisions where the AIA subrogation waiver was deemed enforceable. As per the language of the waiver, the court found that Bohn clearly waived its subrogation rights against the defendants and thus had no rights to which its’ insurers could be subrogated.

The court then considered whether the AIA subrogation waiver violated Louisiana’s anti-indemnification clause. Louisiana statute La. R.S. 9:2780.1 prohibits, among other things, any provision, clause, covenant, or agreement contained in, collateral to, or affecting a construction contract which purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless the indemnitee from or against any liability for loss or damage resulting from the indemnitee’s negligence. The Court of Appeals agreed with the lower court that the anti-indemnification statute did not nullify the subrogation waiver because indemnity agreements and subrogation waivers have separate and distinct legal meanings in a contract. The court explained that unlike indemnification clauses, which can shift liability from the responsible party to another, a waiver of subrogation is simply an allocation of risk. As such, the court held the waiver of subrogation did not violate the anti-indemnification statute.

The Court of Appeals also found that defendants OSM and B & J qualified as third-party beneficiaries under Louisiana law because of the direct language of the subrogation waiver. Louisiana statute La. C.C. art. 1978 permits contracting parties to stipulate a benefit for a third person, commonly referred to as a “stipulation pour autrui.” Louisiana jurisprudence established three factors for determining whether contracting parties provided a benefit for a third party: 1) the stipulation for a third party is clear; 2) there is certainty as to the benefit provided; and 3) the benefit is not a mere incident of the contract between the signatories. Here, the court found that the plain language of the subrogation waiver specifically waived subrogation rights of the owner and the general contractor against each other and their subcontractors and sub-subcontractors on the project. Since the court found that the stipulation is manifestly clear, the benefit is certain and the benefit is not incidental, the court affirmed the lower court’s decision finding that OSM and B & J were third-party beneficiaries of the contract.

Lastly, the court also dismissed Bohn’s claim for its’ deductible. The court found that the contract explicitly obligated Bohn, as the owner, to secure the property insurance policy and stated that if “the property insurance requires deductibles, the Owner shall pay costs not covered because of such deductibles.” Thus, the court held that Bohn should bear the cost of the deductible regardless of fault.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

Louisiana Court Of Appeal Holds Mold Remediation Costs Incurred Following A Covered Peril Fall Within A Mold Sub-Limit Because Such Costs Would Not Have Been Incurred But For The Mold

Gabriel R. Crane | Phelp Dunbar

A Louisiana Court of Appeal affirmed a trial court’s ruling that mold remediation costs incurred as a result of a covered peril fall within the mold exclusion and endorsement of a homeowners’ policy because such costs would not have been incurred but for the appearance of mold. DeFelice v. Federated Nat’l Ins. Co., 21-0179 (La. App. 5 Cir. 1/19/22); 2022 La. App. LEXIS 53.

Plaintiffs sought coverage under a homeowners’ policy for water damage caused by leaking plumbing and resulting mold. The insurer paid a sub-limit for mold coverage contained in a mold endorsement, but the insureds desired coverage for additional amounts and filed suit. The insurer moved for summary judgment that its mold endorsement limited coverage for mold damage to the sub-limit stated in the endorsement. The trial court granted the motion, and the insureds appealed.

On appeal, the insureds argued that “if a covered loss occurs and then mold forms, all subsequent damages resulting from mold must be covered,” and that “mold is excluded only when it emanates from a source independent of the underlying covered peril.” The court rejected the first argument as such an interpretation would render the mold exclusion and endorsement meaningless. It rejected the second argument because case law recognizes “that once mold appears, it can cause additional damages or losses that would not have occurred, but for the appearance of mold, and are therefore, subject to the applicable provisions of a mold exclusion and endorsement.” 

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email

What Is the Prescriptive Period for Louisiana First-Party Bad Faith Claims?

Deborah Trotter | Property Insurance Coverage Law Blog | November 27, 2019

Louisiana federal courts have been split on the issue regarding the applicable prescriptive period (statute of limitation) for first-party insureds’ bad faith claims against their insurers. Recently, the Louisiana Supreme Court granted review of Smith v. Citadel Insurance Company, to definitively rule on the primary legal issue presented: “the proper prescriptive period applicable to a first-party bad faith claim against an insurer.”1

Ms. Smith, pursuant to an assignment of rights from the named insured, which placed her in the position of the first-party insured, brought a bad faith claim against GoAuto. The Louisiana courts agree that Louisiana recognizes an insurer owes its insured a duty of good faith. The split has arisen in the classification of the action in regard to Louisiana law.

The supreme court recognizing this uniqueness of Louisiana law outlined the basis of its ruling by first explaining some of the distinct points of Louisiana law and later demonstrated how its earlier opinions, though not directly addressing the issue before it in Smith, are consistent with Smith:

All personal actions, including an action on a contract, are subject to a liberative prescription of ten years, unless otherwise provided by legislation. La. C.C. art. 3499; Roger v. Dufrene, 613 So. 2d 947, 948 (La. 1993). Delictual actions are subject to a liberative prescription of one year. La. C.C. art. 3492. The nature of the duty breached determines whether the action is in tort or in contract. Roger, 613 So. 2d at 948; Dean v. Hercules, Inc., 328 So. 2d 69, 70 (La. 1976). “The classic distinction between damages ex contractu and damages ex delicto is that the former flow from the breach of a special obligation contractually assumed by the obligor, whereas the latter flow from the violation of a general duty owed to all persons.” Thomas v. State Employees Grp. Benefits Program, 05-0392 (La. App. 1 Cir. 3/24/06), 934 So. 2d 753, 757. See also, Certain Underwriters at Lloyd’s, London v. Sea–Lar Mgmt., 00-1512 (La. App. 4 Cir. 5/9/01), 787 So. 2d 1069, 1074; 6 Saul Litvinoff & Ronald J. Scalise Jr., Louisiana Civil Law Treatise, Law of Obligations § 5.2 (2d ed. 2018) (“Fault is contractual when it causes a failure to perform an obligation that is conventional in origin, that is, an obligation created by the will of the parties, while fault is delictual when it causes the dereliction of one of those duties imposed upon a party regardless of his will, such as a duty that is the passive side of an obligation created by the law.”).2

Basically, the court ruled that a first-party insured’s bad faith claim is a personal action subject to a ten-year prescriptive period, as it arises under the contract of insurance. The court went on to explain how the bad faith statutory laws worked within the personal action:

Although the duty of good faith owed by the insurer to the insured is codified in La. R.S. 22:1973, the bad faith cause of action by an insured against the insurer does not rest solely on this statute. Gourley v. Prudential Prop. & Cas. Ins. Co., 98-0934 (La. App. 1 Cir. 5/14/99), 734 So. 2d 940, 945 (citing Smith v. Audubon Insurance Company, 94-1571 (La. App. 3 Cir. 5/3/95); 656 So. 2d 11, 14, rev’d on other grounds, 95-2057 (La. 9/5/96), 679 So. 2d 372). The duty of good faith is an outgrowth of the contractual and fiduciary relationship between the insured and the insurer, and the duty of good faith and fair dealing emanates from the contract between the parties. In the absence of a contractual obligation, the duty of good faith does not exist. See La. C.C. art. 1759 (“Good faith shall govern the conduct of the obligor and the obligee in whatever pertains to the obligation.”); La. C.C. art. 1983 (“Contracts have the effect of law for the parties and may be dissolved only through the consent of the parties or on grounds provided by law. Contracts must be performed in good faith.”). Because we find an insurer’s bad faith is a breach of its contractual obligation and fiduciary duty, we hold the insured’s cause of action is personal and subject to a ten-year prescriptive period. See also 15 William McKenzie & H. Alston Johnson, Louisiana Civil Law Treatise: Insurance Law and Practice § 11:25 (4th ed. 2018) (“Unless otherwise provided by statute, claims under the penalty statutes prescribe in ten years.”).3

This ruling by the court is a win for policyholders, as they are no longer restricted in some Louisiana venues to the previously misapplied one-year prescriptive period for their bad faith claims. Note—Louisiana does allow parties to enter into contracts of insurance with a suit limitation for breach of contract of not less than two years from the inception of loss.4

So, the next question is … how many bad faith claims from the past ten years remain to be pursued? The previous, potential one-year timeframe, which only aided the insurers in their “arbitrary, capricious, and without probable cause” actions has ended. We will be happy to evaluate your potential bad faith claims. Happy Thanksgiving!
1 Smith v. Citadel Ins. Co., __ So. 3d __, 2019 WL 5445086 (La. Oct. 22, 2019).
2 Id. (emphasis added).
3 Id. (emphasis added).
4 LA Rev Stat § 22:868 (2018).

4th Annual Southeast CDDC Agenda Announced

4th Annual Southeast CDDC
October 12, 2018
New Orleans, LA | Loyola University College of Law
6.5 Continuing Legal Education credits (LA – other states upon request) including 1 ethics credit!

Check-in with Continental Breakfast will start at 8:15 AM.
Lunch and post conference reception is included.

Check out this AWESOME agenda – come enjoy, network, learn and have a great day getting those pesky CLE credits out of the way!

Criminal Statutes for Contractors
Carl Barkemeyer | Carl Barkemeyer Attorney at Law

How to Evaluate a Delay Claim from General and Subcontractors Based on Changing Design and Site Conditions
Larry Mobley | Baldwin Haspel Burke & Mayer

Proving Damages in Construction Cases
Ben Aderholt | Coats Rose

Claims Against Architects and Engineers/Design Professionals
Andrew G. Vicknair | Shields Mott

Ethics Challenge
Eric Barefield | Louisiana State Bar

Do Right to Repair Statutes “Suit” an Insurance Company’s Duty to Defend?
Alexis Joachim | Phelps Dunbar

Top 5 Litigated Construction Defect Issues
Stewart Schmidt | Advise & Consult, Inc.
Insurance professionals are $77, but must still pre-register – CE credits not included.
email from a work email to get discount code.