2.3 Prompt Payment, Good-Faith Duties & Catastrophic Loss Claims (RS 22:1892, 1892.2, 1892.3)

What Changed in 2024 and 2026

Older materials that teach a "60-day R.S. 22:1973 deadline" with "double damages" describe repealed law.

Deadlines Under R.S. 22:1892(A)

Failing to initiate loss adjustment on time under (A)(3) subjects the insurer to a penalty of the greater of $5,000 or the amount provided in Subsection I.

Penalties for Non-Catastrophic Claims (R.S. 22:1892(B))

When the insurer fails to pay within 30 days of satisfactory written proof and demand, fails to make the written offer within 30 days, or fails to pay within 30 days after a written settlement agreement, and the failure is arbitrary, capricious or without probable cause, it owes a penalty in addition to the loss:

• No payment made: 50% of the amount found due, plus proven economic damages, or $1,000, whichever is greater;
• Partial payment or tender made: 50% of the difference between the amount paid or tendered and the amount found due, plus proven economic damages;
• In either case: reasonable attorney fees and costs.

Penalties may not be used in the insurer's loss experience for ratemaking. Claims for these penalties and fees prescribe in two years (R.S. 22:1892(B)(7)). While a fire loss is under active arson investigation, the payment period and penalties do not run until the investigating authority certifies there is no evidence of arson or insufficient evidence to proceed. That arson suspension does not apply to a bona fide mortgage lender (R.S. 22:1892(B)(2)–(3)).

Catastrophic Losses to Immovable Property (R.S. 22:1892.2)

Definitions (R.S. 22:1892(B)(1)(c)):

• Catastrophic loss: a loss from a natural disaster, windstorm or significant weather-related event that was a presidentially or gubernatorially declared emergency or disaster.
• Immovable property: a tract of land with its component parts, including factory-built or modular homes.
• Residential property: improvements for residential purposes as defined in R.S. 47:2322.

For catastrophic first-party claims on immovable property, R.S. 22:1892.2 replaces the Subsection B penalty.

The Cure Period Notice (R.S. 22:1892.2(C))

1. Condition precedent: before suing under R.S. 22:1892.2, the insured or representative must give the insurer 60 days' written notice of the violation, by a Department form or a formal written demand describing the dispute.
2. Full cure: if the insurer pays, within 60 days, the full amount alleged plus actual expenses claimed in the notice, including attorney fees up to 20% of the amount alleged due, no further action exists under the section for that demand.
3. Partial cure: a partial payment within 60 days cuts the penalty in half on the amount actually paid.
4. Response duty: the insurer must respond within 60 days.
5. Prescription: a notice sent within the last 90 days before prescription runs suspends prescription until 30 days after the insurer's written response.
6. Early suits: a suit filed before notice is automatically stayed until 60 days after the notice is received.

Other Catastrophic-Claim Protections

• The insurer may make additional information or inspection requests. Requests for information already in its possession do not extend its deadlines, and unnecessary requests do not extend the payment deadline (R.S. 22:1892.2(D)).
• Insureds may make supplemental claims; a supplemental payment is not by itself evidence of a violation.
• Tendering undisputed additional amounts within 30 days of a valid appraisal award is not by itself evidence of bad faith.
• Louisiana Citizens and LIGA are shielded from class actions for these penalties. Citizens is not liable for general damages, special damages or penalties above the policy limit, though it may still owe legal interest and attorney fees where provided (R.S. 22:1892.2(F)).

The Insurer's Good-Faith Duty (R.S. 22:1892(I))

An insurer, including foreign line and surplus line insurers, owes its insured a duty of good faith and fair dealing. It has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle with the insured, the claimant or both.

• Liability: proven economic damages from the breach. For claims not involving loss to the insured's immovable property, penalties up to 50% of damages or $5,000, whichever is greater, plus attorney fees and costs actually incurred. A penalty based solely on failure to pay within the legal period is available only if the failure was arbitrary, capricious or without probable cause.
• Immovable property claims go to Subsection B or R.S. 22:1892.2 instead.
• Acts that breach the duty when knowingly committed by the insurer or its representative: (a) misrepresenting pertinent facts or policy provisions relating to coverages at issue; (b) failing to pay a settlement within 30 days after the agreement is reduced to writing; (c) denying coverage or settling on an application the insurer knows was altered without the insured's knowledge or consent; (d) misrepresenting the applicable prescriptive period; (e) arbitrarily failing to pay under R.S. 22:1893.
• Representatives: the Subsection creates no separate cause of action against a representative of the insurer apart from the action against the insurer.

The Insured's Good-Faith Duty (R.S. 22:1892(J))

The insured, the claimant and their representatives also owe a duty of good faith and fair dealing in asserting a claim. These acts, if knowingly committed, breach it:

• failing to comply with policy duties, including acting in good faith when providing information, making demands, setting deadlines and settling;
• misrepresenting pertinent facts or policy provisions; and
• submitting an estimate or claim that lacks a basis for coverage or lacks a good-faith evidentiary basis.

The duty creates no separate lawsuit, but the trier of fact must consider the breach in deciding penalties and attorney fees. The insurer's rights to void the policy or deny coverage are unaffected.

Proof of Loss Statements (R.S. 22:1892.3)

• An insurer may require a proof of loss statement before paying, on a form consistent with the statutory model and approved by the commissioner.
• If required, the insurer must give the form to the claimant within 10 business days of receiving the claim and post it on its website.
• When required, receipt of a completed proof of loss statement is the only way to establish satisfactory proof of loss under R.S. 22:1892 and 22:1892.2.
• Within 10 business days of receiving it, the insurer must tell the claimant whether the statement is complete or incomplete.

Louisiana courts generally treat satisfactory proof of loss as information sufficient to fully apprise the insurer of the claim. The practical lesson for adjusters: pay the amount you do not reasonably dispute promptly and unconditionally, document the reasons for any disputed portion, and keep the file moving.

Worked Penalty Examples

Example 1: Non-catastrophic fire claim

A court finds $100,000 due on a first-party fire claim. The insurer timely tendered $40,000 and arbitrarily withheld the rest. The penalty is 50% of the $60,000 difference, or $30,000, plus any proven economic damages and reasonable attorney fees and costs. The $1,000 floor does not matter because $30,000 is greater.

Example 2: Hurricane claim on a home

After a declared hurricane, a court finds $80,000 due on a residential claim. The insurer paid nothing within 60 days of satisfactory written proof of loss, and the failure was arbitrary. Under R.S. 22:1892.2, the penalty is the greater of 50% of $80,000 ($40,000) plus proven economic damages, or $2,500, together with reasonable attorney fees and costs. The insured first had to serve a 60-day cure period notice. Had the insurer paid the full amount plus claimed expenses within 60 days of that notice, no penalty action would remain.