§1973. Good faith duty; claims settlement practices; cause of action; penalties
A. An insurer, including but not limited to a foreign line and surplus line insurer,
owes to his insured a duty of good faith and fair dealing. The insurer has an affirmative duty
to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the
insured or the claimant, or both. Any insurer who breaches these duties shall be liable for
any damages sustained as a result of the breach.
B. Any one of the following acts, if knowingly committed or performed by an
insurer, constitutes a breach of the insurer's duties imposed in Subsection A of this Section:
(1) Misrepresenting pertinent facts or insurance policy provisions relating to any
coverages at issue.
(2) Failing to pay a settlement within thirty days after an agreement is reduced to
writing.
(3) Denying coverage or attempting to settle a claim on the basis of an application
which the insurer knows was altered without notice to, or knowledge or consent of, the
insured.
(4) Misleading a claimant as to the applicable prescriptive period.
(5) Failing to pay the amount of any claim due any person insured by the contract
within sixty days after receipt of satisfactory proof of loss from the claimant when such
failure is arbitrary, capricious, or without probable cause.
(6) Failing to pay claims pursuant to R.S. 22:1893 when such failure is arbitrary,
capricious, or without probable cause.
C. In addition to any general or special damages to which a claimant is entitled for
breach of the imposed duty, the claimant may be awarded penalties assessed against the
insurer in an amount not to exceed two times the damages sustained or five thousand dollars,
whichever is greater. Such penalties, if awarded, shall not be used by the insurer in
computing either past or prospective loss experience for the purpose of setting rates or
making rate filings.
D. The provisions of this Section shall not be applicable to claims made under health
and accident insurance policies.
E. Repealed by Acts 1997, No. 949, §2.
F. The Louisiana Insurance Guaranty Association, as provided in R.S. 22:2051 et
seq., shall not be liable for any special damages awarded under the provisions of this Section.
Neither the Louisiana Insurance Guaranty Association, as provided in R.S. 22:2051 et seq.,
nor the Louisiana Citizens Property Insurance Corporation, as provided in R.S. 22:2291 et
seq., shall be liable for any penalties awarded pursuant to the provisions of Subsection C of
this Section.
Acts 1990, No. 308, §1, eff. July 6, 1990; Acts 1997, No. 949, §2; Acts 2006, 1st Ex.
Sess., No. 12, §1, eff. Feb. 23, 2006; Redesignated from R.S. 22:1220 by Acts 2008, No.
415, §1, eff. Jan. 1, 2009; Acts 2012, No. 271, §1; Acts 2023, No. 290, §1.