Alert
Gov. Landry Signs Louisiana Direct Action Reform Bill
Read Time: 2 minsGovernor Jeff Landry has signed into law a bill that significantly limits the situations in which a plaintiff can name and assert a direct action against a defendant’s insurer under Louisiana law. The new law becomes effective on August 1, 2024.
Under prior law, a plaintiff or a plaintiff’s survivors or heirs, at their option, had a right of direct action. Such action could be brought against the insurer alone or against both the insured and insurer jointly and in solido under the general rules of venue under the Louisiana Code of Civil Procedure.
The new law amends prior law to provide that the injured person, or the plaintiff’s survivors or heirs, have no right of direct action unless at least one of the following applies:
- The insured files for bankruptcy in a court of competent jurisdiction or when proceedings to adjudge an insured bankrupt have been commenced before a court of competent jurisdiction.
- The insured is insolvent.
- Service of citation or other process has been attempted without success, or the insured defendant refuses to answer or otherwise defend the action within 180 days of service.
- When the cause of action is for damages as a result of an offense or quasi-offense between children and their parents or between married persons.
- When the insurer is an uninsured motorist carrier.
- The insured is deceased.
- When the insurer is defending the lawsuit under a reservation of rights, or the insurer denies coverage to the insured, but only for the purpose of establishing coverage.
The new law also provides that the filing of an action against an insured interrupts prescription for all insurers whose policies provide coverage for the claims asserted in the action, prohibits the name of an insurer from inclusion in the caption of the suit, and prohibits the court from disclosing the existence of insurance coverage to the jury or mentioning coverage in the jury’s presence unless required by Louisiana Code of Evidence Article 411.
An insurer that denies coverage is required to (a) provide written notice of reservation of rights to assert a coverage defense to the named insured at his last known address by U.S. postal mail or other similar tracking method, commercial courier, or by hand delivery, within 90 days after the liability insurer makes a determination of the existence of a coverage defense, but not later than 30 days before trial, and (b) provide notice to all counsel of record in a cause of action against the insured that a reservation of rights has been issued, and provide such notice within 60 days of sending the notice of reservation of rights, but not later than 30 days before trial.
The new law does not prevent a plaintiff from resolving a claim of coverage against one insurer while preserving a claim against another insurer of the same defendant in the cause of action.
If you have questions or need guidance surrounding this new law, please contact the author or McGlinchey’s Insurance Defense and Coverage team.
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