News
Storms, insurance turmoil fueling Louisiana population slides
Louisiana v. Biden – Attack on the study committee working on the value for the social cost of carbon. The 5th Cir. found that plaintiffs had no standing.
Suncor Energy (U.S.A.) Inc. v. Board of County Commissioners of Boulder County – Exxon Brief – Artful pleading vs. well-pleaded: can the plaintiffs escape removal by just not mentioning federal law, or should the court look beyond their pleadings? Click the link and look at the highlighted material on pages 8&9.
Assignment
We will finish our discussion of the hurricane cases from last time.
LA Homeowner’s Insurance Cases and Crisis of Cost and Availability
Private residential and small business insurance policies (State Farm, Farmers, Allstate, etc.) do not include flood insurance as part of their homeowner’s insurance. Almost all residential and small business flood insurance comes from the federal government through the National Flood Insurance Program (NFIP). We will look at that program later in the class. Most people are not required to have flood insurance so after every major flooding event attorneys sue homeowner’s insurance companies to try to get coverage for clients who do not have flood insurance. We are going to look at two Louisiana cases that to see how the courts handle this problem. This will be background for our class discussion of the homeowner’s insurance crisis in Louisiana.
When there is a major flood event, we have two situations. The first is homeowners who do not have flood insurance but suffer flood damage, either with or without wind and rain damage that is covered by their homeowner’s policies. When their home floods, they bring legal claims arguing that they thought that their homeowner’s policy covered flooding. This case deals with the construction of insurance policies. Read through paragraph 72. We are not reading the remainder of the case, which is a technical fight over which version of the bad faith penalties statute applies in the case. I have annotated the case so that it will be a fast read.
Sher v Lafayette Insurance Co – annotated
The second situation is homeowners who have purchased flood insurance policies and suffer flood damage, either with or without wind and rain damage that is covered by their homeowner’s policies. The Nelson case looks at the application of the Louisiana Valued Policy Law when a property is covered by a flood policy as well as a homeowners policy. The LVP requires insurers to pay the face value of the policy if the house is a total loss. The LVP prevents insurers from basing premiums on a higher value for a house than they are willing to pay if the house is a total loss. For example, you insure at $800,000 for your New Orleans home, because that is its current market value. That market value includes an inflated cost for the land, which is not damaged by flood or fire. Thus, when your house burns to the ground, the insurer only offers you $600,000 because that is all it will take to rebuild your house. You have paid the insurer for an extra $200,000 in coverage which you cannot collect. If you can prove a total loss, the insurer must pay the full $800,000. The problem arises when the damages are covered by two different policies. Assume the house is a total loss after Hurricane Ida, but half the damage is from flooding – covered by the NFIP policy – and the other half is wind and rain damage, covered by the homeowner’s policy. Is the LVP triggered because the house is a total loss, or is not triggered because the total loss has to be caused by the risks covered by the homeowner’s policy? (The LVP cannot be applied to the NFIP policy because that is legally a government benefit that is not reached by state law.) Focus on understanding Louisiana’s Valued Policy Law and how it affects situations where there is both flood and wind/fire damage.
Nelson v. Americas Ins. Co., No. CV 17-850-JWD-RLB, 2019 WL 5684503 (M.D. La. Nov. 1, 2019)
Watch this video review of these cases so we do not have to go over the basics in class – Louisiana Insurance Law and Flooding.
Is Tort Law Salvation or Damnation: Why Does Insurance Cost So Much in Louisiana?
Read these background materials for our discussion of the homeowner’s insurance crisis in Louisiana. (You can Google Louisiana insurance crises for more information.) We are going to talk about the politics of tort law as a remedy for injuries and about the economics of insurance. Having taken torts, you are well-versed in the plaintiff’s lawyer’s views of the tort system. These readings will acquaint you with the insurance company side. (Note – the truth is somewhere between the extremes, but it is also true that you never get money from insurance companies, only from other policyholders.)
Triple-I: Louisiana’s Insurance Crisis Grew After 2020-21 Hurricanes – this is a quick review of recent hurricane losses in Louisiana.
Affordability of Personal Auto Insurance 3x Worse in Louisiana Compared to Most Affordable State, IRC Study Finds – auto insurance in LA is as bad as you expected.
IT’S NOT JUST THE WEATHER: The man-made crises roiling property insurance markets – This is an insurance industry critique of the effects of the plaintiff’s bar on insurance costs. Read the general information and the Louisiana section.