Louisiana Judge Confirms Constitutionality of New Insurance Laws

By William Murphy

Published on August 25, 2006

As required by the legislature, the attorney general’s office brought suit against several Louisiana insurers to test the constitutionality of the new laws. After Bates’ ruling, lawyers for State Farm, USAA, and Allstate said they would take the case to the state Supreme Court. The Court plans to hear appeals on August 25.

Citing the unprecedented destruction caused by the storms and the impact on victims’ lives, Judge Bates ruled that the new laws do not give policyholders more rights within their existing contracts, but simply give those displaced by the hurricanes more time to file claims or pursue lawsuits against their insurers.

An Allstate representative said the laws will allow policyholders to violate their contracts and implied that if the laws were left to stand, Louisiana would be viewed as an unreliable business partner. A USAA spokesperson said that allowing interference with an insurance company’s contract would have an adverse impact nationwide. A State Farm attorney said the company is taking a wait-and-see position.

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