Louisiana Supreme Court Confirms Lower Court's Insurance Ruling

By William Murphy

Published on August 29, 2006

In their unanimous ruling, the justices said that the Legislature has the power to make changes to insurance contracts when those changes are in the interest of the public welfare. Citing the complete devastation wrought by hurricanes Katrina and Rita, the justices said that the one-year extension granted by the laws is “appropriate and reasonable" for protecting the rights and general welfare of Louisiana’s citizens.

The laws were originally ruled constitutional by District Judge Kay Bates on August 23 in a suit brought by the attorney general’s office against 10 insurance companies to test the laws’ constitutionality. Judge Bates ruled that the laws do not expand the rights policyholders within their existing contracts; they simply give those people adversely affected by the hurricanes more time to file claims or pursue lawsuits against their insurers, she said.

An Allstate representative said that the laws could impede recovery from the hurricanes by sending a message to the business community that the Legislature can and will modify existing contracts.

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