PCI: Judge’s Ruling on Prescription Period Sets Wrong Precedent

With nearly 95 percent of insurance claims from last year’s hurricane season already settled, the recent Louisiana district court ruling on the constitutionality of laws that extend the time period for consumers to file insurance claims or lawsuits regarding property damage resulting from hurricanes Katrina and Rita will have little impact for the vast majority of residents, according to the Property Casualty Insurers Association of America (PCI).

Louisiana District Court Judge Kay Bates ruled that two laws passed last legislative session extending by one year the deadlines for insurance claims resulting from hurricanes Katrina and Rita did not interfere with insurance contracts in a way that was unconstitutional.

“Insurers have always been willing to work with their customers to reach fair, equitable claim settlements and regardless of how the case would have been decided that would not have changed,” said Greg La Cost assistant vice president and regional manager for PCI. “The most appropriate response for consumers that need additional time beyond their policy’s prescriptive period is to contact the insurer and discuss the circumstances. From the very beginning insurers have worked with consumers who have legitimate disputes and there is a clear indication from the insurance industry that on a case-by-case basis companies would not strictly enforce the normal 12-month prescriptive period.

“Our concern regarding these laws and the court’s decision is that they interfere with the agreed upon terms and conditions of the insurance contract,” LaCost continued. “By rewriting the insurance contract, Louisiana is threatening the sanctity of all contracts and sending a very chilling message to the business community. The ability of the state to re-write contacts could create a level of uncertainty that hampers the rebuilding effort.”

Source: PCI