On August 18, 2016, Insurance Commissioner Jim Donelon issued an Emergency Rule that will impact the adjustment of claims related to the recent catastrophic flooding in over 20 Louisiana parishes.1 This Rule will be in effect until September 10, 2016.

Emergency Rule 27 precludes insurers from cancelling policies on the basis of an insured’s failure to comply with policy provisions; prevents all policy cancellations until September 10, 2016, unless the basis for cancellation is fraud or material misrepresentation; confirms that insureds must still provide adequate proof of loss, give notice, and cooperate with adjustment; and suspends the time for an insured to perform an act under the policy or statute (for example, habitation provisions). While it appears that the purpose of Emergency Rule 27 is to assist insureds rather than insurers, the Rule still requires insureds to provide satisfactory proof of loss and notice prior to triggering an insurer’s duty to adjust claims in good faith.

In addition to Emergency Rule 27, an additional statutory provision impacts the adjustment of claims during this disaster. While insurers must typically initiate adjustment of claims within 14 days of receipt, Louisiana law grants insurers 30 days to initiate adjustment in times of “catastrophic loss.” Extreme flooding in over 20 parishes, necessitating state and federal declarations of emergencies, qualifies to trigger this statutory provision. Thus, once an insurer receives a notice of a claim related to the 2016 floods in the affected parishes, it will have 30 days to begin adjustment of the claim. The law also grants Commissioner Donelon the ability to extend additional time, past 30 days, by issuing a Rule. We will monitor the situation and update you if such a Rule is promulgated.