Louisiana Court Of Appeal Finds Heavy Workload Does Not Shield An Insurer From Statutory Penalties For Delayed Payment

A Louisiana Court of Appeal found that an insurer’s failure to pay an insured’s claim for fire damage within thirty days, as required by La. R.S. §22:1892(A)(1), was arbitrary, capricious and without probable cause, even though the delayed payment was caused by the insurer’s unusually high workload. Harris v. Imperial Fire & Cas. Ins. Co., 2020-1323 (La. App. 1 Cir. 07/21/21); 2021 WL 3076871.

A homeowner insured sued his insurer for failure to timely and sufficiently pay proceeds for the total loss of his home caused by fire. The insured moved for summary judgment that the insurer be found in bad faith under La. R.S. §22:1892(A)(1) for the insurer’s arbitrary and capricious delayed payment.  The trial court granted summary judgment in the insured’s favor, and the insurer appealed.

On appeal, the insurer argued the delay was justified, because the delay was caused by the insurer having to deal with pipe-freeze claims in Louisiana and wildfire claims in California, which resulted in an unusually high volume of claims for the insurer. The court rejected the insurer’s argument and held that the insured was entitled to statutory penalties under La. R.S. §22:1892(A)(1) for the insurer’s arbitrary and capricious delayed payment.