Louisiana lawmakers have given final approval to a bill toughening the rules for handling home damage claims after catastrophes.

The measure, which is awaiting Gov. Kathleen Blanco's signature, has had some provisions modified that insurance industry interests viewed as objectionable.

Under the revised version insurers are no longer prohibited from denying wind damage claims based solely on the existence of a floodwater mark if they take into consideration other evidence in determining the cause of the damage.

The original version, which passed the Senate by a vote of 35 to 1, also would have barred an insurer from using the fact that a hurricane-damaged home is removed or displaced from its foundation as exclusive proof on which to deny claim. As modified, that can be a factor in denying coverage when other evidence is considered.

Additionally, the version clarified that the burden of proving exclusion is on the insurer, and provided that any clause in the policy that attempts to deny coverage when more than one cause contributed to the damage is against public policy.

Greg La Cost, regional manager for the Property Casualty Insurers Association of America, said the original bill had the potential of forcing the insurers to go back and re-open many of the closed claims.

“The bill presumed that insurers were being arbitrary or capricious if an insurer did not pay for damages caused by a noncovered peril,” he said.

Mr. La Cost saluted the Legislature for “resisting the pressure to enact overly burdensome laws that would make it difficult for the insurance industry to conduct business in the state.”

Insurers said their lobbying efforts had helped in killing a measure that would authorize borrowing from the Louisiana Insurance Guaranty Association by the Louisiana Citizens Property Corporation. The cash-strapped residual market mechanism was created in 2004 by combining two state programs.

Tami Stanton, National Association of Mutual Insurance Companies state affairs manager, said that loaning money is not an appropriate role for any guaranty fund. “It is particularly unwise in light of insolvencies that may occur as a result of Hurricanes Katrina and Rita,” she said.

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Louisiana Votes On New Claims Handling Rules

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