The Louisiana Department of Insurance (LDI) published an advisory letter informing insurers, producers, and public adjusters that assignment of benefit (AOB) agreements in residential or commercial property insurance policies are not allowed under Louisiana law.

La. R.S. 22:1275 states that a person cannot solicit or accept an assignment of any post-loss insurance benefit under a residential or commercial property policy. Any policy that includes an assignment agreement is deemed against public policy and is null and void. This rule does not apply to liability coverage under a residential or commercial property policy, or to an assignment to a federally insured financial institution, mortgagee, or subsequent purchaser of the property.

The LDI has received reports that some insureds and insurers are unaware of this law. Any policy that includes an AOB agreement is unenforceable and legally void. Anyone violating the rule constitutes an unfair trade practice and would be subject to penalties.