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.
The advisory can be found here.
Ray Sugrim
Ray Sugrim is an Insurance Editor with FC&S Expert Coverage Interpretation, a division of National Underwriter Company and Arc Network. Ray is responsible for helping develop and edit content for subscribers. Ray is a St John’s University graduate with a degree in Risk Management & Insurance and is a CPCU candidate.