Insurance Dispute Lawyer Blog

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In insurance, an assignment is the transfer of legal rights under an insurance policy to another party. The legality of assignments became a major issue in the aftermath of hurricanes Katrina and Rita. During this period, the federal government, in an effort to aid rebuilding efforts, issued money through the Road Home program to homeowners who held underinsured properties. In exchange, these homeowners were required to assign their rights to insurance claims under their policies to the the state of Louisiana. The purpose of this assignment was to prevent homeowners from fraudulently receiving duplicate payments. However, the program incentivized insurance companies to estimate damages too low, which in turn forced homeowners to take the higher amount offered through the Road Home program.

The shortfall created within the Road Home program forced the state of Louisiana to bring suit against insurance companies through the policy rights assigned to the state by homeowners. In essence, the state sought to recoup actual insurance claim damages that the homeowners were rightfully owed had they not opted into the Road Home program. Though most, if not all, of the homeowner insurance policy contracts contained an anti-assignment clause, the state maintained that it had the right to post-loss assignment. Therefore, it is critical to distinguish between a pre-loss assignment and a post-loss assignment.

A pre-loss assignment occurs when one transfers a legal right under an insurance policy to another before the injury or loss occurs. An example of a type of pre-loss assignment is found in cases when life insurance is assigned to a bank as collateral for a loan. Here, the assignment has occurred before the loss, in this case the death of the original policy holder, and any benefits that accrue at the time of death are used to repay the bank first. These types of assignments typically require consent from the insurer, but are usually barred by anti-assignment clauses.

A post-loss assignment, on the other hand, is the transfer of a legal right under an insurance policy to another party after the injury or loss occurs. Post-loss assignments frequently give the third party transferee the ability to file a claim against the insurance company for any loss accrued by the original policy holder. Many insurance companies try to block such assignments through broad anti-assignment clauses found in policy contracts. Such clauses were found in most Katrina and Rita policies, and insurance companies pointed to these sections in an attempt to avoid paying actual damage costs homeowners thought they rightfully assigned to the state.

While national jurisprudence holds that pre-loss anti-assignment clauses are valid in favor of contract law and public policy, anti-assignment clauses related to post-loss assignments are held to be invalid. The reasoning behind this difference primarily lies with public policy considerations. A pre-loss assignment, for example, may increase the risk beyond the point that the insurance company had originally contracted for and with a party the insurance company had not originally contracted with. A post-loss assignment, on the other hand, simply assigns an accrued right to payment after a loss has already occurred. There is no change in risk as the loss has already occurred, and since payment is to be made it matters none to whom the payment is made.
The Supreme Court of Louisiana holds that such public policy concerns are better suited for the legislature. However, the Court does state that clauses prohibiting post-loss assignment must be written in clear and unambiguous language. If the language in the policy contract is unclear, then, in accordance with laws regarding contracts of adhesion, the language will be construed against the insurance company and in favor of the insured. If you have entered into a contract with an insurance company and are looking to assign your rights under the policy to a third party, turn to the language in the contract itself. Though there is not specific set of words or test used to determine "clear and unambiguous," your own judgment is a good starting point in determining whether or not you have the right to assignment.

Though your own judgment is an excellent place to start, insurance law is very complicated and is best suited for a practicing attorney.

Continue reading "Supreme Court of Louisiana Rules on Hurricane Katrina Insurance Policies' Anti-Assignment Clauses" »

For those Louisiana residents, whether you live in Lake Charles, Shreveport, Baton Rouge, New Orleans, Kentwood or any other of the great cities across this state, looking for more information on their possible personal injury claim, check out our blog dedicated to these legal matters:

Louisiana Personal Injury Blog

This blog discusses the legal issues relating to Admiralty/Maritime law, Animal/Dog Bites, Car Accidents, Chemical/Industrial Spills, the intricacies of Expert Testimony, Insurance Disputes, employee rights under the Jones Act, Legal Duty, Civil Lawsuits, Criminal prosecution, Medical Malpractice, Mesothelioma/Asbestos, Motorcycle Injury, Negligence, Offshore Accidents, Product Defects, Chinese Drywall, Strict Liability, Workers' Compensation and Wrongful Death. All of these issues are crucial to citizens rights and residents of Louisiana.

To better understand the complexity of the law, contacting an attorney is crucial. However, to get a better understanding of the general issues, we hope this resource is invaluable. Feel free to browse this legal resource dealing with a variety of harms or damages you may have suffered in order to understand how your issue matches up with the law.

If you would like to speak with an attorney, check out our contact information. We represent Louisiana residents across the state and would be happy to discuss with you how to move forward with your unfortunate circumstances.

FEMA recently came out to publicly encourage residents of Florida and the Gulf Coast to get flood coverage, regardless of how susceptible to risk they may be. In doing this, the government is bringing more attention to the need for proper insurance policies and to prevent having to help out thousands of people who thought it 'could never happen to them.'

Matt Gilmour of the Tallahassee Democrat highlights this important step on the part of FEMA

With hurricane season under way, the Federal Emergency Management Agency is reminding Florida residents about the importance of flood insurance, even if they don't live in high-risk areas.

"It takes 30 days for flood policies to take effect and be active, so today's a good day to speak to a local insurance agent about what policy would be best for you," FEMA coordinating officer Jeff Bryant said in a written statement.

Anyone who lives in a community that participates in the National Flood Insurance Program can purchase flood insurance, and between 20-25 percent of those who file flood-insurance claims do not live in areas at high risk for flooding, according to a news release from FEMA. After Tropical Storm Fay in 2008, nearly 150 flood-insurance policyholders with properties in areas with a low-to-moderate risk for flooding received more than $7 million from the insurance program in settlement payouts.

"This should be a lesson to us all that everyone needs flood insurance — even those who believe their property won't flood because their home or business is in an area that normally doesn't flood," said Doug Wright, state coordinating officer with the Florida Division of Emergency Management.

FEMA is helping all eligible applicants who register directly with the agency and urging them to file claims as soon as possible to help speed up their recovery. For more information, visit www.floodsmart.gov or call (888) 275-6347 or (800) 427-5593.

By being proactive on prevention of home and property owners from having too little of coverage, FEMA and the government are trying to avoid catastrophe while at the same time keep information out and fresh. Both are extremely important and positive actions at a time where money is short and people looking to save a little bit of money might not garner the coverage they need that, in the event of a disaster, could be catastrophic.

While catching up on some hurricane news for the Gulf Coast region from June, we came across this story about relief fraud in the wake of Hurricane Katrina

A federal grand jury in Atlanta has accused four people of fraudulently obtaining tens of thousands of dollars in government assistance for victims of Hurricane Katrina.

Federal prosecutors said Wednesday that 37-year-old Kristine Clark and 24-year-old Michael Rouzan, both of Decatur, Ga., were charged in one indictment, and 26-year-old Markisha Burks of Dallas and 43-year-old Lucien Danthon of Atlanta were named in separate indictments accusing them of falsely claiming they resided in New Orleans at the time of the 2005 storm.

Charges include wire fraud, mail fraud and theft of government funds.

Prosecutors say Clark and Rouzan obtained $32,000 for housing assistance and purported property damage, and a trailer in Hammond, La., where they lived from May 2006 to March 2008.

It's extremely frustrating to hear of how people took advantage of the tragedy suffered by the city of New Orleans but even moreso to see how their claims may justify stricter action by the government that can injure those with real needs after the next tragedy. Punishment for such fraud should be handled swiftly and aggressively to send a message so that if such an event occurs, anywhere in the country, opportunists avoid taking assistance from the people who truly need it. In the event there is any debate over eligibility for such assistance, contact an attorney or government official immediately before assuming and opening yourself up for jail time and fines.

FEMA is now looking into cronyism in Louisiana in the wake of federal funding provided for the recovery effort post-Katrina.

WASHINGTON (AP) — The Federal Emergency Management Agency is investigating allegations of cronyism and other misconduct at the New Orleans office overseeing efforts to rebuild the hurricane-battered Gulf Coast, officials said Wednesday.

The agency, which has endured fierce criticism over delays in the rebuilding effort, sent a team of Washington investigators to its Louisiana office last week. The agency expects a report on findings in the coming days, two top officials said at a congressional hearing on the Hurricane Katrina recovery.

Of note is the following:

In Louisiana, about $3.4 billion in FEMA assistance remains unspent — nearly half of what was approved.

Hopefully the recent attention the mismanagement of tasks FEMA is receiving will lead to positive results for the Gulf Coast.

In a surprisingly candid and clear report on FEMA and its efforts post-Katrina, CBS News released a story on the 25th detailing what Slidell mayor Ben Morris calls "an indescribable nightmare that most people would not believe."

An excerpt:

CBS News has learned that since January 1, nearly 80 employment-related complaints have been filed by staff at the office.

And in the last year, more than 30 complaints have been filed against one man - chief of staff Doug Whitmer - including charges of sexual harassment.

"The harassment, the equal rights - violations that are currently taking place over there, this office is slowing down the recovery in this region.” said one former FEMA employee.

And slowing down the recovery - these former employees charge - is exactly what some senior managers at the New Orleans FEMA office want.

Obviously this is a huge problem for the Gulf Coast but is a reality, and perhaps not so shocking, for those individuals who had their homes destroyed in Katrina and other hurricanes in the past few years. With FEMA appearing to be in disarray, it is ever important that residents remain vigilant on meeting deadlines or expectations put forth by the government and insurance companies in order to do everything they can to not be swept up in the apparent bureaucracy that is holding up the recovery effort.