Updates to Bad Faith Litigation

Understanding Louisiana’s New “Bad Faith” Insurance Law: 2025 Reforms Explained

If you have ever filed an insurance claim in Louisiana, you have probably come across the term “bad faith.” Among other things, it refers to situations where an insurer unreasonably delays or denies payment on a valid claim. Louisiana has long had strong laws protecting policyholders, and as of August 1, 2025, those laws have undergone significant changes.

Insurance companies have a legal duty to act in good faith. That means they must handle claims fairly, honestly, and without unnecessary delay. When they knowingly fail to do so or deny first-party claims without a valid reason, they can face penalties and Louisiana insurance claim attorneys’ fees under state law.

Key Changes Under the 2025 Amendments

Prior to the amendments, Louisiana had two primary bad-faith statutes: La. R.S. 22:1892, which addressed timely payment of claims, and La. R.S. 22:1973, which dealt more broadly with an insurer’s general duty of good faith and fair dealing.

Under the recent tort-based reforms, §22:1973 has been repealed, and its core provisions have been folded into §22:1892. In practical terms, there is now a single statute governing bad-faith obligations for property and casualty insurance carriers in Louisiana, with a few additional rules for catastrophic loss property claims.

All bad-faith duties are now contained within §22:1892, streamlining the process for both insurers and policyholders. The statute also establishes extended deadlines. For first-party claims, insurers must pay within 30 days of receiving satisfactory written proofs and demand therefor. For catastrophic property losses, such as hurricane damage, which are governed by 22:1892.2, the timeline following the receipt of satisfactory proof of loss is 60 days for residential property and 90 days for commercial or other immovable property.

The reforms also introduce a new “cure period notice” for catastrophic claims. When a property claim arises out of a catastrophe or emergency declared by the President or Governor, policyholders must now send the insurer a written “cure period notice” detailing the alleged bad-faith conduct and give the insurer 60 days to correct it before filing suit. If the insurer pays the full amount demanded during that 60-day window, actually incurred expenses, and a 20% attorney fee, the insured’s ‘bad faith’ cause of action is extinguished; if the carrier makes a partial payment, recoverable penalties are reduced by half. However, the statutory language surrounding this new cure process is somewhat vague, which may create uncertainty in future litigation. At Degan, Blanchard & Nash, we take a careful, strategic approach to navigating those ambiguities and protecting our clients’ interests.

New Duties and Penalties for Insurers and Policyholders

The updated law also now imposes a statutory duty of good faith and fair dealing on insureds, claimants, and their representatives when asserting an insurance claim. Any breach of this duty is required to be considered by the trier of fact and may weigh against any insured pursuing a ‘bad faith’ claim.

Penalties have also changed. For most claims, the penalty is now 50 percent of the damages owed or $5,000, whichever is greater, plus attorney’s fees. The insured’s option to seek a discretionary penalty of up to “two times any consequential damages” under §22:1973 no longer applies.

Navigating the Evolving Legal Landscape

For insurance carriers, these reforms raise the stakes. Companies now face stricter deadlines, clearer compliance standards, and the same exposure to penalties for mishandled claims. The addition of a cure notice period and several new and fact-specific statutory requirements makes the claims process more technical and time-sensitive, making it even more important to work with experienced adjusters and seasoned attorneys who understand the evolving legal landscape. At Degan, Blanchard & Nash, our team is prepared to guide clients through these changes and ensure their rights are protected at every step.