Changes are coming to the Louisiana Direct Action Statute. Under this unique Louisiana law, a plaintiff previously had a right to assert a direct action against an insurer, or against both an insurer and its insured, under broad circumstances. This meant that practically, insurance companies were routinely named as a party defendant in most tort lawsuits that were filed or amended in Louisiana.
The new legislation, effective August 1, 2024, now
- limits a plaintiff’s right to sue an insurer directly;
- interrupts the prescriptive period against insurers when suit is filed against an insured;
- prohibits naming the insurer in the caption of the lawsuit;
- precludes disclosure of insurance to a jury except in limited circumstances;
- provides for the participation of insurers in final judgment and motions to enforce settlements;
- creates notice provisions for nonparty insurers;
- enacts procedural notice requirements when an insurer is denying coverage or defending under a reservation of rights; and
- codifies prior Louisiana jurisprudence that insurance policies should be interpreted to effect coverage.
Now, an injured person has no right of direct action unless specific circumstances apply.
As part of the statutory amendments, the Legislature codified Louisiana public policy that the purpose of insurance contracts “is to provide protection and coverage to all insureds, whether the insured is a named insured or an additional insured . . . for all legal liability the insured may have within the terms and limits of the policy.”
This changes the statute, which previously provided that liability insurance was for the benefit of all injured persons and their survivors and heirs.
An interpretation of this change is that it eliminates the argument that a plaintiff is in some manner or form a third-party beneficiary under a liability policy.
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