Louisiana homeowners find lawsuits against insurance bailout program more challenging
There was a vast gulf between the cost of needed repairs to her
"I'm not going to be made whole?" Piro asked recently. "There's something wrong with this picture."
Her confusion is not uncommon among homeowners in south
The organization has borrowed
"At the end of the day, if we're at an impasse, then the answer is people need to sue whether they do it personally or whether they hire an attorney," said
Still, consumers like Piro are learning about another twist. Unlike insurance companies, LIGA cannot be sued for bad-faith damages. As a result, in disputes that lead to lawsuits, plaintiffs' lawyers are asking for a larger share of the settlement. As a result, homeowners might come away with more money than they had, but still less than they need to complete repairs.
Piro has been reluctant to sue, hoping that she would eventually get LIGA to pay by playing nice. But as the
More than 3,000 lawsuits related to the insolvent insurers have already been filed against the association. That number is expected to grow as the deadline looms.
LIGA has hired nearly two dozen law firms to help it respond. Those attorneys join the various third parties — adjusters, actuaries and financial consultants — that are also helping it sort through a historic backlog of claims.
Lawyers say the third parties are also shielded from bad faith claims and other damages while working for LIGA, leaving consumers with no way to check bad behavior.
"When you're suing your insurance company, you've got teeth in that lawsuit because there's a threat of bad-faith damages, attorneys fees and court costs — and they know this," said
The firm has more than 100 cases involving the association, he said.
"But LIGA is immune from liability. They are not on the hook for attorney's fees and court costs. There really is no incentive (to negotiate)."
Tough legal case
The bad-faith penalties helped deter insurers from engaging in deceptive business practices, like intentionally underpaying claims.
If a consumer didn't like what an insurer was offering, for instance, they could also invoke an independent appraisal process.
A standard in most policies, the appraisal process allows each party to name an appraiser from a list kept by the
With LIGA, consumers can still ask for an independent appraisal without hiring an attorney, but there's no guarantee the association will accept it.
"Once that is approved, LIGA sometimes says: 'Well, we're just not paying for it.' Then we have to file a suit and I have to explain that to a consumer," said
Binegar said he regularly sees cases where people got only
"We've got cases where people got paid nothing and the appraisal award was over
Under
Without the possibility of damages, the cost of the lawsuit — if not paid out of pocket — comes directly from the settlement. And LIGA, no matter what, will pay no more than the cost of the claim.
"The statute is set up in a way where they have very little accountability," Binegar said.
To sue or not to sue
As the filing deadline nears, Piro will have to make a choice soon. In her view, there's hardly a decision to make.
"When I paid for my insurance, that's a two-party contract. They owe me," said Piro, a part-time real-estate agent. "I did everything in good faith according to the rules and laws."
She is still living with the damage to her home caused by Hurricane Ida nearly two years ago. Water stains circle the ceiling around her skylights; sections of drywall and carpet have been removed. The visible issues inside suggested roof damage that a hasty inspection would not confirm, she said.
Piro thought the many claims adjusters who have visited would recognize the damage, too. But in January, a representative from
"'Well, that's where it's at. We're denying you,'" she recalls the woman saying.
What they didn't know was that Piro had already commissioned a structural engineer to evaluate her home in
"They're either going to force me to sell my house as it is, or I'm going to get screwed," she said.
Piro said she started shopping around for attorneys and found that lawyers want as much as 33% of her final settlement in a LIGA case.
With hurricane season's arrival, it feels like the walls are closing in.
Piro was one of the nearly 100,000 policyholders who were forced to migrate to the state's insurer of last resort,
With Southern Fidelity, her annual premium had been no more than
Her first installment is nearly
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