DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part of the
legislative instrument. The keyword, one-liner, abstract, and digest do not constitute part of the law
or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 967 Reengrossed 2022 Regular Session Seabaugh
Abstract: Repeals a prohibition on reducing liability limits for certain costs.
Present law provides that liability limits contained in a policy or contract of insurance issued by an
authorized insurer shall not be reduced by the expenses of defense in a suit under the policy, unless
waived by the commissioner.
Present law provides that the prohibition on reducing liability limits in present law does not apply
to personal lines, medical malpractice insurance, commercial vehicle insurance, or commercial
general liability insurance.
Proposed law provides that the commissioner shall not waive the prohibition on reducing liability
limits for personal lines, medical malpractice insurance, commercial vehicle insurance, or
commercial general liability insurance.
Present law provides that the prohibition on reducing liability limits in present law shall be waived
by the commissioner for insurance policies covering professional liability other than medical
malpractice, directors' and officers' liability, errors and omissions liability, pollution liability,
employment practices liability, cyber risk liability, information security and privacy liability, patent
defense or other intellectual property infringement liability, and commercial liability coverages sold
in combination.
Proposed law repeals present law.
Present law provides that the prohibition on reducing liability limits in present law may be waived
by the commissioner for other types of insurance, upon consideration by the commissioner of the
level of market competition, the nature and design of the product, the availability of insurance
coverage, and other relevant factors.
Proposed law repeals present law and provides that the commissioner may waive the prohibition
provided in present law for types of insurance other than personal lines, medical malpractice
insurance, commercial vehicle insurance, and commercial general liability insurance upon
consideration of the customs of the industry and the interests of the particular insured.
Present law provides that every policy or contract for which a waiver is executed by the
commissioner pursuant to present law shall be subject to the following requirements: (1)Defense expenses used to reduce the liability limits on the policy or contract shall not include
overhead costs, adjusting expenses, or other expenses incurred by the insurer in the ordinary
course of business.
(2)Defense expenses used to reduce the liability limits shall include only reasonable attorney
fees and expenses directly connected to the insurer's defense of a specific liability claim on
behalf of an insured and any other litigation expenses directly arising from the defense of a
specific liability claim.
(3)The inclusion of defense expenses shall not exhaust the entire amount of liability coverage.
Proposed law repeals present law and provides that expenses of defense may include only reasonable
attorney fees and expenses directly connected to the insurer's defense of a specific liability claim.
Present law provides that the commissioner may limit the amount of defense expenses used to reduce
the liability limits or establish a minimum amount of liability coverage from which defense expenses
shall not be deducted and provides that the commissioner may limit or define the amount of expenses
that reduce the liability limits for all or specific type of insurance coverage.
Proposed law repeal present law.
Present law provides that any policy or contract of insurance containing terms that require a waiver
pursuant to present law shall include a separate notice or inclusion on the declaration page stating
that the insurance policy or contract includes defense expenses which may be deducted from the
liability limits of the policy. Present law provides that this notice shall be prominently printed or
stamped in bold on the policy or contract and shall not be less than a ten-point type.
Proposed law retains present law.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 22:1272)
Summary of Amendments Adopted by House
The House Floor Amendments to the original bill:
1. Provide types of insurance for which the commissioner shall not provide a waiver,
relative to the prohibition in present law.
2. Provide that the commissioner may waive the prohibition in present law for certain types
of insurance upon consideration of certain factors.
3. Remove certain requirements for policies for which the commissioner grants a waiver. 4. Provide certain costs that shall not be included in an insurer's expenses of defense.
5. Remove certain discretionary authority of the commissioner related to the limitation of
defense expenses.