Requirements for Third-Party Claims
Insurance companies should remember that under La. R.S. 22:1892, an insurer is only required to make an “unconditional” tender/payment to an insured, not to a third-party claimant. The only duty imposed on insurers by La. R.S. 22:1892 with regard to third-party claims is to make a “written offer to settle” any property damage claim or medical expense claim (after sufficient proof), or to make such payments within 30 days only after a written settlement agreement is reached.
The distinction between an “unconditional” tender (i.e. acknowledgment), and an “offer to settle,” (i.e. proposed compromise of a disputed claim) has been recognized by the Louisiana’s courts. Mallett v. McNeil, 939 So.2d 1254 (La. 10/17/06). The effect of this distinction can be found in the application of Louisiana Civil Code article 3464 and La. R.S. 22:1290.
Conditional Offers Not Acknowledgments
Louisiana Civil Code article 3464 indicates that “acknowledgments” interrupt prescription. Conversely, jurisprudence has recognized that “offers to settle” may not interrupt prescription. Lima v. Schmidt, 595 So.2d 624 (La. 1992). Thus, when making an offer to a third-party, an insurer may want to describe the offer as “conditional” to avoid the tender being categorized as an “acknowledgment” which may interrupt prescription.
A second effect can be found in La. R.S. 22:1290 which indicates that “settlements” of claims do not constitute an admission of liability for other claims. With the distinction between “settlements” and “acknowledgments” made by courts, an insurer would want to maintain the application of 22:1290 by again couching any payments or tenders as “conditional”, or an “offer of settlement”, which would help maintain that the claim is disputed, thus reserving the right to deny a subsequent claim.
Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.