Louisiana has changed the rules for when an insurance company can be sued for bad faith. Act 932 takes effect August 1, 2026, and it amends La. R.S. 22:1892, the statute that governs how insurers must pay and adjust claims in this state. The law started as House Bill 1162 by Representative Brian Glorioso and became law without the governor's signature after the constitutional review period expired.

"This change in the law severely limits plaintiffs' ability to hold insurance companies accountable, as the statute's new definition of good faith leaves much to be determined. All the insurance companies need to do is claim a liability or causation defense, and they eliminate their chances of being held in bad faith, therefore shifting any excess judgment burden onto the insureds. This is a loss for claimants as well as for the insureds and, once again, the legislature caves to the self-interest of insurance giants." — Attorney Digger Earles

Act 932 does two things. First, it requires insurers to verify a contractor's license before issuing a check naming that contractor, and it provides insurers with a safe harbor from bad-faith penalties if a licensing check causes a brief delay.

Second, and more important for anyone hurt in an accident, it narrows the circumstances under which an insured person, a claimant, or their assignee can bring a bad-faith claim in a personal injury or bodily injury case. That second change appears aimed, at least in part, at the Louisiana Supreme Court's 2015 decision in Kelly v. State Farm Fire & Casualty Co., 169 So.3d 328 (La. 2015), which held that an insured did not need a firm settlement offer within policy limits to bring a bad faith failure-to-settle claim.

At Laborde Earles Injury Lawyers, we have recovered over $1 Billion for injured Louisianans and built a team of 25+ attorneys with 350+ years of combined experience holding insurance companies accountable. David Laborde and Digger Earles built this firm on the idea that insurers should not get the last word when someone's life has been upended. This new law raises the stakes on getting that fight right from day one, and we want you to understand exactly what changed and why it matters to your claim.

What Does Act 932 Actually Change?

Act 932 amends the insurer good faith duty found in R.S. 22:1892, the same statute that already required insurers to adjust claims fairly and promptly. The new law adds a contractor licensing verification requirement for property repair payments, and it carves out specific situations where a personal injury or bodily injury claimant cannot bring a bad faith cause of action against an insurer.

Before this law, Louisiana's bad faith framework focused on whether an insurer acted arbitrarily, capriciously, or without probable cause in handling a claim. Act 932 does not remove that standard. Instead, it draws three bright lines around situations where the legislature has decided a bad faith claim simply cannot proceed, regardless of how the underlying facts play out.

When Can an Insurance Company No Longer Be Held Liable for Bad Faith?

Under the enrolled version of HB 1162, an insured person or claimant cannot bring a bad faith cause of action against an insurer in a personal injury or bodily injury claim when any of the following apply:

• There is a good-faith dispute as to liability for the accident
• There is a good-faith dispute as to medical causation of the injuries the claimant alleges
• No settlement offer has been presented by or on behalf of the third-party claimant within the applicable policy limits, and the insurer has been given at least thirty days to respond

Each of these carve-outs gives an insurer a defense to a bad-faith claim it did not previously have. For example:

• If the insurance company can point to a legitimate dispute over who caused the wreck, or whether the injuries are actually connected to it, that dispute alone can block a bad faith claim
• The same is true if no formal policy-limits demand was ever put in writing and given time to be answered

Why the Policy-Limits Demand Rule Is the Part That Matters Most

The third carve-out is the one every injured Louisianan should understand, because it goes straight to how excess judgment cases work.

For decades, Louisiana law has recognized that an insurer owes its insured a duty to make a reasonable effort to settle a claim, and that failing to settle within policy limits when liability is clear can expose the insurer to a bad faith claim if a judgment later exceeds those limits.

In Kelly v. State Farm Fire & Casualty Co., the Louisiana Supreme Court went a step further and held that an insured did not even need a firm settlement offer within policy limits to bring that kind of bad faith claim. Act 932 pulls that door mostly shut.

Under the new law, the duty to settle cannot even be tested unless a proper policy-limits demand was actually made and the insurer had at least thirty days to respond.

That single requirement changes how a demand letter must be drafted. To preserve a bad faith claim under Act 932, a policy-limits demand generally needs to:

• State the applicable policy limits clearly and in writing, not by phone or in a general conversation with an adjuster
• Set a firm deadline that gives the insurer at least thirty days to respond, as the new law now requires
• Document liability and medical causation with real evidence, so the insurer cannot lean on a good faith dispute over either one to avoid the claim
• Be presented by or on behalf of the claimant directly to the insurer, so there is no question the demand was properly made

A vague letter, a verbal conversation with an adjuster, or a demand missing any of these pieces may no longer be enough to preserve a bad faith claim if the insurer later refuses to settle a strong case. Getting this piece wrong at the front end of a claim can close a door that never reopens.

How the Contractor Verification Rule Affects Property Damage Claims

Many personal injury cases in Louisiana, especially after hurricanes or serious car accidents, come bundled with a property damage claim. Act 932 requires an insurer to verify a named contractor's license through the Louisiana State Licensing Board for Contractors before releasing a payment for repair or restoration work.

If that verification fails, the insurer is protected from bad faith penalties for the resulting delay, but only if it documents the attempted verification in the claim file and sends the insured written notice within five business days explaining that payment is being held up. If the insurer skips those steps, the safe harbor does not apply, and the standard bad faith rules still govern the delay.

What This Means for Your Claim Going Forward

Insurance companies now have more tools to defend against a bad faith claim, which makes the early stages of a Louisiana injury case more important than ever. A demand letter needs to clearly state the policy limits, document liability and medical causation with real evidence, and start the 30-day clock correctly. Waiting to bring in an attorney until after an insurer has already lowballed or ignored a claim can mean losing the chance to hold that insurer accountable at all.

Laborde Earles Injury Lawyers prepares every case as if it is headed to trial, because insurers respond differently to a firm that is actually ready to go there. Our attorneys build the record early, from the first demand letter through negotiations, so that if an insurance company fails to act in good faith, our clients have not lost their ability to do something about it. No outcome can be guaranteed, but our approach is designed to give clients the strongest possible position under Louisiana's evolving insurance laws.

Talk to a Louisiana Attorney Who Knows How Insurers Operate

Laborde Earles Injury Lawyers has spent decades learning how Louisiana insurance companies handle claims, and that experience matters even more now that state law gives insurers new defenses to bad faith claims. Your Voice is Our Voice, and our team is available 24/7/365, in English and Spanish, to talk through what happened to you. You do not pay us unless we win.

If you have been injured in Louisiana and want to understand how Act 932 could affect your case, Get Your Free Case Evaluation today.

Legal Disclaimer: The information on this page is provided for general educational purposes only and does not constitute legal advice. Every case is different. Past results do not guarantee future outcomes.