La. Wants Hurricane Law Suit Extension Issue Settled in State Court

July 28, 2006

Louisiana plans to fight attempts by Allstate Corp. to have a federal court determine if new laws giving homeowners two years to file lawsuits against their insurers is legal.

Allstate filed a suit July 20 asking U.S. District Judge James Brady to determine the constitutionality of two laws passed this year by the Legislature. The attorney general filed a similar suit in state court on July 10, but the federal suit stopped action on the state suit.

The laws extend from one to two years that homeowners with hurricane-related disputes with their insurers can sue their insurance companies.

Warren Byrd, executive counsel for the state insurance department, said the agency would ask Brady to have the dispute resolved in state court. Under the law, victims of Hurricane Katrina would have until Sept. 1, 2007, to file suits, while victims of Hurricane Rita would have until Oct. 1, 2007.

Allstate contends that the constitutionality question should be determined in federal court because the federal constitution prohibits states from passing laws that impair existing contracts.

The company also argues that standard federal flood insurance policies put a one-year limit on suits.

Information from: The Times-Picayune,

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