Louisiana Citizens Insurance Reaches $23M Settlement

August 25, 2010

Louisiana’s property insurer of last resort has reached a $23 million settlement with thousands of homeowners who say they were not properly compensated after hurricanes Katrina and Rita for work needed to coordinate storm repairs.

The dispute centered around the use of a general contractor.

When repairing a home takes three or more types of specialists, insurers are supposed to pay extra money to cover the cost of a general contractor to coordinate the work — typically 20 percent of the repair bill — even if the homeowner acts as his own contractor.

John Wortman, CEO of Louisiana Citizens Property Insurance Corp., confirmed that a settlement had been reached.

Citizens admits no wrongdoing in the proposed settlement, which will be considered by a judge in state district court in New Orleans on Nov. 18.

“We’re very pleased,” Allan Kanner, co-counsel for the plaintiffs, told The Times-Picayune. “It’s an important issue because it underscores that people are entitled to overhead and profit when three or more trades are involved. That’s not something that insurance companies are necessarily running around telling people.”

The deal creates a $23 million settlement fund for all parties. Attorneys fees of up to 33 percent are deducted off the top, and then the plaintiffs get the rest, with payments depending on the amount of damage homeowners had.

Citizens is Louisiana’s third-largest property insurer.

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