Louisiana Property and Casualty Adjuster Practice Test: Louisiana law, Part 2

Correct answer: B. No, overhead and profit must be included, and those deductions are barred

When a general contractor's services are reasonably foreseeable, 22:1892(F)(1) requires the insurer to include general contractor overhead and profit in first-party loss payments under fire and extended coverage policies, whether losses are settled on a replacement cost or an actual cash value basis. Paragraph (F)(2) also bars deducting prospective contractor overhead, profit and sales tax when determining actual cash value.

Reference: La. R.S. 22:1892(F)

Correct answer: C. La. R.S. 22:1892(I), the claims payment statute

Acts 2024, No. 3 repealed 22:1973 effective July 1, 2024, and the duty now appears in 22:1892(I): an insurer, including a surplus line insurer, owes its insured good faith and fair dealing and must adjust claims fairly and promptly. Knowingly misrepresenting facts, policy provisions or the prescriptive period is a breach. Subsection J imposes a matching good faith duty on insureds and claimants.

Reference: La. R.S. 22:1892(I) and (J); La. R.S. 22:1973 (repealed by Acts 2024, No. 3)

Correct answer: D. 15 calendar days

Paragraph (14)(o) lists failing to provide the forms needed to present a claim within 15 calendar days of a request, with reasonable explanations of their use, as an unfair claims settlement practice. Like every item in paragraph (14), it is a violation when committed with such frequency as to indicate a general business practice. Other items include refusing to pay claims without a reasonable investigation.

Reference: La. R.S. 22:1964(14)(o)

Correct answer: A. $25,000, up to $500,000 aggregate in any six-month period

With a cease and desist order, the commissioner may impose up to $1,000 per act or violation, capped at $100,000 aggregate. If the person knew or reasonably should have known of the violation, the limit rises to $25,000 per act and $500,000 aggregate in any six-month period, and the license may be suspended or revoked. The $500 and $10,000 figures are the adjuster license fines in 22:1672.

Reference: La. R.S. 22:1969(A)

Correct answer: B. A written claim status report and a primary contact reachable two or more ways

When an insurer assigns a third or subsequent primary adjuster within six months on a personal residential named storm or hurricane claim, it must give the insured a written status report showing how the deductible was applied, amounts available and paid under each coverage, payment details and items still to be adjusted. It must also name a primary contact and provide at least two direct ways to reach that contact.

Reference: La. R.S. 22:1897

Correct answer: C. $15,000 per person, $30,000 per accident, $25,000 property damage

Louisiana's minimum limits, often written 15/30/25, are $15,000 for bodily injury to or death of one person, $30,000 for bodily injury to or death of two or more persons in one accident, and $25,000 for damage to property of others. Owners and operators who fail to carry this compulsory security also lose part of their own recovery under the no pay, no play rule in 32:866.

Reference: La. R.S. 32:900(B)(2)

Correct answer: D. $40,000

The no pay, no play rule bars an owner or operator without compulsory security from recovering the first $100,000 of bodily injury and the first $100,000 of property damage under the current text, last amended by Acts 2025, No. 16. Marcus recovers $140,000 - $100,000 = $40,000 for injuries and nothing for his $18,000 of property damage. The two thresholds apply separately, so combining them ($58,000) is wrong.

Reference: La. R.S. 32:866(A)

Correct answer: A. Only on a form prescribed by the commissioner of insurance

UM coverage must be included at limits not less than the policy's bodily injury limits unless the named insured rejects it, selects lower limits or selects economic-only coverage, and that choice may be made only on the form prescribed by the commissioner. A properly completed and signed form creates a rebuttable presumption that the insured knowingly made the choice, and the form becomes part of the policy. Commercial auto policies follow a separate selection-form rule in 22:1295(7).

Reference: La. R.S. 22:1295(1)(a)(i) and (ii); La. R.S. 22:1295(7)

Correct answer: B. $10,000

LIGA pays covered claims for return of unearned premium up to $10,000 per policy, so $4,500 of the $14,500 is not covered by LIGA. Other covered claims are limited to $500,000 per claim and per accident or occurrence, workers compensation benefits are paid in full, and LIGA never pays more than the insolvent insurer owed under the policy.

Reference: La. R.S. 22:2058(A)(1)(b) and (c)

Correct answer: D. It is a nonprofit residual market that operates the FAIR and Coastal Plans

Citizens is a nonprofit corporation that runs the FAIR Plan and the Coastal Plan as residual market mechanisms for applicants who are entitled to coverage in good faith but cannot get it in the voluntary market. It does not need a certificate of authority and does not participate in the Louisiana Insurance Guaranty Association, and the legislature intends it to work toward depopulating its plans.

Reference: La. R.S. 22:2291; La. R.S. 22:2293(A) and (C); La. R.S. 22:2295

Correct answer: A. Payment of $180,000, without deduction or offset

Louisiana's valued policy law covers fire policies on immovable property issued or renewed after January 1, 1992, other than blanket or builders risk policies. If the insurer places a valuation on the property and uses it to set the premium, a total loss is paid at that valuation without deduction or offset, unless the policy and application spell out a different method in type of equal size. Payment cannot exceed the insured's interest.

Reference: La. R.S. 22:1318

Correct answer: C. Within 24 months after the inception of the loss

Louisiana's standard fire policy says no suit for a first-party claim is sustainable unless all policy requirements are met and the action is commenced within 24 months after the inception of the loss. Many states use 12 months, which makes that a tempting wrong answer. The same form requires a sworn proof of loss within 60 days and suspends coverage after 60 consecutive days of vacancy or unoccupancy.

Reference: La. R.S. 22:1311(F)(2), Suit and Requirements in case loss occurs

Correct answer: B. They must keep a $50,000 surety bond or irrevocable letter of credit

A public adjuster must maintain evidence of financial responsibility of at least $50,000, by surety bond or irrevocable letter of credit, and the authority to act ends automatically if it terminates or is impaired. Public adjusting excludes motor vehicle claims, a public adjuster may not act as appraiser or umpire on a claim he adjusted, and a licensed public adjuster may not act as a company or independent adjuster in Louisiana.

Reference: La. R.S. 22:1692(8); La. R.S. 22:1701; La. R.S. 22:1706

Correct answer: C. She may rescind in writing within three business days and get back anything of value

The insured may rescind a public adjuster contract within three business days after signing, by a written rescission mailed or delivered to the adjuster at the address in the contract. Anything of value she gave under the contract must be returned within 15 business days after the adjuster receives the cancellation. Before signing, the adjuster must also give her a separate disclosure explaining company, independent and public adjusters.

Reference: La. R.S. 22:1704(E), (H) and (I)