Prior to its passage in July of 2020, the Civil Justice Reform Act was touted by its supporters as a way to attract more auto insurance companies to Louisiana. This increased competition was supposed to help drive auto insurance rates down by 10 to 25 percent.
Currently, Louisiana has the second highest auto insurance rates in the nation.
After more than a year since the Civil Justice Reform Act was signed into law, auto insurance rates have actually climbed 2 percent. Louisiana state Insurance Commissioner Jim Donelon appears to be backtracking on some of his wild claims about a drop in rates. In a meeting of the state’s Task Force on Affordable Automobile Insurance, Donelon said that the 25 percent decline that he quoted lawmakers was a “pure guess” and not a guarantee.
Read on to learn more from our team of traffic attorneys at Crescent City Law Firm to understand the change in the law and how it could affect your car insurance premiums.
Components of Louisiana’s New Auto Insurance Law
The Civil Justice Reform Act of 2020 was a tort reform law that was supposed to reduce the number of lawsuits and limit the amount that could be awarded for medical expenses in personal injury cases.
Key components of this law include:
- Making a jury trial more likely—by lowering the damages sought threshold for a jury trial from $50,000 to $10,000, this means that more plaintiffs will have to argue in front of a jury rather than a single judge.
- Making a seatbelt a determining factor—by allowing this information in a trial, the jury may make additional determinations if someone was reckless with their own safety.
- Withholding insurance coverage information—many juries are more likely to raise awards if they know that an insurance company will pay the monetary damages they award.
These changes were intended to lower the amounts that courts awarded to auto accident victims, which would lower the financial responsibilities of insurers.
Insurance lobbyists and other supporters of the new law argued that this would make Louisiana a more appealing market for auto insurance companies, which would stoke competition and suppress insurance rates.
Crescent City Law was Opposed to the reforms because:
- Jury Trials are Actually More Expensive: The cost of a jury trial in New Orleans is in excess of $2000.00 per day. With a lower jury threshold, more insurance companies will demand a trial by jury in more cases. The cost to demand a jury trial is $800.00 in New Orleans. And, trial attorneys are expensive!
- We believe that Louisiana insurers will pass these expenses on to their customers with increased premiums.
- Wearing a Seatbelt is not a determining factor: While we encourage everyone to wear their seatbelt because it’s the law and they save lives, this doesn’t mean that wearing a seat belt will prevent all injuries. Almost all of our personal injury clients were wearing their seat belt during their accident and still have serious injuries which require significant medical treatment!
- Lawyers still sue Insurance Companies after Car Wrecks: The law actually changed how suits are filed. In the past, we named John Doe and John Doe’s insurance company as defendants when we filed suit. Under the reformed law, we can either name John Doe or their insurance company. Since the law has changed, we choose to file suit directly against John Doe’s insurance company and call John Doe as a witness to the wreck. In the end, John Doe’s insurance company still pays the damages awarded by jurors.
Ongoing Debate about the New Law’s Impact in Louisiana
It is unclear whether the new law is flawed or if circumstances are preventing it from operating as intended. There has been a spike in highway fatalities in 2021 that could be linked to the current spike in auto insurance rates.
Proponents of the Civil Justice Reform Act suggest that due to the COVID-19 health crisis, there have not been many jury trials. Even if there was no pandemic, they argue, it would take up to nine months to file a lawsuit and start a trial, so the effects of the law may not be apparent for 2 to 3 years.
There is also some speculation that auto insurance rates could fall as the new federal infrastructure bill disperses billions of dollars to Louisiana. These new funds would improve and expand roads, help alleviate congestion throughout the state and lower the likelihood of vehicle accidents.
Hire an Experienced Personal Injury attorney when you’re Hurt in a Car Wreck
Our dedicated attorneys at Crescent City Law are well-versed in personal injury cases. Our team has recovered millions of dollars for our clients. Our experienced team can guide you through these complex legal processes and help get you the treatment you need so you can live a PAIN FREE LIFE. Let us take care of your case.
Contact Crescent City Law today to schedule a free consultation about your injury.