In January 2025, Louisiana introduced significant new insurance law reforms aimed at making the state more competitive for insurers. One of the most notable changes is the repeal of the "three-year rule," which previously prevented insurance companies from canceling or non-renewing policies that had been active for more than three years. This article will explain what these reforms mean for commercial auto insurance in Louisiana.
What is the Three-Year Rule?
The three-year rule was a unique Louisiana law that protected policyholders by ensuring their insurance policies could not be canceled or non-renewed after three years, regardless of any changes in risk or claims history. This rule was intended to provide stability and security for long-term policyholders.
Repeal of the Three-Year Rule
The new law, signed by Governor Jeff Landry, repeals the three-year rule, allowing insurance companies to drop up to 5% of their long-standing policies starting in 2025. This change aims to increase competition among insurers and stabilize the insurance market. However, it has raised concerns about consumer protections and the potential for increased premiums for some policyholders.
Impact on Commercial Auto Insurance
For businesses in Louisiana that rely on commercial auto insurance, the repeal of the three-year rule means that insurers now have more flexibility in managing their policies. This could lead to more competitive pricing and better coverage options for businesses. However, it also means that businesses may need to be more proactive in reviewing their insurance policies and ensuring they have adequate coverage.
Key Coverages for Commercial Auto Insurance
Commercial auto insurance in Louisiana typically includes the following coverages:
· Bodily Injury Liability: Covers medical expenses for injuries caused to others in an accident.
· Property Damage Liability: Covers damage to another person's property in an accident.
· Collision Coverage: Pays for repairs or replacement of your business vehicle if it is damaged in an accident.
· Comprehensive Coverage: Covers damages from non-collision events such as theft, fire, or natural disasters.
· Medical Payments Coverage: Covers medical expenses for your employees and their passengers in the event of an accident.
· Uninsured/Underinsured Motorist Coverage: Covers medical expenses and vehicle repairs if you are involved in an accident with an uninsured or underinsured driver.
What Businesses Need to Know
With the new reforms, businesses should:
1. Review Current Policies: Ensure that your current commercial auto insurance policy meets your business needs and provides adequate coverage.
2. Stay Informed: Keep up-to-date with any further changes in insurance regulations and how they might affect your business.
3. Shop Around: Consider comparing quotes from different insurers to find the best coverage and rates for your business.
4. Consult an Expert: Work with an insurance agent or broker who can help you navigate the new regulations and find the best coverage options.
Conclusion
The new insurance law reforms in Louisiana are designed to create a more competitive and stable insurance market. For businesses with commercial auto insurance, this means more flexibility and potentially better coverage options. However, it also requires businesses to be more vigilant in managing their insurance policies. By staying informed and working with knowledgeable professionals, businesses can ensure they have the coverage they need to protect their assets and employees.
