Direct Action States

In most insurance liability claims, in order to reach into the insurer’s pocketbook, the third-party claimant must sue the insured who, then, turns to his carrier for a defense. The carrier will evaluate the cost of the lawsuit (often called the “cost of defense”) in addition to reviewing the merits of the claim and either settle or fight the suit. However, in Direct-Action States, the legislatures created statutes which avoid this circuitous route and allows the third-party claimant to directly sue the insurer.

Scroll to the bottom of the chart for more information.

This chart is current as of the date I wrote it, but adjusters should be familiar with their state’s rules. I cannot guarantee the accuracy of the list. Because laws and regulations can change without notice, an attorney should be contacted if there are any questions regarding this chart. These materials are provided for informational and educational purposes only and do not constitute legal advice or legal opinions because I am not an attorney.

State	Direct Action
Alabama	No
Alaska	No
Arizona	No
Arkansas	No
California	No
Colorado	No
Connecticut	Yes
Delaware	No
District of Columbia	No
Florida	No
Georgia	Yes
Hawaii	No
Idaho	No
Illinois	No
Indiana	No
Iowa	Yes
Kansas	Yes
Kentucky	No
Louisiana	Yes
Maine	No
Maryland	No
Massachusetts	No
Michigan	No
Minnesota	No
Mississippi	No
Missouri	No
Montana	No
Nebraska	Yes
Nevada	No
New Hampshire	No
New Jersey	Yes
New Mexico	No
New York	No
North Carolina	No
North Dakota	No
Ohio	No
Oklahoma	No
Oregon	No
Pennsylvania	No
Rhode Island	Yes
South Carolina	No
South Dakota	No
Tennessee	No
Texas	No
Utah	No
Vermont	No
Virginia	No
Washington	No
West Virginia	No
Wisconsin	Yes
Wyoming	No

Connecticut
Connecticut believes the insurer is legally responsible. Connecticut statute (D.G.S.A. § 38a–321) allows direct action only after the third-party claimant obtains a final judgement against the insured and only if the judgment has not been satisfied within 30 days of proclamation. Note: The third-party claimant, when he seeks payment from the carrier, steps into the shoes of the insured. Therefore, he has the same rights and duties as the insured under the policy and may be subject to any of the policy defenses the carrier had against the insured.

Georgia
Georgia’s direct-action statute (Ga Code Ann § 46–7–12) limits direct-action to motor vehicle claims. Note: There is not a direct-action cause if the accident occurs outside of Georgia.

Iowa
Iowa’s direct-action statute (Iowa Code § 516.1) applies to all liability policies issued in Iowa. Note: Before the third-party claimant can bring his direct-action lawsuit, he must show he has a judgement and it remains unsatisfied.

Kansas
Like Georgia, Kansas limits direct-action to automobile accidents (KS Code § 66–1, 128). Note: The insurer can be the sole party in the suit; in other words, the insured does not need to be a party to the direct-action lawsuit in Kansas.

Louisiana
Louisiana is probably the first state adjusters think about when they hear “direct-action lawsuit.” It’s broad direct-action statute (La. Rev. Stat. 22:1269) has been attacked throughout the years.

Extremely recently, Act 37 has come into effect—recently as of January 1, 2021. Under this act, jurors will not be told there is insurance coverage for several reasons, which is beyond the scope of this text. In a twist of logic, the act requires the court to read instructions to the jurors which would inform them there is insurance coverage in place. But the act specifically states the jurors will not be told the identity of the insurer. Adjusters should consult with counsel in this matter.

Nebraska
Again, Nebraska’s direct-action statute (Neb Rev Stat § 44–508) is limited to auto accidents. It is further limited to cases involving the insured’s bankruptcy or inability to satisfy a judgment.

New Jersey
New Jersey, like other states, has a limited direct-action statute (NJ Rev. Stat. § 17:28–2) for automobile accidents. However, the damage must be caused by animals. Note: Third-party claimants do not have the right to sue for bad faith in their direct-action lawsuits.

Rhode Island
The third-party claimant can only pursue a direct-action against the insurer when he has obtained a judgement solely against the insured (RI Gen Laws § 27–7–2). Note: The claimant can begin a direct-action lawsuit against the carrier if he can convince a jury he made a good faith effort to serve the insured.

Wisconsin
Like Iowa, Wisconsin direct-action statute (§ 632.24) applies to all types of liability policies. It expands the statute to include bonds and does not require the third-party claimant to obtain a judgment against the insured prior to commencing suit.