After six years with no adjustment, the legal interest rate in Louisiana is going up to 4.25% effective January 1, 2017. Under Louisiana law, the Commissioner of Financial Institutions is to ascertain the Federal Reserve’s approved “discount rate” published daily in the Wall Street Journal on the first day of each October; the judicial interest rate is then set at three and one-quarter percentage points above the discount rate.

Legal interest is designed to compensate a plaintiff for his loss of the use of the money to which he is entitled, the use of which the defendant had during the pendency of the litigation. Therefore, if a tort suit is filed and verdict is thereafter entered for the plaintiff, the plaintiff is entitled to legal interest on the entire judgment from the date of judicial demand (the date the suit is filed) until the judgment is paid.

Insurers should note that, regardless of the provisions in their policy, LSA-R.S. 13:4203 provides that all insurance policies providing coverage for a loss in this state are deemed to include a provision that provides pre-judgment interest on any amount awarded within the policy limits from the date the original petition was filed. Any provision to the contrary is deemed null and void. Also, some authority exists to require an insurer to consider pre-judgment interest in settlement, if a “limits” demand is at issue.