Just as Hurricane Harvey departs the state, a new law in Texas, effective September 1, 2017, is going to make it more difficult for home and business owners to pursue claims against their insurance companies.
Prior Texas law imposed liability on an insurer who violated the Insurance Code for the amount of the claim, interest on the amount of the claim at an annual interest rate of 18 percent, and reasonable attorney fees. H.B. 1774 was recently enacted to address legal actions for claims arising from damage to or loss of property due to hailstorms, lightning, wind, hurricane, rainstorm and other natural events.
The bill creates additional procedural hurdles before a policy holder can file a lawsuit against the insurer. A written notice must be provided to the insurer at least 61 days before filing a lawsuit. The notice must include a statement of the acts giving rise to the claim, the specific amount alleged to be owed, and amount of reasonable and necessary attorney's fees already incurred by the policy holder. Once notice is received, the statute allows the insurers to send a written request to inspect, photograph, or evaluate the property.
The new law requires the court to abate the action if the insurer did not receive a pre-suit notice or was denied its request to inspect, photograph or evaluate the property. Abatement continues for the later of 60 days after the notice was given or 15 days after the requested inspection occurs.
Further, a full award of attorneys' fees will not be made if pre-suit notice was not given and unless the policy holder was able to estimate its damages with 80% accuracy.
The bill only applies to actions filed and claims made on or after September 1, 2017.
Proponents of H.B. 1774 argue it will mitigate the growing trend of abusive severe weather-event lawsuits. The new law also minimizes the increases in homeowners' insurance rates. Supporters also claim the bill will not damage the right of policy holders to sue their insurers. Opponents of the bill argue it will obstruct the ability and right of property insurance policy holders.Texans whose property is damaged by extreme weather will be restricted from suing insurance companies that deny or underpay their claims. Further, requiring 61 days' notice before filing suit could be especially burdensome in extreme weather situations in which the damage can worsen over time.
