Houston Insureds, We Have a Problem
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Q: How will a new Texas insurance law impact Hurricane Harvey victims?
“Texas” and “Big” have always gone together. So, it didn’t surprise any locals that in response to the catastrophic damage Hurricane Harvey dealt with the Houston area, Texans showed the world how big our hearts are by coming together to help our neighbors.
But will our insurance companies be there for us?
What frantic homeowners and business owners likely did not realize in the post-storm mayhem was that a new insurance law was going into effect on September 1st–just a few days after Harvey hit. But skilled Houston insurance law attorneys knew about it.
What is the law and how does it affect Texas weather-related property damage insurance claims?
Before Harvey was even a breeze, HB 1774 was signed into law back in May, with a September 1st effective date. So, even though the timing makes it look like it was specifically related to Harvey, it’s merely coincidental. Still, as purchasers of insurance, homeowners and business owners are entitled to consumer law protection from abuse by insurance companies with which they contracted.
These are the three primary changes in the law:
1. Pre-suit notice. In an effort to encourage mediation and out-of-court settlements and to prevent claimants from rushing to court without giving the insurer adequate time to consider the claim and offer a settlement, an insured person must provide their insurer with written notice at least 60 days before initiating litigation. The notice must be specific with respect to the damage alleged and attorney’s fees claimed.
2. Attorney’s fee awards will be based on a “claim recovery threshold”. In an effort to discourage the insureds from suing for “grossly exaggerated” claims, attorney’s fees will now be 100% recoverable if the insured wins at trial and is awarded 80% or more of the amount demanded in the lawsuit. On the other hand, if the award is 20% or less of the amount demanded, no attorney’s fees will be awarded.
3. Penalty interest rate reduction. Prior to the new law, insurers that were found guilty of being “slow pay, low pay, or no pay” on claims made would be subjected to pay 18% interest on the amount of the award if the insured prevailed in court. Now, the penalty interest rate has been reduced to a market-based rate– which is presently calculated at 10%. There is no denying that this is a blow to the insured and a benefit to the insurance companies who have less incentive to pay quickly due to the reduced penalty.
The new legislation does not impact a homeowner’s ability to file– or the process by which they would file– a weather-related property damage claim. Nor does it impact claims which are settled without litigation.
But since the pre-suit notice requirement now imposes a two-month delay on the ability to commence legal action, seeking advice from a skilled insurance law attorney sooner rather than later may reduce the time it takes to get paid in the event litigation is needed.
However, there are Harvey-related claims that may not be substantially impacted by the new state law because the law does not apply to claims under the Texas Windstorm Insurance Association “TWIA” or the National Flood Insurance Program “NFIP”. An attorney can counsel you with respect to if and how the new law impacts your particular claims.
If you are a homeowner or business owner who has suffered weather-related property damage due to Hurricane Harvey, or any other weather phenomenon, the attorneys of Chandler, Mathis, and Zivley will fight to get you full and fair compensation for your medical, physical, or financial losses and damages when your insurance company violates your insurance law rights.
With offices in Houston, Lufkin, and Nacogdoches, we’ve been serving clients throughout Texas for over 40 years. Contact us today to request a consultation.