This proposed legislation would actually be the beginning of the end. It would give them (Insurance Companies) free reign to hike premiums, (Remember, State Farm just raised another 20%). Then, they would have the ability to threaten, and I mean this in the most blatant form, THREATEN, you if you file a claim. I want you to stop for one second, and ask yourself one question. Why do I pay for Insurance? In the event I may need to file a claim. There is no other reason on this earth to pay insurance, none. This legislation will penalize ANY policy holder who files one single claim, whether that claim could have been prevented or not. Traditionally, if I left water in the tub, got distracted and flooded the whole house, I would be covered, yet I would also get a black mark on my insurance report, which potentially could not only raise my rates, but have me cancelled by the carrier if more claims are filed. This system is in place, and it works well. The insured could have prevented the loss all together, yet he did not, resulting in loss of property and insurance payout. He should have a mark for this type of behavior because it was preventable. However, with this new legislation, they have lowered the number of claims you can file before penalties will begin to one. Then, as if this is not enough to deter you from filing a claim, then they have added some nice language that will actually do this regardless of what the claim was filed for, whether it was man made or an act of nature.
Simple, true scenario:
Possum Kingdom, Texas – April 2011, wildfire erupts and burns several hundred structures, mostly homes. Act of Nature
Possum Kingdom, Texas – August 2011, wildfire erupts and burns another 100+ homes, some of them are victims of the first fire in April.
Under current legislation, neither of these fires would penalize the insured. Which is correct, the insured had absolutely zero fault in the eruption of the wildfires, hence no penalty for filing a claim. (This is how insurance SHOULD work.)
Under proposed legislation, the victims of the first fire, (And let’s be honest, they were victims. Those fires were massive, and they took every single thing in their path.) and would begin to be penalized after this first claim, thereby making them victims again. Then, when the second wildfire erupted in August, they would be canceled. This one single instance, in this small town in Texas is an exact battleground for this bill. The proposed legislation would make these policyholders, Victims, not of two devastating catastrophes, but four. The penalty and cancelation alone will cost them real dollars for some years to come, and may even keep them from re-building. If you cannot secure insurance, a bank will not lend you money on the property.
There are literally a thousand other “ripples” that I have not even touched on here, all of them devastating. Trust me, this fight is dear to my heart, and Texas is my home. I will continue to fight, knowing that if we fail in Texas, the rest of the nation will follow suit.
Remember, the only reason you pay insurance is in case you need to file a claim. To try and deter you from filing that claim is akin to extortion/strong arm robbery.
Current Legislation that, if passed, will again negatively affect each and every insured citizen.
And Courtesy of Texas Watch: