Recently, our legislator’s found it within their own best interest to reduce the penalties insurers pay when they are caught dirty dealing on your insurance claim. Yes, you read that correctly. Not on a good day, but a day when they are caught, red handed.
As a licensed Public Insurance Adjuster, I deal with this on an hourly basis. Every claim, every time. Insurers do what they have the unique ability to do… say no. Regardless of whether it is right or wrong. No. Pretty simple way to earn money, especially when your lobbyist have bought the entire legislative body, either directly or indirectly. (Most of our legislators are investors who own stocks in things like, well… #insurance. So, when the stock does well, so do they. Claims are bad for stocks, especially when they have to pay full amounts, or get penalized for not paying when they were supposed to, or what they were supposed to, normally both.)
The result is legislation that was passed against the many, many business leaders and homeowners who protested it, and is now becoming a very real problem for anyone who files any type of claim in Texas.
In a nutshell, they have reduced penalties by nearly half, reduced the amount that can be recovered, and reduced/limited attorney fees. Again, this is not on a good day, but a day when they are actually caught. It is like telling your 4-year-old that stealing a cookie was bad, and as a punishment, she was getting 2 more cookies…
Here is the bill: Located at Texas Legislature Online
Or read it here:
85R20435 LED-F | |||
By: Bonnen of Galveston, Lucio III, Parker, | H.B. No. 1774 | ||
Frullo, Phillips, et al. | |||
Substitute the following for H.B. No. 1774: | |||
By: Phillips | C.S.H.B. No. 1774 |
relating to actions on and liability associated with certain | ||
insurance claims. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 541.156(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) A person who receives notice provided under Section | ||
541.154 or 542A.003 may make a settlement offer during a period | ||
beginning on the date notice under Section 541.154 or 542A.003 is | ||
received and ending on the 60th day after that date. | ||
SECTION 2. Section 542.060, Insurance Code, is amended by | ||
amending Subsection (a) and adding Subsection (c) to read as | ||
follows: | ||
(a) Except as provided by Subsection (c), if [ |
||
that is liable for a claim under an insurance policy is not in | ||
compliance with this subchapter, the insurer is liable to pay the | ||
holder of the policy or the beneficiary making the claim under the | ||
policy, in addition to the amount of the claim, interest on the | ||
amount of the claim at the rate of 18 percent a year as damages, | ||
together with reasonable and necessary attorney’s fees. Nothing in | ||
this subsection prevents the award of prejudgment interest on the | ||
amount of the claim, as provided by law. | ||
(c) In an action to which Chapter 542A applies, if an | ||
insurer that is liable for a claim under an insurance policy is not | ||
in compliance with this subchapter, the insurer is liable to pay the | ||
holder of the policy, in addition to the amount of the claim, simple | ||
interest on the amount of the claim as damages each year at the rate | ||
determined on the date of judgment by adding five percent to the | ||
interest rate determined under Section 304.003, Finance Code, | ||
together with reasonable and necessary attorney’s fees. Nothing in | ||
this subsection prevents the award of prejudgment interest on the | ||
amount of the claim, as provided by law. Interest awarded under | ||
this subsection as damages accrues beginning on the date the claim | ||
was required to be paid. | ||
SECTION 3. Subtitle C, Title 5, Insurance Code, is amended | ||
by adding Chapter 542A to read as follows: | ||
CHAPTER 542A. CERTAIN CONSUMER ACTIONS RELATED TO CLAIMS FOR | ||
PROPERTY DAMAGE | ||
Sec. 542A.001. DEFINITIONS. In this chapter: | ||
(1) “Agent” means an employee, agent, representative, | ||
or adjuster who performs any act on behalf of an insurer. | ||
(2) “Claim” means a first-party claim that: | ||
(A) is made by an insured under an insurance | ||
policy providing coverage for real property or improvements to real | ||
property; | ||
(B) must be paid by the insurer directly to the | ||
insured; and | ||
(C) arises from damage to or loss of covered | ||
property caused, wholly or partly, by forces of nature, including | ||
an earthquake or earth tremor, a wildfire, a flood, a tornado, | ||
lightning, a hurricane, hail, wind, a snowstorm, or a rainstorm. | ||
(3) “Claimant” means a person making a claim. | ||
(4) “Insurer” means a corporation, association, | ||
partnership, or individual, other than the Texas Windstorm | ||
Insurance Association, engaged as a principal in the business of | ||
insurance and authorized or eligible to write property insurance in | ||
this state, including: | ||
(A) an insurance company; | ||
(B) a reciprocal or interinsurance exchange; | ||
(C) a mutual insurance company; | ||
(D) a capital stock insurance company; | ||
(E) a county mutual insurance company; | ||
(F) a farm mutual insurance company; | ||
(G) a Lloyd’s plan; | ||
(H) an eligible surplus lines insurer; or | ||
(I) the FAIR Plan Association. | ||
(5) “Person” means a corporation, association, | ||
partnership, or other legal entity or individual. | ||
Sec. 542A.002. APPLICABILITY OF CHAPTER. (a) Except as | ||
provided by Subsection (b), this chapter applies to an action on a | ||
claim against an insurer or agent, including: | ||
(1) an action alleging a breach of contract; | ||
(2) an action alleging negligence, misrepresentation, | ||
fraud, or breach of a common law duty; or | ||
(3) an action brought under: | ||
(A) Subchapter D, Chapter 541; | ||
(B) Subchapter B, Chapter 542; or | ||
(C) Subchapter E, Chapter 17, Business & Commerce | ||
Code. | ||
(b) This chapter does not apply to an action against the | ||
Texas Windstorm Insurance Association or to an action relating to | ||
or arising from a policy ceded to an insurer by the Texas Windstorm | ||
Insurance Association under Subchapter O, Chapter 2210. An action | ||
against the Texas Windstorm Insurance Association or that relates | ||
to or arises from a policy ceded to an insurer by the Texas | ||
Windstorm Insurance Association under Subchapter O, Chapter 2210, | ||
is governed by Chapter 2210. | ||
Sec. 542A.003. NOTICE REQUIRED. (a) In addition to any | ||
other notice required by law or the applicable insurance policy, | ||
not later than the 61st day before the date a claimant files an | ||
action to which this chapter applies in which the claimant seeks | ||
damages from any person, the claimant must give written notice to | ||
the person in accordance with this section as a prerequisite to | ||
filing the action. | ||
(b) The notice required under this section must provide: | ||
(1) a statement of the acts or omissions giving rise to | ||
the claim; | ||
(2) the specific amount alleged to be owed by the | ||
insurer on the claim for damage to or loss of covered property; and | ||
(3) the amount of reasonable and necessary attorney’s | ||
fees incurred by the claimant, calculated by multiplying the number | ||
of hours actually worked by the claimant’s attorney, as of the date | ||
the notice is given and as reflected in contemporaneously kept time | ||
records, by an hourly rate that is customary for similar legal | ||
services. | ||
(c) If an attorney or other representative gives the notice | ||
required under this section on behalf of a claimant, the attorney or | ||
representative shall: | ||
(1) provide a copy of the notice to the claimant; and | ||
(2) include in the notice a statement that a copy of | ||
the notice was provided to the claimant. | ||
(d) A presuit notice under Subsection (a) is not required if | ||
giving notice is impracticable because: | ||
(1) the claimant has a reasonable basis for believing | ||
there is insufficient time to give the presuit notice before the | ||
limitations period will expire; or | ||
(2) the action is asserted as a counterclaim. | ||
(e) To ensure that a claimant is not prejudiced by having | ||
given the presuit notice required by this chapter, a court shall | ||
dismiss without prejudice an action relating to the claim for which | ||
notice is given by the claimant and commenced: | ||
(1) before the 61st day after the date the claimant | ||
provides presuit notice under Subsection (a); | ||
(2) by a person to whom presuit notice is given under | ||
Subsection (a); and | ||
(3) against the claimant giving the notice. | ||
(f) A claimant who gives notice in accordance with this | ||
chapter is not relieved of the obligation to give notice under any | ||
other applicable law. Notice given under this chapter may be | ||
combined with notice given under any other law. | ||
(g) Notice given under this chapter is admissible in | ||
evidence in a civil action or alternative dispute resolution | ||
proceeding relating to the claim for which the notice is given. | ||
(h) The giving of a notice under this chapter does not | ||
provide a basis for limiting the evidence of attorney’s fees, | ||
damage, or loss a claimant may offer at trial. | ||
Sec. 542A.004. INSPECTION. Once notice is given under | ||
Section 542A.003(a), a person to whom notice is given may send a | ||
written request to the claimant to inspect, photograph, or | ||
evaluate, in a reasonable manner and at a reasonable time, the | ||
property that is the subject of the claim. | ||
Sec. 542A.005. ABATEMENT. (a) In addition to taking any | ||
other act allowed by contract or by any other law, a person against | ||
whom an action to which this chapter applies is pending may file a | ||
plea in abatement not later than the 30th day after the date the | ||
person files an original answer in the court in which the action is | ||
pending if the person: | ||
(1) did not receive a presuit notice complying with | ||
Section 542A.003; or | ||
(2) requested under Section 542A.004 but was not | ||
provided a reasonable opportunity to inspect, photograph, or | ||
evaluate the property that is the subject of the claim. | ||
(b) The court shall abate the action if the court finds that | ||
the person filing the plea in abatement: | ||
(1) did not, for any reason, receive a presuit notice | ||
complying with Section 542A.003; or | ||
(2) requested under Section 542A.004 but was not | ||
provided a reasonable opportunity to inspect, photograph, or | ||
evaluate the property that is the subject of the claim. | ||
(c) An action is automatically abated without a court order | ||
beginning on the 11th day after the date a plea in abatement is | ||
filed if the plea: | ||
(1) is verified and alleges that the person against | ||
whom the action is pending: | ||
(A) did not receive a presuit notice complying | ||
with Section 542A.003; or | ||
(B) requested under Section 542A.004 but was not | ||
provided a reasonable opportunity to inspect, photograph, or | ||
evaluate the property that is the subject of the claim; and | ||
(2) is not controverted by an affidavit filed by the | ||
claimant before the 11th day after the date the plea in abatement is | ||
filed. | ||
(d) An affidavit described by Subsection (c)(2) | ||
controverting whether the person against whom the action is pending | ||
received a presuit notice complying with Section 542A.003 must: | ||
(1) include as an attachment a copy of the document the | ||
claimant sent to give notice of the claimant’s action; and | ||
(2) state the date on which the notice was given. | ||
(e) An abatement under this section continues until the | ||
later of: | ||
(1) the 60th day after the date a notice complying with | ||
Section 542A.003 is given; or | ||
(2) the 15th day after the date of the requested | ||
inspection, photographing, or evaluating of the property is | ||
completed. | ||
(f) If an action is abated under this section, a court may | ||
not compel participation in an alternative dispute resolution | ||
proceeding until after the abatement period provided by Subsection | ||
(e) has expired. | ||
Sec. 542A.006. ACTION AGAINST AGENT; INSURER ELECTION OF | ||
LEGAL RESPONSIBILITY. (a) Except as provided by Subsection (h), in | ||
an action to which this chapter applies, an insurer that is a party | ||
to the action may elect to accept whatever liability an agent might | ||
have to the claimant for the agent’s acts or omissions related to | ||
the claim by providing written notice to the claimant. | ||
(b) If an insurer makes an election under Subsection (a) | ||
before a claimant files an action to which this chapter applies, no | ||
cause of action exists against the agent related to the claimant’s | ||
claim, and, if the claimant files an action against the agent, the | ||
court shall dismiss that action with prejudice. | ||
(c) If a claimant files an action to which this chapter | ||
applies against an agent and the insurer thereafter makes an | ||
election under Subsection (a) with respect to the agent, the court | ||
shall dismiss the action against the agent with prejudice. | ||
(d) If an insurer makes an election under Subsection (a) | ||
but, after having been served with a notice of intent to take a | ||
deposition of the agent who is the subject of the election, fails to | ||
make that agent available at a reasonable time and place to give | ||
deposition testimony, Sections 542A.007(a), (b), and (c) do not | ||
apply to the action with respect to which the insurer made the | ||
election unless the court finds that: | ||
(1) it is impracticable for the insurer to make the | ||
agent available due to a change in circumstances arising after the | ||
insurer made the election under Subsection (a); | ||
(2) the agent whose liability was assumed would not | ||
have been a proper party to the action; or | ||
(3) obtaining the agent’s deposition testimony is not | ||
warranted under the law. | ||
(e) An insurer’s election under Subsection (a) is | ||
ineffective to obtain the dismissal of an action against an agent if | ||
the insurer’s election is conditioned in a way that will result in | ||
the insurer avoiding liability for any claim-related damage caused | ||
to the claimant by the agent’s acts or omissions. | ||
(f) An insurer may not revoke, and a court may not nullify, | ||
an insurer’s election under Subsection (a). | ||
(g) If an insurer makes an election under Subsection (a) and | ||
the agent is not a party to the action, evidence of the agent’s acts | ||
or omissions may be offered at trial and, if sufficient evidence | ||
supports the submission, a jury may be asked to determine the | ||
agent’s responsibility for claim-related damage caused to the | ||
claimant. To the extent there is a conflict between this subsection | ||
and Chapter 33, Civil Practice and Remedies Code, this subsection | ||
prevails. | ||
(h) If an insurer is in receivership at the time the | ||
claimant commences an action against the insurer, the insurer may | ||
not make an election under Subsection (a), and the court shall | ||
disregard any prior election made by the insurer relating to the | ||
claimant’s claim. | ||
(i) In an action tried by a jury, an insurer’s election | ||
under Subsection (a) may not be made known to the jury. | ||
Sec. 542A.007. AWARD OF ATTORNEY’S FEES. (a) Except as | ||
otherwise provided by this section, the amount of attorney’s fees | ||
that may be awarded to a claimant in an action to which this chapter | ||
applies is the lesser of: | ||
(1) the amount of reasonable and necessary attorney’s | ||
fees supported at trial by sufficient evidence and determined by | ||
the trier of fact to have been incurred by the claimant in bringing | ||
the action; | ||
(2) the amount of attorney’s fees that may be awarded | ||
to the claimant under other applicable law; or | ||
(3) the amount calculated by: | ||
(A) dividing the amount to be awarded in the | ||
judgment to the claimant for the claimant’s claim under the | ||
insurance policy for damage to or loss of covered property by the | ||
amount alleged to be owed on the claim for that damage or loss in a | ||
notice given under this chapter; and | ||
(B) multiplying the amount calculated under | ||
Paragraph (A) by the total amount of reasonable and necessary | ||
attorney’s fees supported at trial by sufficient evidence and | ||
determined by the trier of fact to have been incurred by the | ||
claimant in bringing the action. | ||
(b) Except as provided by Subsection (d), the court shall | ||
award to the claimant the full amount of reasonable and necessary | ||
attorney’s fees supported at trial by sufficient evidence and | ||
determined by the trier of fact to have been incurred by the | ||
claimant in bringing the action if the amount calculated under | ||
Subsection (a)(3)(A) is: | ||
(1) greater than or equal to 0.8; | ||
(2) not limited by this section or another law; and | ||
(3) otherwise recoverable under law. | ||
(c) The court may not award attorney’s fees to the claimant | ||
if the amount calculated under Subsection (a)(3)(A) is less than | ||
0.2. | ||
(d) If a defendant in an action to which this chapter | ||
applies pleads and proves that the defendant was entitled to but was | ||
not given a presuit notice stating the specific amount alleged to be | ||
owed by the insurer under Section 542A.003(b)(2) at least 61 days | ||
before the date the action was filed by the claimant, the court may | ||
not award to the claimant any attorney’s fees incurred after the | ||
date the defendant files the pleading with the court. A pleading | ||
under this subsection must be filed not later than the 30th day | ||
after the date the defendant files an original answer in the court | ||
in which the action is pending. | ||
SECTION 4. (a) Section 541.156, Insurance Code, as amended | ||
by this Act, and Chapter 542A, Insurance Code, as added by this Act, | ||
apply only to an action filed on or after the effective date of this | ||
Act. An action that is filed before the effective date of this Act | ||
is governed by the law as it existed immediately before the | ||
effective date of this Act, and that law is continued in effect for | ||
that purpose. | ||
(b) Section 542.060(c), Insurance Code, as added by this | ||
Act, applies only to a claim, as defined by Section 542A.001, | ||
Insurance Code, as added by this Act, made on or after the effective | ||
date of this Act. A claim made before the effective date of this Act | ||
is governed by the law as it existed immediately before the | ||
effective date of this Act, and that law is continued in effect for | ||
that purpose. | ||
SECTION 5. This Act takes effect immediately if it receives | ||
a vote of two-thirds of all the members elected to each house, as | ||
provided by Section 39, Article III, Texas Constitution. If this | ||
Act does not receive the vote necessary for immediate effect, this | ||
Act takes effect September 1, 2017. |
As you can see, the folks who are filing Hurricane Harvey claims are on an uphill battle before they ever get started.
We did not bring Hurricane Harvey, or any of the flooding. We cannot reverse the laws no more than we can reverse the destruction. What we can do… work to repeal this abomination of a law while we help folks recover with what is available now. In other words, we will continue to #ProtectTheInsured!
I am Cal Spoon, and yes I am in this business. Yes, before it is all over with, we will have worked these claims and hopefully made a profit. It is what we do. It has taken years upon years of knowledge to get where we are. We have successfully fought against nearly every insurer out there. Someone has to, and at last count, there were only approximately 750 people in this entire great state of ours who have this very special license. Never forget, the people who owe you the money are sending their guy out…
My advice, file all claims prior to September 1st, 2017. This will not even come close to derailing this new law, but it will allow the one concession I am aware of, it will still cost them 18% when they are caught with their hand in the cookie jar.
Then hire a licensed, competent Public Insurance Adjuster.
Need a FREE Insurance Claim Review, fill out the contact form below, or call us toll-free at 877-41-2BUST
No Recovery, Absolutely No Fee!