TAR clarifies misinformation about new homeowners insurance law

As the remnants of Hurricane Harvey make their way out of Texas, attention now focuses on rebuilding efforts in the communities affected by this unprecedented weather event.

However, misinformation has been circulating on social media and in some news reports about a new law known as House Bill 1774—which was passed by the Texas Legislature this year and takes effect September 1, 2017—and the potential impact this law may have on affected property owners.

What does the new law do?
HB 1774 only deals with the process when a property owner sues an insurance company (or its agent) over a claim-related dispute (i.e., when the property owner believes they are owed more money than the insurance company offers).

But this situation is rare. According to the Texas Department of Insurance, only about 2% of claims each year result in this type of litigation.

While homeowners should always file claims as soon as possible, the new law will not change the claims process, no matter whether claims are filed before or after September 1.

Here are four key points to remember about the new law:

  • The legislation does not change the process for filing a property insurance claim, whether a claim is filed before or after September 1.
  • This legislation deals with how lawsuits arising from disputed claims are handled in court.
  • Claims relating to the National Flood Insurance Program (NFIP) are governed by federal law.
  • Claims relating to Texas Windstorm Insurance Association (TWIA) policies are not subject to the provisions of this bill.

Read this PDF for more information about the new law.

Where to learn more
Texans affected by the recent severe weather events have access to several resources:

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17 Responses to TAR clarifies misinformation about new homeowners insurance law

  1. David J Davis says:

    I just commented about this on another blog (https://www.facebook.com/Dennis.Paul.HD129/posts/1666252300061244?comment_id=1666288756724265&reply_comment_id=1667143333305474&comment_tracking=%7B%22tn%22%3A%22R%22%7D). I was thinking the NFIP wouldn’t be effected by this as they are Federal policies. Thanks for the clarification!

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  2. Sam Gentry says:

    TAR explanation of changes is misleading. I would not have expected this from TAR but perhaps I am naïve. You say “This legislation deals with how lawsuits arising from disputed claims are handled in court”. Does date of filing a claim affect how a court treats suits brought against insurance companies? Did legislation make law retroactive to include current lawsuits.
    Is David J Davis on of the authors of his pro insurance company legislation?

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  3. Guy Gimenez says:

    The 2% litigation percentage, even if accurate (was this from the insurance industry?), will surely go up with the recent storm events throughout Texas. As someone who had to sue Farmer’s Insurance to get paid under the uninsured / underinsured portion of the policy, I know what these affected homeowners will go through. Rest assured, the insurance companies will use every technicality available under this untested (in court) law to wear down the policyholder…the date of claim being one of them.

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    • David Davis says:

      As previously stated, the date of claim has no bearing, or is NOT affected by this new law. Read the law in my prior comments.

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      • Guy Gimenez says:

        Thanks David. I did read the law. As my comments stated…the law has not yet been to court and those of us who have been around the legal profession for some time understand that a good attorney will use EVERY avenue possible to keep their client from paying out. Mark my words, this WILL be one avenue that will be tested by the industry.

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      • David J Davis says:

        In light of the topic of this OP which is the FAKE NEWS that is being broadcast by people (mostly on social media) but I understand even some main stream media, this new law has nothing to to with any gained advantage of when an insured files their insurance claim (especially those from Hurricane Harvey,as the OP has already pointed out that the majority of claims from Hurricane Harvey are either going to be from TWIA or NFIP, both of which are affected by the new law) as the new law deals with lawsuits that are filed after September 1, 2017 ONLY! What the new law does is merely put in place some minimum standard (in this case 61 days prior notice) before the filing of a lawsuit. If you were going to be sued by someone, don’t you think it’s fair that they give you a demand and some reasonable period of time to respond before the suit gets filed? Further don’t you think you should have the opportunity to make right the wrong which the person who is suing you alleges you done/did? The new law is purely about fair play. If someone wants to sue an insurance company, they simply have to give notice before filing, and allow the insurance company a reasonable period of time, to correct the wrong that the Plaintiff is alleging.

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  4. Bob Christian says:

    David, I feel the “don’t you think it is fair” comment seems to overlook the fact that if I finally felt I have no choice left but to file a lawsuit against my insurance company, that same company would “already” have in their possession an insurance claim filed by me… and they would have already had time choose whether or not to work with me on this claim. As someone who has had to sue a major insurer in the past over “Hurricane Related Damages”, I can tell you that I would not have been happy to find out that I was required to give the the insurance company I have been paying “an additional 61 days” to drag out my claim out of fairness to them. Especially as water continues to rain in on my possessions and the deterioration of my property continues. However, if you were to tell me that the 61 days started within 7 to 14 days of the original claim, then that might be what I would consider a fair process. But, that is just my opinion and experience.

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  5. Mr. Davis: Your reading of the law may be incorrect, as lawyers much smarter than me are arguing left and right (on somewhat private Facebook forums for lawyers) about whether filing notice of the claim prior to September 1, 2017 will allow a subsequent lawsuit based on that claim to be subject to the prior law, instead of the new law. Further, as Mr. Christian posits above, requiring a policyholder to wait sixty days prior to filing suit is not fair to policy holders who are trying to repair their home and have a dispute with their insurer. The law also reduces the interest rate that these claims, at least the successful ones, will be subject to, which in effect reduces the “penalty” an insurer will have to pay for wrongfully denying these claims.

    Finally, I suspect that many people, including myself, are growing weary of the term “FAKE NEWS,” which in todays vernacular has come to often embody the response of anyone who is confronted with facts that they find inconvenient or impossible to refute.

    If this law is meant to help Texas policyholders, it seems odd to require a two month delay and reduce interest rates that irresponsible insurance companies will have to pay if they are found liable for wrongfully denying claims.The campaign by lawyers to advise policyholders to file their claims BEFORE the law changes is hardly misleading, but IS likely designed not only to help Texas homeowners, but also to turn up the heat on Texas politicians who sponsored (Sen. Larry Taylor, an Insurance Agent by profession) this legislation, along with the state Senate, Governor and Lt. Governor, at a very inopportune time for these politicians. Surely Insurance Agent and Senator Taylor didn’t propose this legislation to HURT insurance companies, so it is not hard to believe his primary purpose in proposing the law was to instead help them. As many have pointed out, if it doesn’t change the law, then why was it passed? It was passed to help insurance companies, NOT Texas homeowners. By describing this as misinformation, the TAR does itself and Texas homeowners a disservice.

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  6. Tom Polk says:

    I’m disappointed with TAR for misleading readers. I feel that TAR didn’t perform due diligence before publishing this specious article. It reads like it was written by an insurance industry lobbyist. Although it appears to all be true, it doesn’t tell the whole story, thus undermining TAR’s credibility. Whether intended or not, such assertions cause TAR to be complicit in looking out for insurance companies more than the insured. TAR should have no dog in that fight except maybe for promoting private property rights. I believe TAR does that best by advocating for the insured. They are the ones whose private property is affected. If advocacy for the insured is out of bounds, then at least TAR should remain neutral, as advocating for insurance companies is certainly out of bounds.

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    • David J Davis says:

      Byron Barclay,

      To start off with why do you automatically assume that a lawyer is much smarter than anyone else simply because (s)he happens to be a lawyer? That one statement alone almost disqualifies any further statement you make.

      As for the fact that there are private forums (made up of nothing but lawyers,) I’m quite certain those exist. Why wouldn’t they? We have ours why can\’t, or shouldn’t they have theirs? What are they debating? My guess would be the limit on attorney fees the new law places into effect. Afterall that\’s about all the new law really does. However, it creates a bit of a “loophole” for them (attorneys) to still get paid what they think they are owed.

      The original post (OP) is about the topic of the FAKE NEWS (by the way, by definition, news which is false, or inaccurate, not your clouded meaning, though I\’m sure your definition may fit in some arenas) of the need to file insurance claims before September 1, 2017, otherwise the claimant could lose benefits, and so-called loss of benefits is due to HB 1774. The very simple truth of the matter is HB 1774 has absolutely nothing to do with a deadline to file claims before September 1, 2017. It has to do with (for lack of better terms) “due process” requirements for lawsuits filed after September 1, 2017, when those lawsuits have to do with DTPA actions against an insurer. Considering a couple of points:
      1. Hurricane Harvey claims will almost exclusively be related to flood (defined by the insurance industry as water, or other liquid which came in contact with the earth or ground before it affected the loss [common term used to describe the damaged property]) which is underwritten and administrated by the NFIP/FEMA (By the way did you know there is currently a \”call to action\” on the boards for many REALTOR® associations asking for an extension to the NFIP?,) and wind related damage in the Gulf coastal regions which is covered by Texas Windstorm Insurance Association (TWIA,) and that the new law (HB 1774) does NOT apply to either of those types of policies; 2. The lawsuit process is no race by any definition, upon that I think we will all agree. How is it that anyone that has suffered a loss from Hurricane Harvey could possibly file a lawsuit before September 1, 2017? Most haven’t even been allowed back into their homes yet to assess the damage, let alone file a claim. You do realize that tomorrow is that seemingly all important date of September 1, 2017, correct?; 3. You realize that this blog is about the inaccurate statements of many concerning HB 1774, and is started by the TAR legal staff (the same one\’s we call at the TAR Legal Hotline), correct? Why would they have any reason to mislead anyone?

      I realize that attorney\’s get paid to argue points in a judicial tribunal. But, one needs to understand how the law works. There are “steps” (if you will) on how the law is considered or rendered in a court (in descending order of importance):
      A. Code (This is written law, generally passed into law by Legislature, an attorney [or anyone else for that matter] can argue against this till they are literally “blue in the face” it won\’t do any good in the trial court [only the Supreme Court can make this illegal-want to venture a guess how long that will take? I can assure you it won\’t be before September 1, maybe in 2018 or beyond]); B. Written opinion (These are opinions written by Justices and lawyers); and C. Rendered opinion (These are decisions made by a Justice when there is no written law to govern or direct them in their opinions.) In this case debates about the content of HB 1774 is considered “Code” or “codified” law. That is to say, it is written.
      Will some attorney be coerced by a Client to argue the constitutionality of this law? I can\’t honestly say one way or the other at this point. Heck, the law isn\’t even effective for another day, so how can we know what will happen in the future about the judicial process of this legislative action? The whole law is about granting time (namely 61 days) yet here we find ourselves wanting to undue (in less than a day) what has been legislated. That simply isn\’t going to happen. Again, see my point #1 above. This law (HB 1774) will have no bearing on the effects of Hurricane Harvey (trying to stay on topic.) The law doesn\’t apply to the insurance policies that cover the types of losses suffered from this storm.

      Sen. Taylor (I\’m assuming your talking about Sen. Larry Taylor, since he was, prior to being elected to public office, an insurance salesperson, or agent) had nothing to do with “proposing” or “sponsoring” as you put it, (the Legislative term is Author or Coauthor.) Your welcome to go read the list (alphabetical) of its Authors & Coauthors at: http://www.capitol.state.tx.us/BillLookup/History.aspx?LegSess=85R&Bill=HB1774 The actual text of the law is also at that website. Please check it out before making other (since you refuse to use the modern term of “FAKE NEWS”) false points, or statements.

      As both a retired insurance adjuster (yes, for both TWIA, NFIP, & and other Fire Insurance [what many call homeowner\’s] policies,) as well as a property owner who has suffered losses at the demise of tropical cyclones/hurricanes, I see no reason as to why a 61 day notice before a lawsuit (which hasn’t changed at all, the filing of which will slow the process way down by the way) is out of the realm of reasonable. That 61 days has been the law for sometime, and also sets deadlines upon the carrier or insurer to do certain things, as I said, go read the law. Did you know that the new law hasn’t changed any waiting period at all? See Texas Insurance Code Sec. 541.154. The very last place anyone wants to end up is in court trying to settle a dispute. The courts are heavily burdened, and very slow (much longer than that 61 days this law creates.) Most of these disputes are of a DTPA nature, and they are all about contractual law. That means the losing party generally pays the winning party\’s attorney fees. Yes the new law does “somewhat” limit that attorney fees. It uses the terms “REASONABLE AND NECESSARY” which are very suggestive or vague. Can you name one attorney who has ever litigated a DTPA or contract suit and didn’t “prove up” his/her attorney fees? I certainly can’t think of any. As to the limiting of interest, post judgement interest is 5% + the prime rate as published by the Board of Governors of the Federal Reserve System on the date of computation, but pre judgement interest is not regulated by the new law.

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    • David J Davis says:

      Who is to say that they (TAR) are advocating for anybody in this post? I see a blog post that points out, and helps clarify what a codified law is while hopefully quieting false reports about the law change.

      Like

  7. Sam Gentry says:

    Right on target Tom.

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  8. Mr. Davis: Thank you for your lengthy response to my post. The fact that we all, to a man, believe your article itself to be slanted and misguided certainly tells me that my initial thoughts on your article, and your bias, were correct. Were I more interested in your thoughts or opinions, I could address and refute your response point by point, but clearly by the tone of your responses to each of the comments here criticizing your article, it is readily apparent that you are much smarter than any of us who have deigned to criticize your opinions on this subject. For that reason, I won’t waste my time, nor yours. Truly sorry that I tried to discuss this on an intellectual level with you. It would appear your article was quite successful in “quieting false reports about the law change.” You certainly convinced all of us (#sarcasm).

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