A Storm Just Damaged My Home–Now What?
In 2012, two hailstorms in Hidalgo County, Texas, spawned thousands of lawsuits involving alleged underpayment of property insurance claims. According to the Texas Department of Insurance, the number of windstorm and hail claims that led to policyholders suing their insurance carriers increased after 2011 by an average of 1,400% for the years 2012-2014. As a result, the Texas Legislature introduced and eventually passed HB 1774, a bill designed to curb a perceived abuse of the courts by unethical profit-seekers and scammers.
The bill, which will become effective on September 1, 2017, makes changes to both procedural and recovery aspects of legal actions. Generally, it has injected additional pre-suit notice requirements into the law by requiring a prospective plaintiff to send certain information related to the claim to the insurance company prior to initiating a suit. Attorneys who send these notices must also provide a copy to their clients, which seems to be an effort to combat prohibited conduct on the part of lawyers that has been a side-effect of hailstorm litigation. (In Texas, lawyers are prohibited from initiating personal contact with potential clients who have not invited that contact.) Additionally, while the bill still allows for a successful claimant’s recovery of attorney’s fees, it reduces the amount recoverable under certain conditions.
Due to Hurricane Harvey, many home and business owners have become concerned about whether they need to file an insurance claim prior to September 1. Although the law will change, proper claims will still entitle insureds to recover their damages and costs. Importantly, the new law will not affect the merits of the claim, but instead simply alters (1) the procedures to bring a lawsuit against an insurance company for claims filed after the law becomes effective if the insured is dissatisfied with the claims handling process and (2) the potential damages recoverable from the insurance company in such litigation.