Changes to Texas Insurance Law – Effective September 1, 2017
Dear Friends and Clients,
We would like to extend our thoughts and prayers to those who have been affected by the tragic events of the past week. The City of Houston will take months to fully recover from the devastation wrought by Hurricane Harvey. Murrah and Killough will be here to assist you in any way that we can as you recover from any damage the storm may have caused.
With that in mind, you may have heard a great deal about a new insurance law in Texas that is set to go into effect on September 1st. There has been a great deal of discourse on the topic, some of it misinformation. We would like to provide you with our analysis of the real-world implications of the new law.
HB 1774, also known as the “Hailstorm” act, was passed as a reform to the process and procedure for filing lawsuits relating to certain insurance claims resulting from weather events, including damage and loss caused by natural disasters. Most of the reforms change certain procedural requirements for pre-suit notice of a lawsuit against your insurance company as well as the amount of interest the insurance company must pay on claims that are underpaid or paid late. The new law may also impact the amount of attorney fees recoverable in a lawsuit. That said, there is no change in the process of making the insurance claim itself and the new does not affect or limit the principal amount that a claimant can recover.
However, the new law does limit the amount a claimant may recover IF an insurer fails to pay a legitimate claim ”timely and fully.” The previous statute mandated that an insurer pay a claimant 18% interest on untimely payments. The Hailstorm act limits the allowable interest to a floating rate between 10-20%. The current rate is 10% and is not likely to rise any time in the foreseeable future. If a claim or lawsuit is filed prior to September 1st, then the claimant will be able to recover the amount of penalty interest set in the previous law, 18%. If not, the claimant will be limited by the provisions of the Hailstorm act.
For this reason, we recommend that any insurance claim be filed no later than Thursday, August 31, 2017, so that your potential rights and remedies are at their strongest. If, for whatever reason, you do not file your claim prior to September 1st, the principal amount you are able to recover should not be impacted and you should still file your claim as you normally would. A significant impact that filing on or after September 1st will have is the amount of interest you can collect on untimely or inadequate payments of your claim.
This recommendation is only out of an abundance of caution and to protect yourself in the event that your insurer does not timely pay your claim. We are happy to assist you with filing any claims if you would like. Our office is open and ready to help in any way we can during this difficult time.