Texas insurance companies may soon see drop in lawsuits
A new bill in the state House would discourage homeowners from suing as a result of certain claims.
Texas insurance companies could soon find themselves facing fewer lawsuits relating to claims involving weather damage. The Texas House passed a bill discouraging homeowners insurance policyholders from filing lawsuits against their insurers in regard to claims involving flood, hurricane or hail damage, for example.
At the moment, Texas insurance code provisions include a penalty for failing to follow-through with claims payments.
This means that Texas insurance companies risk having to pay more money if they don’t take the appropriate actions or make the required payments within a certain span of time. After a catastrophic event, policyholders can find themselves waiting a long time to receive the payments they are due for home repairs.
For instance, there are still Texas homeowners insurance customers waiting for their total Hurricane Ike and Rita claims payments. Those storm struck in 2008 and 2005 respectively. According to attorney David Starnes, “the penalty provisions in the Texas insurance code were a great aid in getting them to pay legitimate claims.”
Some customers sue their Texas insurance companies to ensure the provider will be held accountable.
That said, if House Bill 1774 successfully becomes law, it would eliminate the 18 percent penalty currently faced by insurance companies in Texas that unreasonably delay or deny legitimate weather related claims. “The balance is not only tipped in favor of the insurance companies, it is overwhelmingly tilted in their favor,” said Starnes about the bill.
The Texas insurance bill would also make it possible for insurers to force claims into federal courts. This, says Starnes, generates claims requirement notice loopholes that would remove components regarding claim legitimacy.
Moreover the bill also does not distinguish between legitimate and bad claims from homeowners insurance policyholders and business coverage customers.
“Businesses, churches, schools, you name it, hospitals, all of them are going to be impacted if they don’t get their insurance companies to fairly and timely pay their legitimate claims,” cautioned Starnes
The bill to reduce lawsuits against Texas insurance companies must still receive Senate approval to move forward. Should it successfully become a law, it would become effective September 1, 2017.