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Texas Governor urges legislature to limit hailstorm litigation against Insurance Companies.

Posted on: February 17th, 2017 by Lory Sopchak No Comments
Texas Governor urges legislature to limit hailstorm litigation against Insurance Companies.

If you have read any of my blogs or looked at our law firm’s website, it is no secret that our law firm represents homeowners and business owners with their claims for property damage to their home or business against their insurance companies. Through the years we have worked on these cases, I have not had one homeowner or business owner tell me that they feel their insurance company paid them enough for the damages to their property as a result of their claim. Most of the time, when speaking to a potential client, I hear things more like “how do they expect me to replace my roof for what they paid me,” “the adjuster said there was no opening to my roof to allow water intrusion so why did my roof start leaking after this storm,” and my personal favorite “the adjuster who came out to my property told me I needed a new roof but then I get a letter from another adjuster saying I have no storm related damages to my roof.” The list truly goes on and on. Though I cannot speak for all attorneys who represent homeowners and business owners with these types of cases, I can say this, there has not been ONE client I have spoken to that has been satisfied with what their insurance company paid them for their property damage claim.

Despite the routine and well-known practice of insurance companies denying covered damages to property or significantly undervaluing the cost to repair or replace such damages to property, Texas Governor Gregg Abbott has urged the legislature to send him a bill that he can sign into law which will limit the insured’s rights in hailstorm cases, which he has referred to as “the newest form of lawsuit abuse.” This is not the first time that big money insurance company lobbyists have gone head-to-head with advocates for consumers/insurers’ rights in an attempt to limit the ability of consumers and policyholders to file suits against their insurance companies for hail damage to their homes. A bill was introduced in the 2015 legislative session in an attempt to limit consumers’ rights to enforce their insurance contracts. Though the bill made it through the Senate, it did not pass a House committee.

Senator Kelly Hancock, (R), plans to file a new version of the bill limiting hailstorm litigation. Mr. Hancock has stated that “hail litigation has spiraled out of control in Texas, mainly because of a small group of bad actors” and he added that the bill would “improve the transparency, and protect Texas consumers from sky-high premiums without infringing on their right to make an insurance claim or sue their insurance company when it’s not holding up its end of a deal.” The proposed litigation, however, is supposed to make changes to Texas’ Insurance Code which will water down the courts’ ability to penalize insurance companies for unfairly settling claims and for not promptly paying the claims.

This bill really targets Plaintiff attorneys who help homeowners recover against their insurance companies when their claim for storm related damages is grossly undervalued or denied even though the damages are clearly covered under the terms of the policy. For example, the bill would limit the attorney’s ability to sue the adjuster for the insurance company who handled the file which would in turn make it easier for an insurance company to remove the case to federal court, which are usually corporate friendly. It would limit and reduce attorney’s fees if their clients get less than what was originally demanded in the lawsuit or if the insurance company can prove that a third party helped recruit clients.

The bill would also require plaintiff attorneys to sue either under the Deceptive Trade Practices Act or the Unfair Claim Settlement Practice Act, but not both. The bill would also require the Plaintiff’s attorney to file notice with the insurance company before a lawsuit is filed which would have to include a “realistic” demand for the amount the homeowner needs to repair the property and reasonably attorney’s fees incurred to date. The notice would have to be provided at least 60 days before a lawsuit is filed and if the attorney does not comply with the notice requirements, he or she would not be able to collect attorney’s fees. The legislative intent is to erode consumers’ rights under their insurance policies, to help insurance companies increase its profit margins and restrict the consumers’ rights to competent legal counsel.

The proposed bill simply does nothing more than put up more roadblocks for homeowners to file lawsuits against insurance companies when they unreasonably deny or undervalue storm related damages covered under the insurance policy. Ware Wendell, executive director of Texas Watch said “Insurance companies have gotten what they wanted on rates and coverage through the years. Now they are coming for policyholder’s claims protections.” I agree wholeheartedly with Mr. Wendell’s statement. Insurance companies use every excuse in the book to raise premiums. One of which being catastrophic events. However, after the large, massive hail storms that moved through the San Antonio, Bexar County, Texas area last Spring, I saw numerous cases in which insurance companies told a homeowner that although their home sustained damage as a result of wind and hail, most of the damage to the roof was as a result of normal “wear and tear” and therefore, the insurance company would only allow coverage for a portion of the roof. Even though the insured received a check for $300.00 to fix a slope of his/her roof, the insured’s premiums will increase significantly as soon as their policy renews.

The issue I have is why our legislature is not considering the reality of this situation, there would not be so many lawsuits if insurance companies would do the right thing – adjust the claim in good faith. Homeowners would not be so quick to hire lawyers and public adjusters to help them against their insurance companies if they did not have to fight tooth and nail to get a new roof after a massive hail storm moves through the area. Homeowners would be satisfied if the adjuster paid for interior water damage that did not start until after their roof got damaged by hail versus being told by the adjuster that the interior water damage is as a result of “mechanical damage” (whatever that is) to the roof or a “deteriorated pipe jack” even though there is no evidence that the leak occurred prior to the storm that formed the basis of the claim.

In my humble opinion, this bill is simply another way for the insurance companies to undervalue and deny legitimate, covered damage with little to no repercussion for doing so. I truly hope this bill does not pass as it is one more chip at the continual depletion of consumer rights.

Information for this blog taken from the Houston Chronicle Article of February 5, 2017.