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Lone Star Project Report

New Abbott-backed Law is the Next Threat to Hurricane Harvey Victims

Bill protecting insurance companies and harming homeowners goes into effect Friday
Dear Friends,

Americans across the country turned their eyes to Texas as Hurricane Harvey and torrential rains ravaged communities along the Gulf Coast and for miles inland.  Our prayers are with Texans who have lost loved ones and the thousands more who have lost homes and property.  Our deep gratitude goes to the first responders, the national guard and all the volunteers who are mobilizing to meet and overcome this disaster.
 
The rains are still falling, so the primary focus should remain on protecting lives and keeping people safe. However, it is not too soon to consider and prepare for the massive rebuilding project ahead.  In fact, waiting until after Friday could make recovery for Texans even harder.
 
Why?  Earlier this year, Governor Abbott and legislative leaders enacted a new law to severely limit the ability of Texans who suffer massive storm damage to reclaim losses on their insurance claims.   The new anti-homeowner bill goes into effect Friday, September 1st. Congressman Joaquin Castro (CD 20- San Antonio) has called on Governor Abbott to convene a special session to delay implementation of the law. 
 
The Texas Tribune article below provides more background and responsibly suggests that Texans who have suffered storm damage and are in a position to file claims for losses do so before Friday when the new Abbott anti-homeowner law goes into effect.
 

Respectfully,
New Texas law means Harvey victims have good reason to file claims by Friday

by: Alana Rocha, 8/28/2017
For many Texans ravaged by the rain and winds Hurricane Harvey carried ashore this past weekend, filing an insurance claim for the damage their property sustained is probably the farthest thing from their minds right now. But waiting to submit a claim past Friday could cost them big.

A new law set to take effect Friday enacts several provisions aims to crack down on frivolous insurance lawsuits. But whether there's a lawsuit or not, House Bill 1774 also reduces the penalty interest rate insurance companies are subject to on late payments.

Policyholders filing claims on or before Friday could collect an 18 percent interest penalty fee if the insurance company fails to pay a claim on time. For claims filed after Friday, the rate will be determined by a market-based formula. Currently, that would total 10 percent.

Jeff Raizner, a member of the Texas Trial Lawyers Association, which opposed HB 1774, said the law is a mixed bag.

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“I want to be completely fair, there were some bad actors,” said Raizner, a Houston trial lawyer who has worked on insurance cases for 25 years. He added that some of what the new law requires addresses that problem – like strengthened rules on communications regarding claims issues and attorney fees structures.

But he calls the interest penalty rate change an overreach.

“Much of this new law is a money grab by the insurance industry,” Raizner said.

Claimants filing by Friday can take advantage of the higher interest rate penalty for late payouts. But anyone suing an insurance company based on a Harvey claim will be subject to the new law. The claims process would need to run its course before a policyholder could even consider suing. And that process can’t happen by Friday.

The new law decreases the chances insurance companies will have to pay the plaintiff’s attorneys fees in full and protects agents from being personally sued.

“The intent of the bill was to cut off this ‘cottage industry’ that was happening around hailstorms after Hurricane Ike; lawsuits that didn’t need to be filed,” said Lucy Nashed, a spokesman for Texans for Lawsuit Reform. TLR supported the bill and argues that because the bulk of Harvey insurance claims will be flood-related, nothing will change.

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For one, most homeowners' policies in Texas don't cover flooding. And for those that do, the policies are often with the National Flood Insurance Program through the Federal Emergency Management Agency, which aren’t subject to state regulations.

During the 85th Legislature, HB 1774's author, Rep. Greg Bonnen, R-Friendswood, told lawmakers the legislation would target the "worst lawsuit abuse we have in the state" while protecting the rights of Texans to sue an insurance company.

At least 29 lawmakers who represent areas hit particularly hard by Harvey voted for the bill. Bonnen didn't immediately respond to a request for comment.
MORE INFO ON FILING CLAIMS