By Kaia Flowers
The great state of Texas has suffered a devastating blow the past week. Hurricane Harvey was a nightmare scenario that many of us did not see coming. The damage to our area is unprecedented with countless families having lost everything they own – houses, cars, and clothing gone in a flash. Social media is filled with pictures of homes flooded to the roof, streets filled with cars no longer fit to drive, and debris fields along our coast.
Another thing filling our news feeds and twitter walls are messages urging people to file insurance claims before a September 1, 2017 deadline. Most of the memes do not give any other information besides the opinion that a bill, HB1774, will hurt people filing insurance claims after this deadline.
What exactly is HB1774? HB1774 is a lawsuit reform bill passed by the Texas Legislature in the 85th session along party lines in the Texas House, 92-55 and in the Texas Senate 21-7, with one Democrat supporting it. It outlines the amount of interest added to claims that are not paid out in a timely manner (section542.060, amended subsection A and adding subsection C), it requires a pre-suit notice of 61 days before a lawsuit is filed (section542A.003), it instructs the court to dismiss with prejudice any claim against an insurance company that is fulfilled before court (i.e. settled with the homeowner, section 542A.006) and outlines the award of attorney’s fees during a lawsuit (section 542A.007). Lawsuit reform is a necessary part of our legal system; laws must be written and revised to ensure that frivolous lawsuits do not hurt the consumer (many experts say that Texas has the strongest consumer protections in regard to insurance policies in the nation). The cost from these lawsuits is passed on to the consumer by raising rates or high prices on everyday goods that we buy.
The timing of this bill and the subsequent social media hysteria is unfortunate during this crisis. We should be very skeptical of the fear mongering in our Facebook feeds. Lawsuits are not the norm and should not be the norm. The vast majority of people will not have to sue their insurance company to receive a settlement. This bill focuses on the outliers that have been unable to come to an amicable settlement.
The Texas state legislature did not lower the amount of interest you will receive if a claim is not paid in a timely manner, they defined it – some cases will still receive 18% interest while other cases will receive the interest rate in section 304.003 of the finance code plus 5%. Section 542.060 subsection C states “Nothing in this subsection prevents the award of prejudgment interest on the amount of the claim, as provided by law.” The pre-suit notice is designed to allow the insurance claim to be settled expediently. After giving notice of the pending litigation the insurance company will have an opportunity to settle the claim without going to trial. This will save time and money by reducing attorney’s fees and the length of the unfilled insurance claim, which is the goal.
This bill also outlines the award of attorney’s fees. It requires reasonable and necessary attorney fees that are supported by sufficient evidence at trial. If the court hears evidence to support a higher attorney fee it will be granted but the key is that there must be evidence. Without this clause unscrupulous lawyers can take advantage of exorbitant attorney’s fees raising the cost of lawsuits and limiting the amount the award to the homeowner.
Without the attorney fee clause, would there have been an uproar over this bill worrying people displaced by hurricane Harvey? I find it extremely unlikely because there would have been no gain to flood social media with messages urging people in shelters to file their claims before the Texas HB1774 takes effect. Filing insurance claims promptly is always the best thing to do in these situations. The faster this step is done the faster people can begin to rebuild their lives after this natural disaster. In times of hardship there are people who will misuse the public’s trust for their own gain and that is unfortunate but please do not be scared that your insurance agency will abandon you due to this bill.
Kaia Flowers is a long time resident of La Porte, Texas. Mrs. Flowers is currently a student at the University of Houston Clear Lake and is pursuing her degree in history and government.
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