HOW WILL THE NEW TEXAS “HAIL BILL” IMPACT ME?
Whether you’ve heard about House Bill 1774, better known as “The Hail Bill,” or not you should know how it will affect you. The new law goes into effect on September 1, 2017, so we want to dispel some rumors and explain exactly what the bill means to Texas policyholders and their rights.
First, there is no denying that this bill is a pro-insurance industry, anti-policyholder statute. The new law lays down a number of additional hurdles that requires policyholders or their representatives to take specific actions prior to filing a lawsuit. Deterring many policyholders from attempting the process on their own because if the policyholder fails to comply, the policyholder is prevented from filing a lawsuit.
HURDLE #1 – NOTICE LETTER
Under the new statute, 60 days prior to filing any lawsuit concerning a “force of nature” or “weather-related” event, a policyholder or the policyholder’s representative must send a notice letter detailing the cost to repair the property and attorney’s fees to date. The letter must specify the individuals and entities the policyholder intends to file a lawsuit against, the specific amount of money being sought for the cost of repair to the damaged property, and attorney’s fees incurred to date. The statute also requires the notice letter to include, at a minimum, the following:
- A statement of the acts or omissions giving rise to the claim;
- The specific amount alleged to be owed by the insurer on the claim for damage to or loss of covered property; and,
- The amount of reasonable and necessary attorney’s fees incurred by the claimant, calculated by multiplying the number of hours actually worked by the claimant’s attorney, as of the date the notice is given and as reflected in contemporaneously kept time records, by an hourly rate that is customary for similar legal services.
If a policyholder fails to provide pre-suit notice, the lawsuit will be dismissed. There are a few exceptions to this pre-suit notice listed in the statute, but they involve the tolling of a statute of limitations, and eventually, notice must be given even in those exceptional cases. The new law also allows insurance companies to enter the notice letter into evidence if the claim goes to trial. Therefore, it is imperative that the notice letter be accurate as to the cost of repairs because it could later become the measurement of a jury verdict.
HURDLE #2 – INSPECTION FOLLOWING NOTICE
Within 30 days of receiving the pre-suit notice letter, the insurance company can make a written request to inspect the property. If reasonably possible, the inspection must be completed no later than the 60th day after receiving the pre-suit notice.
HURDLE #3 – THE INSURANCE COMPANY’S
AGENTS OR ADJUSTORS
As for agents or adjusters, insurers will have the opportunity to accept, via written notice, liability on behalf of its agent’s or adjuster’s acts or omissions. If the insurance carrier makes this election, the agent or adjuster cannot be a party to the lawsuit. Insurance carriers would likely use this provision to remove the case from typically policyholder friendly state court to insurance company friendly federal court.
HURDLE #4 – PENALTIES & INTEREST
Until now, the Texas Insurance Code allowed for penalties of 18% to be added if an insurance company underpaid a claim as a way to punish unruly companies. Under the new law, the 18% penalty provision was dropped to a standard interest rate under the finance code plus 5%.Thus making it a much smaller stick with which to deter the insurance companies from mistreating their policyholders.
The new law generates numerous procedural hurdles that must be cleared prior to filing a lawsuit. It is essential that policyholders, who may be forced into litigation in order to recover the insurance benefits they are owed, find knowledgeable and experienced help to assist them as they navigate the process. Before taking on the burden of pre-suit notice, you should consult with an attorney.
 Tex. Ins. Code 542.001(2)(C) (“arises from damage to or loss of covered property caused, wholly or partly, by forces of nature, including an earthquake or earth tremor, a wildfire, a flood, a tornado, lightning, a hurricane, hail, wind, a snowstorm, or a rainstorm.”).
 Tex. Ins. Code 542A.003(b)
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