Storm insurance bill on verge of final passage in Legislature
AUSTIN — The Texas Senate on Tuesday was on the verge of sending a bill to Gov. Greg Abbott for his signature that backers predict will crack down on “abusive and unnecessary” lawsuits filed by “stormchasing lawyers” over insurance claims after hail and other storms.
The 21-8 vote for preliminary approval followed a brief debate and no attempts to amend the so-called “blue tarp bill,” which foes have said will impact millions of property owners by threatening their access to the courts. Final approval is viewed as a lock. It was a stark contrast to the House, which debated HB 1774 earlier this month for several hours and wrangled over nearly two dozen amendments.
Sen. John Whitmire, D-Houston, predicted legislators may need to make changes to the bill in two years if the opponents are correct that problems will arise that warrant further action.
“I think people are going to be in for a real surprise that we are changing the current practice — not the abuses and the chasers — I’m talking about legitimate practice of law. I hope we will monitor this and be willing next session to make any corrective measures that are denying people their fair recovery from their loss,” he said.
State Sen. Kelly Hancock, the North Richland Hills Republican who sponsored the Senate version of the bill, replied that lawmakers had crafted “fair and reasonable” legislation to address “frivolous lawsuits” while enabling residential and business property owners to continue to file lawsuits against insurers that don’t act appropriately.
In his State of the State speech, Abbott called hailstorm litigation “the newest form of lawsuit abuse” and urged legislators to send him a bill that he can sign into law to limit those types of lawsuits. He is expected to sign HB 1774.
The bill requires plaintiff’s attorneys to file a notice with an insurance company more than 60 days before a lawsuit is filed that includes “acts or omissions” causing the claim, the amount alleged to be owed and the amount of “reasonable and necessary” attorney fees incurred. If the pre-suit deadline is missed, plaintiff ’s attorneys would not be able to collect fees.
In addition to hail, the bill also applies to earthquakes or tremors, wildfire, flood, tornado, lightning, hurricanes, wind, snowstorms and rainstorms.
Also, the legislation would lower the penalty interest rate that insurance companies have to pay when they fail to pay a legitimate claim “timely and fully” — from the current 18 percent to a rate that would float 5 percentage points above Texas’ judgment rate. That rate currently is 5 percent. As a result, the penalty rate would drop from 18 percent to 10 percent.
Insurance companies would be able to assume the liability of adjusters that they hire. TLR and insurance companies have said plaintiff’s attorneys have named adjusters as defendants in hail and other storm lawsuits. The goal is to enable out-of-state insurers to move those lawsuits to federal court, which may be less friendly to plaintiff ’s attorneys, the bill’s backers have said.