The vast majority of property damage claims are resolved without a lawsuit. Texans need to focus on their own safety as well as that of their communities and, once they are safe, it is important to understand the claim process to maximize recovery.
August 31, 2017
The Office of Public Insurance Counsel (OPIC) strives to make the insurance market more transparent, efficient, and responsive to all Texans. As part of this endeavor OPIC believes it is vital to provide information to Texans that reduces confusion in the insurance market during a crisis such as Hurricane Harvey. Much of the confusion relates to House Bill 1774 that was enacted during the recent legislative session. This confusion is primarily the result of the timing of Hurricane Harvey and the fact the new law becomes effective September 1, 2017.
While HB 1774 is important if you have a dispute with your insurance company that cannot be resolved without filing a lawsuit, the vast majority of homeowner and business-owner property damage claims are resolved without a lawsuit ever being filed. It is more important now for Texans to focus on their own health and safety as well as that of their communities. Once it is safe to do so, it is important to understand as much as possible about how the insurance claim process works in order to maximize recovery.
Therefore, OPIC’s primary focus is to provide consumers with information that may assist them in the various stages of the claim process, which includes potential disputes. However, it is necessary to provide some basic information regarding HB 1774.
Below are some key points relating to HB 1774:
- It does not apply to claims or lawsuits with the Texas Windstorm Insurance Association (TWIA) or the National Flood Insurance Program (NFIP). TWIA provides a large majority of the wind coverage for the 14 first tier coastal counties of Texas. The NFIP is the primary source of residential flood coverage in Texas.
- Insurance companies will continue to be subject to the same claims-handling legal requirements and they will continue to be responsible for paying your claim promptly and fairly. You will continue to have the right to reject any settlement offer, including any unfair valuation, and the insurance company must still comply with the same consumer protection statutes that allow for extra damages when an insured can prove their insurer violated a consumer protection statute or acted in bad faith.
- HB 1774 does change the interest penalty when an insurance company violates the prompt payment of claims law. The interest penalty for violating the prompt payment of claims law will change on September 1 from 18% to a new method for calculating the annual interest rate, which currently results in a 10% rate of annual interest for claims filed on or after September 1, 2017.
- HB 1774 does change some of the requirements relating to lawsuits filed against an insurance company on or after September 1, 2017. The main changes are 1) the required pre-suit notice of damages can now affect the amount of attorney fees awarded at trial, and 2) an insurance company is now allowed to decide whether it wants to assume the legal liability for the acts of insurance adjusters and other agents involved in the claims process. These changes will apply to all lawsuits that are filed as the result of disagreements from Hurricane Harvey claims.
The Claim Process
The Texas Department of Insurance (TDI) and OPIC provide information to assist consumers with Hurricane Harvey-related issues, including how to file a claim, at http://www.tdi.texas.gov/consumer/storms/helpafterharvey.html and http://www.opic.texas.gov. It is important to review you insurance policy and inspect your property thoroughly in order to maximize your insurance recovery. Some things to consider before you file a claim are discussed below:
- Do you know your deductible amount? Homeowners deductibles vary from one company to another and can be as much as 5% of the insured amount. For example, a 1% deductible amount on a homeowners policy that insures a home for $250,000 is $2,500. Some policies may have a special deductible called a “named storm deductible.” A named storm deductible may be 5% of the insured amount. A home insured for $250,000 with a 5% named storm deductible would have a $12,500 deductible for a loss that is subject to a named storm deductible. It is important to understand what types of deductibles exist for your insurance policies. For additional information, visit http://www.opic.texas.gov/residential-property/property-insurance-articles/item/249-understanding-your-homeowners-deductibles.
- Have you determined all property damage caused by Hurricane Harvey? You should consider having a reputable contractor or builder help you determine all the property damage caused by Hurricane Harvey. This will be beneficial to you if the adjuster misses something or if you need to discuss estimates or technical construction and repair items with the adjuster or insurance company. Be sure the contractor or builder is reputable and that they complete any work before you pay them.
- Are You Temporarily Out of Your Home Due to Damage Covered by Your Homeowners Insurance Policy? If so, ask your agent or insurance company about coverage that may be available to you for your additional living expenses (ALE). Homeowners insurance policies pay for your additional living expenses if you are unable to live in your home because of a covered loss. You will need to provide documentation regarding your additional living expenses so keep receipts. Flood Note: The National Flood Insurance Program’s Standard Flood Insurance Policy DOES NOT cover your additional living expenses if you are unable to live in your home due to a covered flood loss. For additional information, visit https://www.fema.gov/national-flood-insurance-program.
- Have you made any repairs? If you are making repairs prior to settling your insurance claim, only make repairs necessary to protect your home and property from further damage, such as covering broken windows and holes to keep rain out. Do not make permanent repairs until instructed by your insurance company. Save all repair receipts.
- Have you taken an inventory of your damage? If it is possible and safe to do so, photograph or video your damage. Do not throw away damaged property until your adjuster has seen it.
OPIC understands many issues will arise during the claim process and TDI and OPIC will update their websites as much as possible as these issues arise. For additional information, please contact the Texas Department of Insurance Consumer Help Line 1-800-252-3439 or the Office of Public Insurance Counsel at 512-322-4143
Share article on social media or email: