A man waits to be rescued from his home after the greater Houston area was inundated with flooding from Hurricane Harvey. Credit: Joe Raedle / Getty Images

Texans who suffered property loss or damage due to last week’s hurricane and subsequent flooding face an uphill battle rebuilding their lives. For many of them, a new law passed by the 2017 Texas Legislature makes that climb a little steeper. 

The stated purpose of House Bill 1774, which was signed into law in May and goes into effect on Sept. 1, is to limit hailstorm litigation abuse. It applies primarily to lawsuits filed against private insurers, requiring more notice of a suit and reducing potential payouts.

Donna Thomisee and Briana Loughlin of Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, a Houston law firm, said that the new law added a new chapter to the Texas Insurance Code. 

“Although the early impetus for the bill was hailstorm litigation, the bill’s broad scope includes additional weather events such as earthquakes, wildfires, floods, tornado[e]s, lightning, hurricanes, wind, snow, and rain storms,” Thomisee and Loughlin wrote on their firm’s blog

Proponents of the law claim that because the bill only applies to private ensurers, it will not apply in most of the hurricane-related cases.

State Rep. Dennis Bonnen (R-Angleton) wrote a Facebook post claiming that the new law will not actually apply to most claims or lawsuits arising from Harvey. Damage caused by flooding will be claimed under the National Flood Insurance Program, a federal program not subject to the new law. Wind damage can be covered similarly.

“Similarly, the new law will not apply to lawsuits pursued against the Texas Windstorm Insurance Association (TWIA), which is subject to an entirely different statute governing post-disaster lawsuits. TWIA provides insurance for many people affected by Harvey,” Bonnen said.

Lawyers and insurance companies, however, do appear to anticipate a high number of claims under private insurers, providing information for consumers who will be affected.

The Insurance Council of Texas issued a statement Monday clarifying that the claims process has not changed, nor has the right to sue an insurance company. The process of filing suit against an insurance company has changed.

“One of the key changes in the new law is that the insurance company must be given written pre-suit notice of legal action and an opportunity to inspect the property in question.  Regardless of the date your claim is filed, your insurer will work with you to see that your claim is handled professionally and promptly,” the council said in the statement.

The council also highlighted the following “need-to-know” facts about the new law:

  • The claims process for filing a claim for an insurer to handle a claim has not changed.
  • Consumers still have all legal remedies available under the consumer protection laws in
    the event an insurer engages in bad faith conduct.
  • The Texas Department of Insurance is available to handle any complaints about insurers.
  • The new law does not take away any right to sue and does not diminish any cause of
    action that a person has against an insurance company. HB 1774 does, however, require
    notice before a lawsuit is filed.
  • The pre-lawsuit notice is effective for all “actions filed on and after the effective date,
    which is September 1, 2017.” Any lawsuit filed after September 1, 2017, would be
    governed by the new law.

The Texas Trial Lawyers Association is advising Texans with property damage from the state’s recent storms and floods to file before Sept. 1, if possible.

Among other things, the bill cuts the penalty insurance companies face for delayed payments from 18% to just 10%,” TTLA Director of Communication Alex Winslow said. “By notifying your insurance company of a claim before that date, you should be able to preserve your rights under the current Texas Prompt Pay Act, specifically the stiffer penalty for delayed payments.”

The notice needs to be in writing and should have a time and date stamp showing when it was submitted, Winslow said.

Because of the narrow window to file claims, and the complicated nature of the insurance industry, victims may find legal advice reassuring.

To help victims understand the process and locate recovery resources in their area, the State Bar of Texas has a hotline.

“Callers can find help with problems such as replacing lost documents, answering insurance questions, tenant/landlord matters, and consumer protection issues such as avoiding price-gouging and contractor scams,” State Bar President G. Thomas Vick wrote on the Texas Bar Blog.

Those who need a referral to legal representation, can call from 8:30 a.m. to 4:30 p.m. on weekdays. The State Bar can connect victims with Legal Aid networks which deliver legal services to those who cannot afford them otherwise.

Several law firms are offering advice for those who will need to file claims.

“Telephone calls are not enough,” said Peyton Smith, an attorney with the Austin office of McGuire Woods in a Facebook post. “It is vital that you make sure that you put notice of your claim in writing – and send it by mail, fax, text, or email. Insured property owners filing a claim should also keep a copy of what you send and make a personal follow-up call to your agent, and forward a copy of the notice of claim to your insurance agent,”

Raizner, Slania, a Houston law firm dealing in property insurance claims, offered the following advice to those with damage from the hurricane:

  • Submit a written notice of loss form to the insurer. Do not rely solely on a verbal notice of loss.
  • The insured should sign the notice of loss. While it is a reasonable interpretation of the statute that a public adjuster may sign the notice on behalf of the insured, we recommend that the insured sign the notice.
  • Keep proof that the notice was submitted. This can include a copy of an email, proof of an online submission, fax confirmation, or other documented confirmation that notice was made, including the date and time of the notice.
  • The insurer must acknowledge the claim in writing within 15 days of notice. Verify that the acknowledgment of notice you receive from the insurer reflects the correct date

Of course, for many living along the Texas coast and in Houston and surrounding areas, the extent of damage to their businesses and dwellings remains unknown. Supporters of the bill believe that Texas insurance companies will take care of their customers. Many of State Rep. Briscoe Cain’s (R-Deer Park) constituents remain in Harvey’s path of destruction in the Houston area.

“I believe that Texans have the strongest consumer protections in the nation against insurers [that don’t deliver on claims],” Cain told the Texas Tribune on Monday.

While supporters of the bill say that it is needed to curb the rampant litigation following a series of destructive hailstorms across the state, opponents of the bill said that it was a pass for insurance companies, allowing them to pay less and later.

State Rep. Diego Bernal (D-San Antonio) said that his concern is that “broad strokes could make it easier and more likely that the companies pay less or not at all.”

The future is unclear, even for those who file before Sept. 1. Still, experts recommend trying. While insurance is the last thing storm victims may want to think about at the moment, it could make all the difference in their ability to rebuild their lives.

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Bekah McNeel

Bekah McNeel is a native San Antonian. You can also find her at her blog, FreeBekah.com, on Twitter @BekahMcneel, and on Instagram @wanderbekah.