Statement from Senator Miles on HB 1774 Regarding Hurricane and Flood Insurance


The law reduces penalties insurance companies would have to pay for not paying enough in insurance claims, and makes it more hard for plaintiffs to collect attorneys' fees for litigation. She said most claims related to Hurricane Harvey will be flood-related and not affected by the law because flood damage is covered by policies obtained through the National Flood Insurance program. For claims filed after Friday, that rate will be determined by a market-based formula that is capped at 20 percent.

By doing so, those policyholders will preserve their ability to collect an 18 percent penalty interest rate that insurance companies have to pay when they fail to pay a legitimate claim "timely and fully".

The author of HB 1774, Sen.

"This bill does not take away consumer's rights to sue their insurance company".

The new law does not affect the Texas Windstorm Insurance Association or federal flood insurance. Aside from the protections against paying lawyers' fees, insurance companies will be shielded in large part from interest penalties for delayed claims.

"It will reduce the amount of attorney's fees available to certain attorneys in certain situations".

However, Republican Senator Kelly Hancock who sponsored the legislation, claims lawyers are misleading homeowners.

Lucy Nashed, a spokeswoman for Texans for Lawsuit Reform, a nonprofit group which backed the new law and has championed "tort reform" for several years, accused plaintiff's attorneys of spreading misinformation.

Summary: Some Hurricane Harvey victims are scrambling to file homeowner insurance claims before Friday.

While people filing claims by Friday would benefit from the higher penalty payouts in lawsuits, those same cases would be subject to provisions in the new law.

But Lee Parsley, general counsel of Texans for Lawsuit Reform, said the change in the interest rate penalty from 18 percent to an amount equal to the state's judgment rate plus 5 percentage points - now 10 percent - will benefit policyholders. He wrote that the new law won't change the claims process and that he filed the bill in response "to a growing trend around the state of lawsuits being filed without pre-suit notice, in some instances before an insurance claim had even been filed, and often without the property owner knowing they had even signed a contract with an attorney". "After Friday, there won't be the incentive because the penalty for delays have been reduced". "It will also require policyholders to provide written notice prior to filing a lawsuit", said Martin.

"There's no doubt that this is a multibillion-dollar event in terms of losses. We will be keeping an eye on any problems that could arise", said Alex Winslow, the group's communications director.