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Texas HB 1774, also known as the “Hailstorm Bill,” will go into effect on September 1, 2017. This new law will make it more difficult to litigate weather-related property damage claims. Although the process of filing a claim will remain the same, it is important to note that your rights with regard to disputing the claim will diminish severely. While it is true that this law will not affect your rights with respect to the National Flood Insurance Program (NFIP), which backs all Flood Insurance policies, it will affect your rights regarding disputes against the carrier from which you purchased the insurance. These new provisions will affect your right to recover from the carrier, should a dispute arise.

On September 1, 2017, Chapter 542A will be added to the Texas Insurance Code, which will be specifically directed at weather-related claims. There are several changes to the current law regarding insurance disputes, but among these changes is perhaps the most prominent: the change to statutory penalty interest. The statutory penalty interest applies to insurance companies who are either late in paying or fail to pay claims as a result of a lawsuit. Under the current law, an insured will recover 18% interest on top of the overall claim if the insurer fails to timely pay the amount for which it is liable. The new law, however, changes this percentage to 5% above Texas’s pre-judgment interest rate, which is currently 5%. This means that the overall statutory penalty interest rate is 10%. You can, however, preserve your rights to the current statutory interest percentage under the current law by filing a claim with your insurance carrier by August 31, 2017.

In addition to the change in statutory penalty interest, there are modifications and additions to the notice requirements, inspections, abatement process, assumption of liability, and attorneys’ fees:

1. Pre-Suit Notice: If filing suit, the insured is required to provide written notice that complies with the requirements of the new rules at least 60 days prior to filing suit or else the insured’s attorney may be unable to recovery attorneys’ fees.

2. Pre-Suit Property Inspections: The new law allows an insurer who receives pre-suit notice to inspect, photograph, or evaluate the property within 30 days of receipt of such notice—prior to suit ever being filed.

3. Abatement: The individual and/or company against whom an action is filed, may file a plea in abatement to stay any court proceedings if it claims the insured either did not provide pre-suit notice that complies with the rules or was not provided a reasonable opportunity to inspect or evaluate the property after giving notice to the insured.

4. Assumption of Liability: Insurers are able to assume it’s agent’s liability to the claimant for any acts or omissions made by the agent relating to the claim. Once this is done, the court must dismiss any claims made against the agent with prejudice, meaning that the claims may never be brought up again.

5. Attorneys’ Fees: Attorneys’ fees will be prohibited if the insured (claimant) fails to provide pre-suit notice in accordance with the new rules. In addition, attorneys’ fees will most likely be limited if the claim is tried and the award equates to less than 80% of the pre-suit damage demand. If the award equates to less than 20% of the pre-suit damage demand, then no attorneys’ fees will be awarded.

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