Storm Damage Insurance Claims and House Bill 1774

There is a lot of misinformation regarding recent changes to laws concerning homeowner’s damages during storms like Tropical Storm Harvey.  This post is made in an effort to aid those people impacted by this storm. It is not a substitute for legal advice.  It is not a solicitation for cases, our practice does not handle homeowner’s property damage cases.  This is intended to provide information to those that have been impacted by the current storm system.  I am a native Houstonian, with friends, family, and property that have been damaged in this storm.  I am hopeful this information helps people recover what they may lose as a result of this catastrophic event.

House Bill 1774 will become effective on September 1, 2017.  That is this Friday.  Horrible timing for thousands of people who have suffered incredible damages as a result of this storm system.  The current law regarding Homeowner’s rights in making claims as a result of storm damage is more favorable than the new law that becomes effective this Friday.

• The stated purpose of House Bill 1774 was to make it more difficult for homeowner’s to bring and litigate weather related property claims.
• The new law created Chapter 542A; which applies to weather related claims brought by Homeowners.
• The penalty interest rate enforced against an insurer that fails to promptly pay a homeowner’s claim for weather related damages has been decreased. Before the new law takes effect in September 1, 2017, an insurer that failed to promptly pay a homeowner for damages caused in a weather related catastrophe like Harvey would be forced to pay 18% per annum interest for such failure.  On September 1, 2017, that penalty interest rate changes to 10% (5% plus the prevailing pre-judgment interest rate, currently set at 5%).
• An insurer therefore faces less penalties for failing to promptly pay homeowners for weather related claims. A decrease of 8% interest on the value of destroyed home is a significant amount of money.  See, 542.060(c) Texas Insurance Code.

Many people believe that the foregoing changes, in addition to other changes not herein listed, provide an incentive for insurers to delay the payment of claims resulting from weather related disasters like this one.

As a result, we previously posted this message on Facebook:  Hurricane Harvey: The anti-homeowner legislation recently passed goes into effect THIS FRIDAY, September 1, 2017. To take advantage of current Texas Insurance Law protecting property owners with regard to damage claims resulting from HURRICANE HARVEY, policyholders MUST send a written message or email directly to their insurance carrier that (1) specifically references their claim; AND (2) is dated BEFORE SEPTEMBER 1, 2017. Telephone messages will not suffice to give written notice. Please share this with any of your family or friends who have been affected by Hurricane Harvey. 

By establishing a claim before September 1, 2017, your claim will be governed by the law as it exists before the effective date of the new law.  Here is an excerpt of the actual text of the bill:

(b)  Section 542.060(c), Insurance Code, as added by this Act, applies only to a claim, as defined by Section 542A.001, Insurance Code, as added by this Act, made on or after the effective date of this Act. A claim made before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 5. This Act takes effect September 1, 2017.