Texas Bill Limits Property Insurance Claims

Two proposed bills in the Texas Legislature seek to limit when and how policy holders can file property insurance claims. House Bill 3646 and Senate Bill 1628 propose to institute changes to the Texas Insurance Code that would add “consumer protection” for policy holders seeking to file property insurance claims. However, some of the language in these bills could remove many protections Texas policy holders have relied on for more than four decades.

“Compromise Settlements” In Property Insurance Claims

The numerous changes proposed in HB 3646 include language that favor insurers over policy holders in property insurance claims. One section allows insurers to make a “compromise settlement” on property insurance claims. Some observers believe that insurers could use this language to avoid paying the full amount on a claim. The bill also allows the insurers to determine the amount of the “compromise settlement” without input from the policy holder or review from an independent arbitrator.

“Reasonable Investigation” Into Property Insurance Claims

The proposed bill also allows insurers to make “reasonable investigations” into their policy holders’ property insurance claims. However, the bill does not define what constitutes a “reasonable” investigation. The bill’s language also does not provide clear-cut standards as to when, where and how insurers and adjusters are to conduct these investigations. Industry observers have stated that this language allows insurers to delay processing property insurance claims and reduce payments on legitimate claims.

More Documentation For Property Insurance Claims

A major hurdle the new bill proposes for those filing property insurance claims is the added burden of documentation. The bill states that policy holders seeking to pursue legal action to recover their property insurance claims must file numerous documents no later than 60 days before filing their suit. These documents include “a verified proof of claim,” which the policy holder must send to the insurer by certified mail. The policy holder must also have calculated the amount of actual damages, plus interest and attorney’s fees.

Bill Limits Recovery Amounts In Property Insurance Claims Lawsuits

The bill goes further in limiting how much policy holders can recover in a property insurance claims lawsuit. The bill counts “actual damages” separately from attorney’s fees. The bill also separates the “actual damages” from property insurance claims and “the (insurer’s) failure to pay the policy benefits or interest.” The bill also states that “’actual damages’ does not include the policy benefits or noneconomic damages,” such as punitive damages or pain and suffering.

Source: Insurance Busters:

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