Texas Homeowners Insurance Bill Could Limit Claims

A new bill proposed in the Texas Legislature may allow insurers to drag out the process of paying legitimate Texas homeowners insurance claims. House Bill 3646 contains some major revisions to the Texas homeowners insurance code. These changes include changing the deadlines for responding to claims from “consecutive days” to “business days,” as well as reducing or eliminating the penalties for an insurer’s failure to respond to claims by the deadlines.

Proposed Changes to Texas Homeowners Insurance Deadlines

The proposal offers several changes to when and how insurers process Texas homeowners insurance claims. Some of these changes involve pushing up deadlines for Texas homeowners insurance policy holders to file claims. While the current law establishes the statute of limitations on filing claims at two years, the new law would push that deadline up to “not later than the first anniversary of the date” the damage occurred. The change could allow insurers to deny later claims on damages that may not be visible within the first year.

Texas Homeowners Insurance Revisions Use “Business” Days

The new Texas homeowners insurance bill would also stretch out the deadlines for insurers to respond from “consecutive days” to “business days.” The bill defines a “business day” as “a day other than a Saturday, Sunday, or holiday recognized by this state.” The bill would call for Texas homeowners insurance providers to start the claims process “not later than the 15th business day” after receiving the claim. For eligible surplus lines insurers, the deadline stretches out to the 30th business day.

Penalties Removed From Texas Homeowners Insurance Bill

A controversial aspect of the proposed Texas homeowners insurance legislation would remove legal penalties for insurers who fail to meet their deadlines. The bill states that an insurer missing a prescribed deadline “is not an unfair claim settlement practice” and that the missed deadline “is not actionable” by the Texas homeowners insurance policy holder. The bill gives the state Insurance Department the discretion to “assess interest against the insurer” or “enter an order compelling the insurer to comply.” However, the revisions do not carry the force that either an unfair practice charge or a lawsuit could to compel insurers to meet their deadlines.

Does New Texas Homeowners Insurance Bill Include Stall Tactics?

Another noticeable component of the Texas homeowners insurance bill is a clause that allows insurers to request more time before responding to a claim. The bill would allow Texas homeowners insurance providers to send claimants a written notice that they need more time to process a claim. The insurer’s letter would inform the the claimant that their claim will be approved or rejected within 45 business days. During this time, which can be as long as ten weeks with holidays, claimants are still expected to make their premium payments in full and on time.

Source: Insurance Busters:

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