Private property owners rights must always prevail
Published 7:39 am Saturday, May 20, 2017
Editorial by Dade Phelan
AUSTIN, Texas — Storm chasing was made glamorous by the movie, “Twister.” But storm chasing by certain unscrupulous plaintiff attorneys is more horror movie than adventure film.
Lawsuit mills built around recruiting property owners to sue their insurance companies after severe weather has caused a 1,400 percent explosion in property-damage lawsuits since 2012. This unnecessary litigation is causing hardship to consumers through higher insurance premiums and deductibles and reduced or lost coverage, with devastating impact on working class families trying to make ends meet.
The Texas Department of Insurance (TDI) found that 12 insurers have already raised rates and seven have reduced, limited or stopped writing policies in Texas altogether as a direct result of unnecessary lawsuits.
We Texans already pay some of the highest property insurance rates in the nation because of our severe weather. We can’t let storm-chasing lawyers hijack our insurance and raise those rates even more. In some parts of the state, families in modest homes have seen their insurance rates triple.
That’s why I voted for House Bill (HB) 1774 to protect property owners’ rights against insurance companies that unfairly deny and delay claims, while imposing accountability for attorneys that abuse the system. The bill ensures that:
(1) Consumers will still have the same seven paths to the courthouse that exist today.
(2) Consumers will still have strict liability against an insurer who underpays a claim by a single dollar or is one day late – no showing of bad faith or wrongdoing is necessary.
(3) If an insurer acts in bad faith, the policyholder can continue to get treble damages from the insurer.
(4) The insurer will still pay significant penalty interest on top of pre-judgment interest; under HB 1774, the minimum interest accrued against a late-paying insurer is ten percent penalty interest and five percent prejudgment interest, for a total of fifteen percent. This maintains a strong incentive for insurers to pay claims on time and to settle reasonable demands quickly.
(5) Attorney fees will still be owed by the insurer when the plaintiff lawyer makes a reasonable pre-lawsuit demand for damages.
To stop the abusive litigation, the bill implements common-sense reforms.
A 60-day pre-lawsuit notice is already required by law, but regularly ignored by unethical plaintiff lawyers, with no consequences to those lawyers. HB 1774 simply requires 60 days’ notice prior to filing a lawsuit. This gives the insurer the opportunity to make a settlement offer to the policyholder, making the property owner whole more quickly and potentially avoiding a long and costly lawsuit. That’s good news for Texans because TDI found that lawsuits take seven times longer to resolve than regular insurance claims – nearly two years compared to about three months.
Additionally, TDI found that some lawyers make outrageously excessive demands in these lawsuits – on average four times more than what an insurer eventually pays. To encourage fact-based demands – and again, quicker resolutions for families and businesses – if the attorney recovers less than 20 percent of the amount he states in the pre-suit notice is needed to repair or replace the damaged property, the defendant owes him no attorney fees. If the attorney recovers 80 percent or more of what he demanded, the insurer must pay all of his attorney fees. Anything between 20 and 80 percent is prorated.
Texas has the strongest consumer protection laws in the nation for policyholders against insurance companies and that will continue to be the case under HB 1774, which is why it passed the Texas House with overwhelming support. House Bill 1774 holds accountable both slow-paying insurance companies and lawyers who exploit our legal system for personal gain.
Dade Phelan is Texas House Member Representative for District 21