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Opponents have effectively killed a piece of Texas legislation that would have made it more difficult for property owners to sue insurance companies that unfairly denied or delayed claims.
The Calendars Committee in the Texas House of Representatives opted to not schedule Senate Bill 1628 for debate and vote.
The bill, which passed the Senate earlier this year, was drafted in response to what lead sponsor State Senator Larry Taylor said was "excessive litigation" after several years of severe hailstorms and hurricane damage in the Lone Star State. The bill would have made it more difficult for home and vehicle owners, as well as business owners, to sue insurers over damage claims disputes.
The bill was opposed by a diverse array of organizations, including the Texas Trial Lawyers Association, the Texas Mortgage Bankers Association, AARP Texas, and others. The Houston Auto Body Association (HABA) also opposed the bill.
"The bill’s author and supporters are selling a line that SB 1628 somehow helps consumers," said Alex Winslow, executive director of policyholder advocacy organization Texas Watch. "It does not. You don’t help policyholders by taking away their rights."
The bill passed the Senate on April 30 and was sent to the House Insurance committee on May 4.
The bill would have established a two-year time limit on seeking claims. Policyholders would have had to provide advance written notice, along with a signed statement attesting that damages occurred and show proof of damages before they could sue for deceptive acts or unfair claims handling. The bill also offered immunity protections to insurance agents and adjusters, and lowered the penalty insurance companies would have faced for making late payments. (The House version of the bill softened that last provision.)
Under current Texas law, when property owners file weather-related claims, insurers have to pay within 15 days or face penalties and interest on the payments.
The insurance industry backed the legislation, which they said would curb the increase in hailstorm-related litigation. Insurers have reported a 25 percent to 40 percent increase in post-storm claim litigation since 2008. In many cases, those suits were filed after the claims were paid.
In response to claims that the bill would strip consumer protections, Taylor issued a statement on April 29: “SB 1628 stops trial lawyers from filing frivolous lawsuits following a weather catastrophe and strengthens homeowners' rights. Policyholders deserve the lowest insurance premiums possible and to have their claims handled promptly and fairly."
Taylor also owns the Truman Taylor Insurance Agency in Friendswood, Texas.
Taylor and supporters of the bill attempted to resurrect some provisions in HB 3787, which allows a property insurance company to issue a policy that set a new statue of limitations for filing a lawsuit.
According to a statement from Texas Watch, the bill (which moved to the Senate Business & Commerce Committee at the end of May) would add notice provisions that "criminalize" mistakes on damage estimates, cut the time policyholders have to file claims to just one year, and create new processes for seeking approval for claims deadline extensions.
“This is a sneak attack on Texas families and businesses,” Winslow at Texas Watch said. “The Senate should see this for what it is: a naked attempt by a group of desperate lobbyists to ram through a giveaway for the insurance industry. Senators should reject this latest assault on hardworking Texans.”