New Law Limiting Your Rights Under Your Policy Goes Into Effect September 1

The Texas Legislature passed a law, effective September 1, called the “Hailstorm Bill.” This new law severely limits your rights under your commercial property insurance policy. Here are a few of the new changes.

-Statutory Penalties: The current law provides a penalty of 18% for failure of an insurance company to pay a claim timely and fairly. The new law lowers that amount to 5% higher than the Texas Pre-judgment interest rate which is now 5%. So the penalty will effectively drop from 18% to 10%.

-Notice: Property owners are now required to give written notice to an insurer at least 61 days before filing suit. The old law only required notice of suit of the insured was going to bring a cause of action alleging “Bad Faith.” If Notice is not sent, the lawyer for the property owner may not be able to recover attorneys fees.

– Inspections: The new law allows the insurance company, within 30 days after receiving the notice letter to request an inspection within 30 days, and to actually inspect the property within 60 days after receiving the notice letter.

-Abatement: If pre-suit notice requirements are not met, an insurance company can automatically abate the lawsuit.

-Assumption of Liability and Defense: One way property owners avoid federal court and help determine whether a claim was handled properly is to sue an agent or adjuster. The new law allows a property insurer to assume liability for the agent or adjuster. Once liability is assumed, any case against an agent or adjuster will be dismissed with prejudice.

-Attorney’s Fees: In order to recover attorney’s fees, a property owner must be awarded 80% of pre-suit damages claimed. If the award is between 20% and 79% of the pre-suit demand the attorney’s fees award will be scaled accordingly. If the award is less than 20% of the original demand, there can be no recovery of attorney’s fees.

If you have a property insurance matter you would like to discuss, call me at 817-731-9703 or 817-999-5961.