New “Hail Bill” In Texas

Texas has a new law regarding hail damage claims.

Here are five things to know about the new law.

First, it creates a new chapter in the Texas Insurance Code, Chapter 542A, which applies to property damage claims caused by “forces of nature.”  This includes damage caused by earthquakes, wildfires, floods, tornados, lightning, hurricanes, hail, wind, snowstorms, and rainstorms.  The law applies to any lawsuit the insured may bring against the insurer or its agent even if the insured does not sue the insurer.  Besides, Insurance Code violations, this new law applies to breach of contract claims and common law claims.  Further, “forces of nature” are not specifically limited to weather related events and litigation will probably result over what else is included.

The second requirement of the new law is the requirement that the insured must give notice and an opportunity to inspect the property before a lawsuit may be filed.  The notice must include (1) a statement of the acts or omissions giving rise to the claim; (2) the specific amount the insurer owes on the claim; and (3) the amount of attorneys’ fees the insured already incurred at the time notice is given.  After receiving the notice, the person who received the notice has thirty days to send a written request to inspect, photograph, or evaluate the property that is subject to the claim and must complete the inspection, photography, or evaluation no later than sixty days after it received the notice.  These requirements can complicate some commercial cases.

Third, the new law allows an insurer to abate the lawsuit or remove it to federal court.  The abatement is not that new.  The significance of the removal to federal court is the new law allows the insurer to assume liability for its agents and thus defeat diversity jurisdiction, which allows the case to be easier to remove to federal court which what insurance companies prefer.

The fourth change makes it difficult for an insured to recover their full attorney fees.  The amount allowed to be recovered for attorney fees is modified to the “lesser of”: (1)  Reasonable and necessary fees shown at trial with evidence and determined by the trier of fact to have been incurred in bringing the action;  (2)  The amount of attorneys’ fees that may be awarded to the claimant under other applicable law; or  (3)  The amount to be awarded in the judgment divided by the amount stated in pre-suit notice multiplied by the total amount of reasonable and necessary attorneys’ fees determined at trial.

The result of the fourth change is if the insured over states the amount of damages in the pre-suit notice the insured may run the risk of losing complete recovery of attorney fees.

Last, the insured may not get as much money in damages in his real property claims.  Instead of the old law damages of 18% on actual damages, the new law limits the recovery to 5% plus the prime rate.  The prime rate varies, but will have a base of 5% and a cap of 15%.

When discussing a claim with an insurance law attorney, this new law needs to be reviewed for how it effects the claim.