Flood Insurance

For those insurance lawyers handling flood claims, a Corpus Christi Court of Appeals opinion issued in 2017, is a must read.  It is styled, Housing & Community Services, Inc. and HCS 401, LLC D/B/A Lantana Square Apartments v. Texas Windstorm Insurance Association.

This is an appeal in favor of TWIA

HCS had policies providing coverage with TWIA through December 2012.  On May 15, 2012, HCS sustained damage to covered property and on May 28, 2013, filed two claims with TWIA.  On July 1, 2013, TWIA denied both claims on the grounds that HCS failed to fulfill its duty to file its claim with TWIA within one year of the loss.

HCS sued TWIA alleging wrongful denial of coverage under Section 2210.575 of the Texas Insurance Code.  Specifically alleging that HCS’s thirteen day lapse of filing its claim within exactly one year of the requisite requirements of the policy do not bar it from coverage under the policies because the delay did not prejudice TWIA.

TWIA claimed that chapter 2210 of the insurance code exclusively regulates insurance policies issued by TWIA and does not require a showing of prejudice to prevail in its defense.

The parties made four stipulations:  (1) a weather event occurred on May 15, 2012 causing damages to the covered property, (2)  HCS filed the claims one year and thirteen days after the loss, (3)  TWIA denied the claims as untimely because the claims were filed thirteen days late, and (4)  TWIA was not prejudiced by the late filing of the claims.

The plain language of Section 2210.573(a) states that an insured must file a claim not later than the first anniversary of the date on which the damage to property occurs.

When statutory text is clear and unambiguous, the courts construe the text according to its plain and common meaning unless a contrary intention is apparent from the statute’s context.  The Legislature provided that TWIA shall: (1) function in such a manner as to not be in a direct competitor in the private market; and (2) provide windstorm and hail insurance coverage to those who are unable to obtain that coverage in the private market.  When the Legislature creates a statutory cause of action and remedy for its enforcement dealing with an administrative agency, such as TWIA, rather than common law, the statutory provisions are mandatory and exclusive.

Section 2210.573(a) sets forth a clear and unambiguous one-year limitations period for when a claimant may file a claim with TWIA.  Both policies in this case expressly reiterate these duties to HCS as conditions to the policies under the heading “Your Duties After Loss.”  Furthermore, nothing in the TWIA Act requires TWIA to show prejudice before denying coverage based on a claimant’s untimely filed claim.  Lastly, the TWIA Act in Section 2210.579, states that “To the extent of any conflict between a provision of [the claims process under the TWIA Act] and any other law, the provision of [the TWIA Act] prevails.

Therefore, construing the TWIA Act, the court had to hold that TWIA may deny untimely filed claims, regardless of whether TWIA was prejudiced by the untimely claim.