Texas Winter Weather Claims Denial

Texas homeowners have just experienced the worst loss state wide that has ever been experienced.  Homeowners will be reeling from the damage and hopefully the insurance companies treat all their customers fairly.  Unfortunately, there will be many customers who end up having their claim denied for one reason or another.

Here are some things to think about as it relates to weather related property claim.

After the historic and widespread property loss and damage resulting from the recent Texas freeze, home and business owners will be turning to their insurance provider for help.  Some of those insurance claims will be denied unfairly and property owners will turn to Texas Trial Lawyers Association (TTLA) members for assistance in getting their homes and businesses repaired.

Legislation enacted in 2017 with the support of the insurance industry and other special interests makes the process of resolving weather related property insurance claims disputes, including those arising out of the recent snow and ice storm, much more difficult on property owners.  HB 1774 adds significant administrative burdens on property owners and reduces penalties on insurers who fail to meet their obligation to handle claims properly.

This is a page that was provided to TTLA members to help them understand the effect HB 1174 will have on those claims.

What is HB 1774?

HB 1774 is legislation enacted in 2017.  The bill created Chapter 542A, Texas Insurance Code.  Chapter 542A outlines specific requirements for property owners and attorneys before a suit can be filed.  Additionally, HB 1774 lowered the penalty insurance companies face when they fail to handle claims promptly.  See specifically Section 542A.060(c).

So, what type of claim is subject to 542A?

Chapter 542A applies to ALL WEATHER RELATED claims against your own insurance company or its agents.

Despite the focus on specific types of weather related events by the media and proponents of the bill, it is important to know that any weather related claim is subject to the rules and restrictions of Chapter 542A.

Specifically, Chapter 542A applies to first party claims that arise “from damage to or loss of covered property caused, wholly or partly, by forces of nature, including an earthquake or earth tremor, a wildfire, a flood, a tornado, lightening, a hurricane, hail, wind, a snowstorm, or a rainstorm.” This is found in Section 542A.001(2)(C).

Moreover, Chapter 542A applies to any weather related claim alleging breach of contract, negligence, misrepresentation, fraud, breach of common law duty or any action brought under Chapters 541 or 542 of the Texas Insurance Code or Chapter 17 of the Texas Business & Commerce Code.  This is found in Section 542A.002.

What requirements are included in Chapter 542A?

Chapter 542A imposes hurdles that property owners must overcome before filing an action, including provisions requiring a 60-day written notice pursuant to 542A.003(b) and inspection pursuant to 542A.004.

The pre-suit notice must include certain components outlined in 542A.003(b) including:

(1) a statement of the acts or omissions giving rise to the claim;

(2) the specific amount alleged to be owed by the insurer on the claim for damage to or loss of covered property; and

(3) the amount of reasonable and necessary attorney’s fees incurred by the claimant, calculated by multiplying the number of hours actually worked by the claimant’s attorney, as of the date the notice is given and as reflected in contemporaneously kept time records, by an hourly rate that is customary for similar legal services.

Property owners may not be able to fully recover their loss and be made whole if they incorrectly estimate their damages according to 542A.007.  Additionally, there are specific responsibilities for attorneys filing the required notice on behalf of a property owner according to 542A.003(c).

What steps should property owners take when filing their initial claim?

Texas Watch, the state’s leading consumer and property owners advocacy organization, has compiled resources on its #StormHelp resource page and a simple Top 5 Consumer Tips for Insurance Claims.

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