Cars Underwater Due to Flood

New Changes For Property Damages Claims in Texas

New Changes For Property Damage Claims in Texas

If you have any damage to your property from Hurricane Harvey it is imperative that you contact your policyholder as soon as possible.

Important changes affecting property damage claims under Texas Insurance Law will go into effect on Friday, September 1, 2017.

To take advantage of current Texas Insurance Law protecting property owners’ with regard to damage claims resulting from HURRICANE HARVEY, policyholders should send a written message or email directly to their insurance company that (1) specifically references their claim; AND (2) is dated BEFORE SEPTEMBER 1, 2017.

Telephone messages will not suffice, you must give written notice.


Here is more detailed information regarding the law change.

HB 1774 was made into law, effective September 1, 2017 – it was a bill to REMOVE protections for policyholders by amending Texas Insurance Code 541 and 542.  Here is a summary of the changes:

HB 1774 was enrolled this past legislative session and goes into effect September 1st. HB 1774 essentially carves out a new chapter in the Texas Insurance Code for insurance claims specifically tailored to first-party property damage claims arising out of weather events and was meant to curb the hailstorm litigation in Texas.

What types of cases:

HB 1774 affects first-party claims that are made by an insured under an insurance policy providing coverage for real property and “arises 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, lightning, a hurricane, hail, wind, a snowstorm, or a rainstorm.” Notably – property damage cases not involving these forces of nature are not subject to the new changes.

It affects all claims against an insurance company, including breach of contract, negligence, misrepresentation, fraud, breach of duty of good faith and fair dealing, 541 actions, and 542 actions, and DTPA actions. TWIA is excluded from the revised changes.  It specifically covers common law claims too (like Good Faith and Fair dealing – what we call common law bad faith).


HB 1774 heightens the pre-suit notice requirement in Texas and specifically states that the notice must provide: “(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.” This really should not be any different than what is already being provided in pre-suit notices and essentially requires specificity of the causes of action, with specific references to acts or omissions, and the Arthur Andersen type of attorney’s fees’ calculation. The bill also mandates that if the attorney is the one signing the notice, that a statement be contained somewhere in the letter that a copy of the notice was given to the insured. If a defendant is able to show that it was not given proper pre-suit notice (61 days before filing suit), then the attorney’s fees for the plaintiff is capped at the amount of attorney’s fees at the time the defendant first files a pleading with the Court. Additionally, the bill mandates that the Court to dismiss a case without prejudice if a defendant shows a defect in pre-suit notice. The bill does state that the pre-suit notice can be used as evidence, which will allow practitioners to show the notice at trial (whereas in the past judges have been hesitant to do so under TRE 408).

TRANSLATION: your pre-suit notice should have a tight damage model with attorney fee bills attached.

The bill also allows for a pre-suit inspection by the insurance company if the insurance company gives notice (within 30 days after receiving pre-suit notice) and the inspection is supposed to take place before the expiration of the 60-day notice period.

A case can be automatically abated (without a court order) if pre-suit notice was not given in accordance with the new bill’s terms and/or the inspection was not allowed during the notice period.

Liability of Adjusters:

The bill allows the insurance company to pick up liability for adjusters or agents working/investigating the claim. If the insurance company makes the election during pre-suit notice period than no cause of action can be brought against adjuster/agent. If the insurance company makes the election after the suit is filed, then the Court must dismiss the action with prejudice against adjuster. An insurance company who makes this election is required to make the adjuster/agent available for depositions (otherwise the election provisions don’t apply). The insurance company cannot also revoke the election once made. You can still use the adjuster’s acts/omissions at trial and jury can consider them as if finding against the adjuster. You cannot tell the jury that the insurance company elected to accept responsibility for the adjuster’s acts/omissions.

TRANSLATION: This will essentially prevent most claims from being brought in state court – that is the aim here.  541 allows suits against insurance adjusters – now any “agent” can come under insurance company and out-of-state companies (like the big, discount lines – allstate, state farm, etc.) are going to be in federal court.

Attorney’s Fees Changes:

The amount of attorney’s fees recoverable will be determined by the amount of actual damages awarded in judgment versus the amount claimed in the pre-suit notice. You are to divide the amount of actual damages awarded in judgment, by the amount of actual damages claimed in pre-suit. If the sum total of this is greater than or equal to 80%, then a claimant is entitled to their full attorney’s fees. If the sum total is less than 20%, then the claimant is not entitled to any attorney’s fees. If proper pre-suit notice was not ever given, and defendant pleads and proves the same, then the amount is limited and capped at the amount up until the date by which defendant pled the same.

A hypothetical is useful in illustrating the above point:

Judgment Actual DamagesPresuit Notice Actual Damagesless than 20%greater than 80%Attorney’s Fees Awarded at trialAttorney’s Fees Allowed

As shown here, if the actual damages awarded at trial are greater than or equal to 80% of what was sent to the defendant in the pre-suit notice, then you can recover your full attorney’s fees. If the actual damages are less than 80% of what was claimed in the pre-suit notice but greater than 20%, then you are capped at the following equation: (Judgment Actual Damages / Pre-suit Notice Actual Damages) * Amount of Attorney’s Fees Awarded. If the actual damages awarded at trial are less than 20% of what was sent in pre-suit notice, you may receive NO attorney’s fees.

Statutory Interest Changes:

Instead of the 18% that you get now, it will become 5% on top of the current interest rate, at the time of judgment as determined by Tex. Fin. Code 304.003.

SO…the summary of the summary:

  1. For claims with NOTICE given before Sept. 1 then they can grandfather to the prior 542 insurance rate for late payment (18% per year or 1.5% per month – which is a lot).  Otherwise, the new interest for late payment is effectively 8%.
  2. All the other changes will apply UNLESS suit is FILED before Sept. 1 (which is unlikely).
  3. So, to give advice, at least get them to give NOTICE of the claim before Friday – in writing somehow – mail, fax, email – get a confirmation that it is filed by getting a CLAIM NUMBER and that way they can preserve the penalty interest.
  4. None of these changes apply to flood policies as they don’t get any of these protections anyway.
  5. But, given that you are talking about Rockport, that is a wind area where landfall was made.