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Insurance Claim Form

New Insurance Bill

New Insurance Bill

There is a new insurance bill that takes effect September 1 (this Friday) and has serious ramifications on homeowners rights.  If you FILE the insurance claim in writing before September 1, then they can claim the old penalty interest amount of 18% in Texas Insurance Code 542.  The claim needs to be in writing – We would not advise the usual telephone call to the agent or 800-line.  Certified mail best but email at worst and keep a copy.

This is big because the new law effectively removes 10% of that penalty – which is a no excuse penalty (good faith is not a defense).  If they underpay the claim, they owe the penalty plus attorney fees.  This statute has teeth and you need to FILE the claim (in writing) before Friday (yes, this Friday).  I know it is hard – some of you will not know the extent of the damage – but it is a significant change in the law.

Once you file, the investigative burden shifts to the insurance company.  Here are our rules (use them as a guidepost when evaluating insurers conduct):  Use them to evaluate the insurance companies’ conduct:

1.         Insurance company must conduct a thorough, objective, and reasonable investigation.

2.         Insurance company should diligently search for and consider evidence that supports the claim.

3.         Insurance company may not ignore evidence that supports coverage.

4.         Insurance company must assist the policyholder with the insurance claim.

5.         Insurance company should pay the claim unless there is a good reason not to – denial should not be based on speculation.

6.         Insurance company must disclose to its insured all benefits, coverages, and time limits that may apply the claim.

7.         Insurance company must promptly pay for claims when liability is “reasonably clear” (not crystal clear).   (This is Texas common law and statutory bad faith standard).

8.         Insurance company must not close a claim file before the investigation is complete.

Now, the other changes in the law can only be avoided if the SUIT is filed by Sept. 1 (this Friday).  As that is unlikely, please consider at least advising them to FILE in writing to preserve the 18%.

The new statute forces us into federal court, complicates the fee-shifting, changes pre-suit notice (substantially), election of remedies, among some other stuff.  It is complicated but if you have questions, contact us immediately.