By: Bob Sechler
A proposed law aimed at reducing the motivation for Texas property owners to sue insurance companies in the wake of damage caused by “forces of nature” — from the relatively commonplace, such as hailstorms, to the more atypical, such as earthquakes or wildfires — won initial approval from the state Senate Tuesday.
House Bill 1774, sponsored by state Rep. Greg Bonnen, R-Friendswood, was approved by the state House earlier this month. The Senate voted 21-8 in favor of the bill Tuesday but still must take a final procedural vote on it. That’s likely to happen Wednesday.
Supporters contend the law is needed to rein in predatory attorneys who have been fueling a growing trend of baseless property-damage suits against insurance companies in Texas, which they say has been a particular problem after hailstorms. Texans for Lawsuit Reform, an advocacy group supporting the bill, has cited statistics indicating property-damage lawsuits climbed from about 500 in 2006 to nearly 10,000 in 2015.
The measure will “discourage bad actors from creating a business model based on frivolous litigation,” state Sen. Kelly Hancock, R-North Richland Hills, said Tuesday.
Hancock, who introduced HB 1774 in the Senate prior to the vote and previously sponsored an identical companion bill in his own chamber, said it also will preserve the rights of property owners to sue their insurance companies over legitimate grievances.
But detractors of the proposed law, including the Texas Trial Lawyers Association, view it as an attempt to tip the scales toward insurance companies in disputes with Texas homeowners and businesses over claims. Some also have criticized advocates of the bill for publicizing it largely as an attempt to curb lawsuits after hailstorms, when it actually would apply to property damage caused by many types of natural disasters.
The bill encompasses damage caused by “an earthquake or earth tremor, a wildfire, a flood, a tornado, lightning, a hurricane, hail, wind, a snowstorm, or a rainstorm.”
Among other measures, it would lower the penalties insurers face for denying or dragging their feet on payment of legitimate claims, and it would reduce their chances of being ordered to pay plaintiffs’ attorneys fees. It also would protect insurance agents from being sued individually.
State Sen. John Whitmire, D-Houston, questioned Hancock on Tuesday about the potential for “unintended consequences” from the bill, in terms of property owners being stymied when they seek legitimate legal redress in fights with insurers over valid claims. Whitmire said lawmakers may have to undue HB 1774 in a future legislative session.
“I think we will hear from our constituents across the state when we have storms and natural disasters,” Whitmire said. “I think people are going to be in for a real surprise. It’s a major change in getting to the courthouse.”
But Hancock said the proposed law won’t prevent “the good actors” in the legal community from helping aggrieved property owners pursue legitimate claims against insurers.