If you are still waiting for your insurance company to reimburse you for damage from the recent Texas storms, you should know that a new law could put off your payment indefinitely. A bill that would make it nearly impossible for homeowners and businesses to receive full and fair payment from their insurers passed the Texas Senate and could soon become law.
Republican State Senator Larry Taylor, who owns an insurance agency, introduced Senate Bill 1628 to make drastic changes to the Insurance Code. Under the proposed legislation, power is shifted away from the consumer and placed into the hands of insurance companies, making policyholders likely to suffer in the following ways:
- Lower payments. Policyholders are entitled to a full measure of damages under Chapter 541 of the Insurance Code. Insurers can pay out claims in installments, but the full amount must be received in a timely manner to avoid penalties. Senate Bill 1628 relaxes the penalties for late payments, encouraging insurance companies to offer less than a claim is worth. Even if an insurer promises the rest of the payment “at a later date,” claimants may be forced to accept less than the full value of their claim and wait years for the remainder.
- Late payments. Chapter 542 of the Insurance Code applies an 18 percent interest penalty on an insurer for issuing late payments on a claim—arguably the main incentive for insurers to pay claims on time. However, under Senate Bill 1628, only the “unpaid” portion of a claim would be liable for penalties. If an insurer pays 75 percent of a claim, an insurer may be forced to perform inadequate repairs as he waits to receive the rest of his payment, which the insurance company has no reason to provide.
- Unethical employees. Currently, insurance company employees, agents, representatives, and adjusters are legally liable for their conduct with policyholders. The new bill relieves these employees from the consequences of any misconduct by offering immunity protections to agents and adjusters who are named in lawsuits. As they cannot be held personally liable for damage estimates and other findings, their dealings with consumers are more likely to be ruled by their financial relationships with their employers.
- Problems filing lawsuits. The bill also attacks a consumer’s last hope for fair dealing with an insurance company—the right to sue. While Texans will still be able to sue an insurer for unfair dealings, all property damage claims would have to be brought within two years of the date the damage was done, instead of when the damage was discovered. As many types of structural damage can take years to detect, this places business and property owners at a significant disadvantage. Finally, before a policyholder can sue for unfair claims handling, he or she must jump through many more administrative hoops, including giving advance written notice, signing a sworn statement of the extent of damages, and providing evidence of damages.
What Does This Mean for My Property Damage Claim?
Consumers should be aware that if this legislation passes, insurance companies will face no penalties for delaying or denying legitimate claims from homeowners, businesses, schools, property owners, and any other policyholders across the state. Make sure to share this article with your friends and family on Facebook and add your voice to the thousands of Texans opposing the bill!