Joint statement from AIA, PCI, NAMIC, ICT, and TCAIS on the effects of HB 1774
Reform legislation passed in the last legislative session (HB 1774) goes into effect on September 1. Contrary to some erroneous reports and inaccurate social media posts, the new law does not bar access to the courts nor does it prevent consumers from retaining legal counsel. Under the new property litigation law:
- Neither the process for filing a claim nor the insurer’s handling of a claim has changed.
- Consumers still have all legal remedies available under the consumer protection laws in the event an insurer engages in bad faith conduct.
- The Texas Department of Insurance is available to handle any complaints about insurers.
- The new law does not take away any right to sue and does not diminish any cause of action that a person has against an insurance company.
- The new law will change punitive interest on companies from 18% to 10%. Insureds who prevail in a suit will be able to recover punitive interest under HB1774. The level of interest enacted in HB 1774 is currently twice the normal judgement interest rate set in the Texas Finance Code. This balancing change preserves a strong punitive interest rate to discourage slow payment by insurers while not creating an incentive for unscrupulous lawyers to slow down the claims and legal process to pad recoveries.
- The new law will require notice be given to companies by insureds before filing suit, to give companies and customers a chance to communicate and potentially come to an agreement prior to litigation. The pre lawsuit notice is effective for all “actions filed on and after the effective date, which is September 1, 2017.” Any lawsuit filed after September 1, 2017, would be governed by the new law.
Texans should contact their insurance companies directly to file claims, work with your adjuster to identify all damages and coverages, and resolve your claim quickly. Texans should also seek information from the Texas Department of Insurance and other official sources. If consumers believe that an insurer is not meeting the terms of the policy, they should know that they have the right to take legal action, including filing suit.