Immediate

Release: Contact: Zach Johnson

Thursday, May 18, 2017 Phone: 512.463.0706

Private Property Owners Rights Must Always Prevail

Austin, TX - Storm chasing was made glamorous by the movie, Twister. But storm
chasing by certain unscrupulous plaintiff attorneys is more horror movie than adventure
film.
Lawsuit mills built around recruiting property owners to sue their insurance companies
after severe weather has caused a 1,400 percent explosion in property-damage lawsuits
since 2012. This unnecessary litigation is causing hardship to consumers through higher
insurance premiums and deductibles and reduced or lost coverage, with devastating
impact on working class families trying to make ends meet.
The Texas Department of Insurance (TDI) found that 12 insurers have already raised
rates and seven have reduced, limited or stopped writing policies in Texas altogether as
a direct result of unnecessary lawsuits.
We Texans already pay some of the highest property insurance rates in the nation
because of our severe weather. We cant let storm-chasing lawyers hijack our insurance
and raise those rates even more. In some parts of the state, families in modest homes
have seen their insurance rates triple.
Thats why I voted for House Bill (HB) 1774 to protect property owners rights against
insurance companies that unfairly deny and delay claims, while imposing accountability
for attorneys that abuse the system. The bill ensures that:
(1) Consumers will still have the same seven paths to the courthouse that exist today.
(2) Consumers will still have strict liability against an insurer who underpays a claim by a
single dollar or is one day late no showing of bad faith or wrongdoing is necessary.
(3) If an insurer acts in bad faith, the policyholder can continue to get treble damages
from the insurer.
(4) The insurer will still pay significant penalty interest on top of pre-judgment interest;
under HB 1774, the minimum interest accrued against a late-paying insurer is ten
percent penalty interest and five percent prejudgment interest, for a total of fifteen


percent. This maintains a strong incentive for insurers to pay claims on time and to
settle reasonable demands quickly.
(5) Attorney fees will still be owed by the insurer when the plaintiff lawyer makes a
reasonable pre-lawsuit demand for damages.

To stop the abusive litigation, the bill implements common-sense reforms.

A 60-day pre-lawsuit notice is already required by law, but regularly ignored by
unethical plaintiff lawyers, with no consequences to those lawyers. HB 1774 simply
requires 60 days notice prior to filing a lawsuit. This gives the insurer the opportunity to
make a settlement offer to the policyholder, making the property owner whole more
quickly and potentially avoiding a long and costly lawsuit. Thats good news for Texans
because TDI found that lawsuits take seven times longer to resolve than regular
insurance claims nearly two years compared to about three months.

Additionally, TDI found that some lawyers make outrageously excessive demands in
these lawsuits on average four times more than what an insurer eventually pays. To
encourage fact-based demands and again, quicker resolutions for families and
businesses if the attorney recovers less than 20 percent of the amount he states in the
pre-suit notice is needed to repair or replace the damaged property, the defendant
owes him no attorney fees. If the attorney recovers 80 percent or more of what he
demanded, the insurer must pay all of his attorney fees. Anything between 20 and 80
percent is prorated.

Texas has the strongest consumer protection laws in the nation for policyholders against
insurance companies and that will continue to be the case under HB 1774, which is why
it passed the Texas House with overwhelming support. House Bill 1774 holds
accountable both slow-paying insurance companies and lawyers who exploit our legal
system for personal gain.
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Not Printed at State Expense

P. O. BOX 2910 AUSTIN, TEXAS 78768-2910 512-463-0706 512-463-1861 FAX
DADE.PHELAN@HOUSE.TEXAS.GOV