Changes to the Texas Insurance Code, effective September 1, 2017, may affect first-party claims of hurricane/wind/rainstorm damage.
As Hurricane Harvey continues to wreak historic damage in Texas, recent updates to a state law dealing with the responsibilities of insurers are scheduled, by sheer coincidence, to take effect this Friday, September 1, 2017.
This statute was a legislative response to perceived increases and abuses in homeowner claims from recent storms. Some press coverage, social media and other venues have suggested that insureds impacted by the hurricane must take action before that date or they will lose certain rights. As always, those suffering damages should always move promptly to preserve their rights under their policies. But while companies and organizations protected by commercial insurance coverage should be aware of this new statute, there is no reason to panic. For example, the claim process will look largely the same as before. If, however, an insured knows a potential claim from Harvey is likely, then providing written notice in accordance with your polic(ies) before the effective date of the statute is a prudent choice.
What will not change under the revised statute
Insurers’ claims-handling deadlines, including:
However, because Harvey is a “weather-related catastrophe or major natural disaster,” the current statute extends each of these deadlines by an additional 15 days.
What will change under the revised statute
Some of these requirements are not fully defined or may intersect with other statutes without clear guidance on supremacy, so these issues will likely be addressed through the courts.
Many of these changes are less likely to affect corporate policyholders, and, again, they provide no reason to panic. It is possible, however, that some insurers may give priority to claims under the existing law due to some of these changes, such as the current interest rate differential. However, other Insurance Code provisions that are not changing still impose an obligation on insurers to attempt in good faith to bring about a prompt, fair and equitable settlement of claims once the insurer’s liability becomes reasonably clear.
Considering all of this, if an insured knows a potential claim from Harvey is likely, then providing written notice in accordance with your polic(ies) before the effective date of the statute is a prudent choice, but not an imperative one.
Pillsbury’s Insurance Recovery & Advisory Group is a nationally acclaimed, market-leading policyholder-side insurance group within one of the most respected global law firms headquartered in the United States. Pillsbury stands ready to assist with Hurricane Irma and Harvey recovery efforts from its Miami, Houston and other offices nationwide.