There’s only one explanation for the recent surge in lawsuits following hailstorms in Texas – lawsuit abuse, says one state senator.
Seeking to calm the surge, Sen. Larry Taylor, R-Friendswood, on March 12 introduced SB 1628, a bill that, if passed, “will rein in the hailstorm lawsuits and assure that Texans continue to have access to affordable homeowners insurance."
"SB 1628 is a consumer protection bill,” Taylor said. “Without this bill many Texans, particularly low-income homeowners, could lose access to homeowners insurance and insurance premiums for every Texas homeowner could increase.”
The 20-page bill aims to create a two-year statute on claims; stop plaintiffs from naming adjusters in their suit; and require plaintiffs to give notice of their storm damages when filing suit.
Also, adjusters who refer policyholders to plaintiff attorneys could be hit with barratry charges.
Ultimately, enacting SB 1628 would hinder trial lawyers, such as Houston attorney Steve Mostyn, from drumming up mass litigation following a storm.
Whether hail or hurricane, over the past decade Mostyn has made hundreds of millions suing insurers after a major storm strike.
“Lawsuit abuse is the only explanation for the recent surge in lawsuits following hailstorms,” said Taylor. “There’s been no increase in the frequency of hailstorms and no changes in insurance law. Some insurance companies are already planning to stop writing homeowners’ insurance in Hidalgo County."
On March 29, 2012, a hailstorm stuck McAllen in Hidalgo County, causing $250 million in damages. The subsequent lawsuits that followed in the storm’s wake drove the cost up to $600 million, according to the Insurance Council of Texas.
On average, 2 percent of insurance claims become lawsuits. But in the McAllen storm, the number jumped to 22 percent – a spike Taylor hopes his bill will alleviate in the future.
“Some property owners have reported an increase in deductibles to such a high level that hail claims are essentially going uncovered,” Taylor said. “SB 1628 will address the surge in lawsuits, while protecting consumers. It maintains important safeguards for policyholders to receive fair and timely claims payments from insurers.”
If a policy claim morphs into a lawsuit, the bill would still allow policyholders to collect damages, plus 18% penalty interest plus pre-judgment interest and attorney’s fees when an insurer has acted wrongly in dealings with policyholders.
“I have made sure Texas policyholders will continue to have extraordinary remedies not available to policyholders in most other states,” Taylor said. “At the same time, SB 1628 will rein in the hailstorm lawsuits and assure that Texans continue to have access to affordable homeowners insurance."
SB 1628 is currently left pending in committee.