AUSTIN - The tide my be turning in mass hailstorm litigation, as data collected by the Texas Department of Insurance shows fewer complaints being filed during 2013-2015, compared to 2012.
In 2012, hailstorms pummeled Rio Grande Valley area, resulting in a trial lawyer litigation boom, with thousands of lawsuits filed.
Since then, trial lawyers have set up shop after every severe weather event in the Lone Star State, advertising heavily in search of clients.
“Typically, only a small number of claims result in lawsuits, and many insurers were surprised by this sudden onslaught of lawsuits especially given that companies did not suddenly change how they resolved claims,” said Mark Hanna, a spokesman for the Insurance Council of Texas.
“This meant unexpected and significant litigation costs for companies. After a few months of adjusting to this new litigation tactic, companies have started challenging many of the questionable lawsuits and are finding some success in the judicial process.”
For example, Hanna points to a May trial in Houston, where a six-member jury in Houston didn’t fall for the story that a hailstorm resulted in a woman’s leaky roof.
The claim involved water damage and was supported by a roofing expert who claimed the leak was the result of hail damage. The homeowner was seeking $46,000 in damages.
The Texas FAIR Plan, the insurer defendant in the case, countered by arguing the leaking roof was the result of long-term poor maintenance. The company also pointed out that the homeowner did not examine the roof until six months after the lawsuit was filed.
The jury deliberated for less than a minute before returning with their verdict.
“I don’t think the jurors even sat down before making their decision,” said Lori Daves, of Jay Old and Associates, who defended the Texas FAIR plan in the case. “It was the quickest verdict I have ever been part of.”
Many hail lawsuits filed in state courts have found their way into federal court, where several have been dismissed after appraisal has been completed, Hanna says.
On May 6, Houston attorney Steve Mostyn, who created the mass storm litigation model following Hurricane Ike, found himself in a McAllen federal courtroom, forced to explain why he shouldn’t be sanctioned for bringing factually unsupported hail claims against State Farm.
“Texas has had a significant number of catastrophic weather events over the last couple of years, and this seems to have encouraged a large number of questionable lawsuits being filed across the state,” said Hanna. “Hopefully, as more of these types of questionable lawsuits are taken to trial, we will see decisions that will discourage attempts to profit from severe storms.
“In the end, all Texas consumers are harmed by unnecessary litigation.”
The Insurance Council of Texas is the largest state insurance trade association in the country consisting of approximately 500 property and casualty insurers writing business in Texas.