Lawyers urge Texas homeowners to file Harvey claims before law change

Harvey spawns catastrophic flooding
Harvey spawns catastrophic flooding

Attorneys and a Texas lawmaker are urging homeowners to try and file claims for property damage inflicted by Hurricane Harvey before Friday, when a new insurance law goes into effect.

The law will impact policyholders who file a lawsuit against their insurance company for failing to pay enough in claims or repaying claims too slowly. It requires plaintiffs' attorneys to offer more detail when the give notice of intent to file a lawsuit. If insurance companies must pay damages, the law will reduce the amount of penalty interest they'll owe from 18% to about 10%.

Supporters of House Bill 1774, which becomes law on September 1, say the legislation will reduce the amount of frivolous lawsuits filed on behalf of policyholders against their insurance companies. Opponents argue that it will weaken consumer rights.

Attorney Craig Eiland, a member of the Texas Trial Lawyers Association, said that property owners who submit insurance claims before Friday will be able to increase the amount of damages they receive if they file and win a lawsuit against their insurance company down the road.

"If you file a notice of claim before the new law takes effect, then you'll have the advantages of the Texas insurance code in place right now which would give you 18% interest if the insurance company slow pays, no pays or low pays."

Eiland says policy holders should file a written notice with their insurance carriers and adjusters before Friday to be able to secure access to the higher interest rate.

He said that by reducing the penalty insurance companies face if they owe damages, the new law will do less to deter companies from acting in bad faith.

Texas Congressman Joaquin Castro also urged Texans "to file for Harvey relief before Sept 1," in a tweet. He said the Texas legislature had "passed a bill making it harder to dispute weather-related property claims."

But supporters of the new law argue that some lawyers take advantage of policy holders by encouraging them to file frivolous suits against insurance companies.

Lucy Nashed, communications director at Texans for Lawsuit Reform, said policy holders should keep in mind that the new law won't change the way insurance claims are filed in Texas. She added that "the vast majority of Texans" won't end up filing a lawsuit -- and won't be affected by the new law.

HB 1774 only applies to private insurance companies. Flood insurance is generally provided by the government.

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