ERIC YOLLICK, The Golden Hammer
In response to an article which this newspaper ran this morning about HB 1774, a tort reform measure, which the Texas Legislature passed during the 85th Legislative Session and Governor Greg Abbott signed into law on May 24, 2017, there has already been quite a bit of discussion, argument, and mis-information.
HB 1774 becomes effective September 1, 2017, and covers any homeowners insurance claims filed on or after that date. As a tort reform measure, the new law does a lot of good to make it more difficult for aggressive plaintiff’s lawyer to bring abusive lawsuits against the insurance industry.
Let’s face it, however. The insurance industry is not comprised of a group of angels either.
This newspaper – and its Publisher – supported the passage of HB 1774. Nevertheless, the insurance industry and the plaintiff’s bar are both spreading terrible mis-information about the bill.
First, most of the insurance claims that residents of Montgomery County will file will come under their homeowners insurance, not federal flood insurance or Texas Coastal Windstorm insurance. As to flood insurance, very few homes in Montgomery County have flood insurance, because a home must be in a federally-designated flood plain in order to get such insurance. The Obama administration added some regulatory exceptions to that requirement in order to expand the flood insurance program. As to Texas Coastal Windstorm insurance, Montgomery County doesn’t have any land on the Gulf Coast the last time I looked at a map. Therefore, Texas Coastal Windstorm insurance doesn’t have anything to do with this discussion.
Now, there’s no question that there are a lot of people, especially in Rockport, Corpus Christi, and in surrounding areas, who will file Texas Coastal Windstorm insurance claims, with which HB 1774 has nothing to do. There’s also no question that HB 1774 has nothing to do with federal flood insurance claims.
But homeowners insurance claimants have a real problem. Homeowners insurance does not cover flooding. It does, however, cover losses that arise from wind-driven water or directly from wind damage. Therefore, when a homeowners insurance policyholder makes a claim after an event, such as Harvey, the issue becomes whether the damage was from flooding or from wind-driven water or wind damage. That’s precisely the reason that so much litigation arises from events such as Harvey, the 1994 flood, Ike, Katrina, and the like.
HB 1774 took a wise approach in reducing some of the punitive aspects of claims handling when insurance companies make honest mistakes. Nevertheless, on a macroeconomic scale, when tort reform measures go into effect, insurance companies across the industry tend to take a different approach as well, because they enjoy greater legal protections.
For homeowners in Montgomery County who don’t have flood insurance and who intend to make a homeowners insurance claim, it’s important to try to submit their claims in writing prior to September 1, 2017, when HB 1774 comes into effect. Yes, HB 1774 primarily deals with lawsuits. But if you file a claim on September 2, 2017, and you must file suit against the insurance company later to determine whether your loss came from flooding or from wind-driven water, then you’ll have a bit more difficulty than if you had filed the claim three days earlier.
The Golden Hammer supports tort reform measures such as HB 1774. This newspaper is no friend to the plaintiff’s bar. Nevertheless, reality is reality. This newspaper takes the middle path on this issue.
Montgomery County residents, who are able to do so, should file their homeowners insurance claims arising from Tropical Storm Harvey on or before August 31, 2017, in order to maximize their likelihood of swift handling of the claim.