Lawyers warn: File claims by Friday

Aug. 29--Lawyers are urging those who were affected by Hurricane Harvey to file their claims before Friday, but Texas legislators and officials with Texas insurance companies say there is no need to rush.

A new law, set to take effect Friday, aims to crack down on frivolous insurance lawsuits. But House Bill 1774 also reduces the penalty insurance companies face for late payments if the policyholder files a lawsuit.

If insurance companies are late in paying claims as a result of a lawsuit, they must pay an additional penalty to policyholders. Under current state law, that penalty comes in the form of a fee that totals 18 percent of the claim. For claims filed after Friday, that rate will be determined by a market-based formula that is capped at 20 percent. Currently, the rate is 10 percent, according to a story in the Texas Tribune.

Port Lavaca attorney Alex Hernandez Jr. said there is real concern that homeowners will not get full payment for their claims or be able to rebuild if insurance companies do not pay promptly.

He said people should file before Friday's deadline to be safe. Several concerned homeowners have called, he said, and he has been advising them to file now.

"I expect to be fighting this legislation and these cases for possibly the next two years," he said.

However, this law has no effect on the claims process, said Mark Hanna, spokesman for the Insurance Council of Texas. Claims can be filed as soon as it is safe to do so.

"This legislation is aimed at trial attorneys and has no effect on people's claims. There is no rush and nothing to worry about," Hanna said. "Attorneys are doing a good job of stirring people up right now, but this law doesn't take any of their (policyholders') rights away."

The bill does not apply to policyholders with Texas Windstorm Insurance Association.

The law's intent is to cut off a cottage industry of unnecessary lawsuits filed around hailstorms after Hurricane Ike, said Lucy Nashed, of Texans for Lawsuit Reform.

Most homeowners' policies in Texas don't cover flooding. And for those that do, the policies are often with the National Flood Insurance Program through the Federal Emergency Management Agency and not subject to state regulations.

State Sen. Lois W. Kolkhorst, R-Brenham, said Monday the legislation, supported by the vast majority of coastal lawmakers, does not create a new deadline for action by policyholders.

"Texans will continue to have some of the strongest consumer protections in the nation," Kolkhorst said.

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