Dallas Morning News: Don’t expect that a bill to restrict homeowner lawsuits will drive down your premiums

Don’t expect that a bill to restrict homeowner lawsuits will drive down your premiums

April 30, 2015

Dallas Morning News, Jim Mitchell

Your dog runs through your screen door and you expect your insurance company to pay for the door. That is an abuse of insurance. Bad apple roofers, adjusters and lawyers gin up excessive litigation. That also is an abuse of insurance.

But when there is a truly catastrophic event, a hail-damaged roof, for instance, homeowners must have an avenue of recourse if they feel that their insurer is shortchanging them.

Homeowners should be concerned that Sen. Larry Taylor, R-Friendswood, is spearheading legislation that would make it more difficult for homeowners to challenge their insurance company.

Taylor says the problem is a “storm of litigation” from homeowners in the wake of Hurricane Ike in 2008 and has worsened as homeowners file expensive claims for hail damage. He says across the state, a rise fueled in part by shady roofers, adjusters and lawyers. He defends his bill in this statement on his website.

I get it in the abstract. I have no problem with a crackdown on abuses caused by shady roofers, adjusters and lawyers who plaintiff shop. But let’s scale this back a step or two. Texas remains a profitable state for insurers despite the state’s location in the eye of Mother Nature’s hurricanes, tornadoes and hailstorms.

In other words, we don’t have an insurance crisis in Texas because insurers still see this as a highly profitable market with pro-insurance regulations and healthy profit margins.

Taylor’s bill, SB 1628, will not result in a rollback in premiums. It will result in higher profit margins for insurers and block people with legitimate claims from pursuing those claims.

Clearly, financial solvency keeps insurers in Texas, and that has merit for consumers for going naked. But let’s not pretend that this bill will lower homeowner premiums or make insurers more willing to honor claims without a tussle.