This Bill Hurts Texas Business

This misguided proposal would require businesses to do the insurance company’s work — for which the policyholder has already paid a premium — by detailing, separately, each type and amount of damages, along with the supporting evidence, before a lawsuit is even filed.  Under current law, the insurer is required to conduct a reasonable investigation, which should reveal this information already, if the insurer does its job – for which it has been paid.

The bill would make the insurance policy holder gather every bit of their evidence before they can force the insurance company to pay a wrongfully denied or delayed claim — and in more detail than would be required even in court. This makes businesses and property owners incur substantial expense getting information the insurer should already have, which then makes settlement more expensive and harder.

And the bill would give the insurance company a tremendous weapon – making the insured subject to jail time if the estimates they rely on are found to be false.

This unfair, one-way street applies only to policy holders – and those who write estimates (such as car dealerships in the case of hail claims, or building contractors) – there is no similar penalty for insurance companies.  Their cheating, lowball estimators are given complete immunity, and the insurer is given a new “bona fide” dispute defense.  This language will disincentive contractors and auto dealers to even write estimates in the first place, and gives more power to the already powerful insurers and takes away protections from those the law was designed to protect.

And if the policyholder doesn’t dot every “i” and cross every “t” – doing the insurer’s job – the insurer can stall the lawsuit, causing further hardship for legitimate claimants.

But that’s not all.

This proposal would treat insurance companies better than any other business in Texas, imposing a two year absolute bar on claims.  This section requires notice of a claim within two years of when the damage or loss occurs.  This will bar valid claims by extending the time for “good cause” for just 120 days, and by ignoring when the claim could be discovered.

It is based on the assumption that every insured can easily discover a claim.  What about an elderly couple that can’t see so well and thus don’t see the roof damage?  What about water damage that is concealed in a wall and can’t reasonably be discovered?  What about a landlord who discovers the property damage only after the lease ends?  The bill treats all claimants alike, without regard to any extenuating facts.  This section is particularly onerous as to its impact on real estate investors, corporations with large campuses containing multiple buildings, and commercial real estate owners, who often are responsible for too many properties and buildings to regularly inspect their properties for past damage.