top Controversial bill aims to end ‘frivolous’ lawsuits against insurance companies

Controversial Bill Aims to End ‘Frivolous’ Lawsuits Against Insurance Companies

May 6, 2015, Brett Crandall

Senators in Texas passed a controversial bill aiming to end frivolous lawsuits filed against insurance companies.

Those against the legislation warn filing an insurance claim could become much more cumbersome if the bill becomes a law.

Three years after McAllen saw the city’s costliest natural disaster, some damage still sits unrepaired.

A 2012 hail storm led to an unprecedented number of insurance claim and thousands of lawsuits.

“Nothing compares with what we saw in Hidalgo County. One out of every three weather claims turned into a lawsuit. That’s unprecedented,” said Mark Hanna of the Insurance Council of Texas.

Insured losses were originally estimated around $250 million, but after lawsuits and arbitration it has more than doubled – rising to about $600 million.

The high number of lawsuits hurts homeowners, Hanna said.

“You’re the epicenter; you started it all, Hidalgo County. And since then you got insurance companies saying, ‘Hey we don’t want to do business here anymore,’ you’re seeing homeowner insurance rates go up because of all of these frivolous lawsuits. You didn’t do yourself any favor,” Hanna said.

Texas currently has the third highest homeowner insurance rates in the country.

On April 30, the Texas Senate passed SB 1628, a bill that claims to prevent those rates from skyrocketing.

The law would hurt homeowners, making it more difficult to sue insurance companies for better settlements, McAllen attorney Michael Moore said.

“It’s like they’ve given the insurance company a get out of jail free card,” Moore said.

Moore, who has taken on dozens of hail damage cases, said the SB 1628 will place a bigger burden on the policy owner to get what they need when they file a claim with their insurance company.

“It gives the insurance company the right to file some type of complaint against the homeowner for criminal violations but at the same time the insurance company that undervalues the claim and doesn’t take care of the homeowner like they should has no penal ramifications whatsoever,” Moore said.

In the meantime, the courts have more than 6,000 cases to hear in Hidalgo County alone.

The bill still must be debated and passed in the Texas House of Representative and signed by the governor before it becomes law.