WFAA: Bill could gut protections against insurance companies

Bill could gut protections against insurance companies

April 30, 2015

WFAA, David Schechter

Consumer protection advocates say Texas lawmakers want to strip a consumer’s right to sue insurance companies in cases where an insurance company unfairly denies paying a claim.

Lawmakers behind the bill say they’re trying to stop lawsuits against insurance companies by scammers who come in after a major storm and sue over bogus or inflated claims.

It’s exactly the kind of consumer protection against an insurance company that Cheryl Demarco said she needed. In 2012 a massive hail storm chewed up the 100,000 square foot roof over her indoor sports complex in Rockwall, called RISE.

Reporter David Schechter shows us how the proposed legislation could hurt small business that pay for insurance but may not be able to use it when they need it most.

Under a leaky roof, her business was suffering. “We had to shut games down,” Demarco said.

A roofer estimated her damage at over $500,000 dollars. But, she says, an adjuster representing her insurance company estimated there was zero damage– without even coming out to look.

“He didn’t even come out,” Demarco said. “Not, initially. No,” she added.

Demarco sued, taking advantage of Texas’ consumer protection laws, and won. The terms are confidential.

Now, her lawyer, Linda Dedman, says proposed legislation in Austin, called Senate Bill 1628, would gut a consumer’s right to sue insurance companies and adjusters who act in bad faith.

“It was actually conceived of and introduced by the insurance industry,” Dedman said about the bill.

Supporters of the bill say it would stop a cottage industry of scammers who flood in after a storm trying to take advantage of insurance companies.

The bill is sponsored by Republican Senator Larry Taylor, from the Houston area – who is an insurance agent. His office did not respond to our request for a comment.

Attorney Dedman says she believes Taylor is beholden to the insurance industry.

“That’s where he earns his livelihood and that’s where he gets a lot of his campaign contributions,” said Dedman.

Dallas-area Senator Don Huffines supports the legislation. In a statement, he writes:

“When overzealous trial lawyers abuse the system, it forces premiums higher and burdens all consumers. (This bill) will help keep a few greedy lawyers from driving insurances prices up for Texas homeowners.”

But the way Demarco sees it, when your business is suffering because your roof is leaking that expecting an insurance company to pay your claim is far from greedy.

“What are you buying insurance for if you’re not going be able to use it,” Demarco said.

The bill is making progress in Austin. It’s out of committee in the Senate waiting for a vote on the floor. It’s currently being debated in a House committee.