FEMA Waives and Extends Proof of Loss Requirement for Harvey Victims

This week, the Federal Emergency Management Agency (FEMA) issued a memorandum that waives the requirement that National Flood Insurance Policy policyholders have to submit and sign a proof of loss or sign an adjuster’s report prior to receiving payment on their claim. Now, the insurance company is directed to pay policyholders, as soon as possible and without the need for this extra step in signing and swearing to a proof of loss form or signing and swearing to an adjuster’s report / estimate of damages.

Additionally, if policyholders believe that there are extra or additional damages not covered by the adjuster’s report / estimate, then they are given one year from the date of loss to sign and submit their proof of loss of damages. This is significant as policyholders can now get independent contractors or adjusters to evaluate and assess their damages to see if all damages were covered by the insurance company’s adjuster in his/her estimate.

Moreover, the memorandum makes clear that your insurance carrier is to pay your claim as quickly as possible.

To read the full memorandum, please click here.

The Brasher Law Firm is experienced in handling flood claims and issues surrounding flood insurance disputes. If you believe that your insurance company has handled your claim unfairly, please call us at (409) 832-3737 for a free consultation today.

The Truth about Insurance Law Changes

During the course of Hurricane Harvey ravaging Southeast Texas, Corpus Christi, Dickinson, Rockport, Houston and surrounding counties, like Jefferson, Orange, Hardin, Jasper, Tyler, etc…, speculation from both sides of the aisle spread like wildfire about what the new changes to the Texas Insurance Code would mean for victims of Hurricane Harvey. People barely made it to shelters, and the sponsor of House Bill 1774 (HB 1774), Senator Kelly Hancock, issued a press release claiming the bill would have “no impact on the insurance claims process”. Simultaneously, the group that lobbied for the bill for the past few years, Texans for Lawsuit Reform, tried to justify this bill by saying that “If your insurer does improperly deny or delay paying your claim, Texas has the strongest consumer protections in the nation for you, which will continue to be the case after September 1, 2017.” Yet, despite these statements, the State Bar of Texas president-elect, Joe Longley, strongly encouraged homeowners to file their claims before September 1, 2017 as the changes in the law could adversely affect them.

So where is the disconnect coming from? What Texans for Lawsuit Reform (also known as TLR) failed to mention is that this bill strips the so-called strong consumer protections that Texans used to have if their insurance company fails to timely pay a claim or unreasonably denies a claim. And despite Sen. Hancock’s statements, the bill will have an impact on the insurance claims process. Because quite simply put, the insurance companies will now have less of an incentive to pay you properly and timely.

How did we get here?:

TLR and the group of legislators that supported HB 1774 have been trying for years to get a bill like this passed. In the 2015 legislative session, Senator Larry Taylor, an insurance agent and state senator, tried to pass a similar piece of legislation. This piece of legislation became known as the “hailstorm bill” based on the large number of hailstorm claims that Hidalgo County and other parts of the Valley saw in 2012-2014, which then led to numerous lawsuits because of insurance companies not paying or adjusting these claims properly. Homeowners and business owners from across the state testified against the bill. And the bill eventually failed.

However, before the 2017 legislative session even began, Lt. Governor Dan Patrick made it a top legislative priority to pass the “hailstorm bill”. He even had the Senate Committee on Business & Commerce discuss the issues prior to the start of the legislative session to expedite the process. Thus, it was destined that the “hailstorm bill” would become revived in the 2017 Legislative Session, and with a Republican majority, certainly pass. But they did not simply leave it at only hailstorms – they included every single natural disaster in the new bill.

What does it mean for me?:

So what does the bill mean for you and how will it impact you?

First, if you want to file a claim for damages to your property, as a result of wind or rain damage, there are potential benefits to doing so before Friday, September 1, 2017. Here’s why:

  • The old Texas Insurance Code §542.060 allowed an 18% penalty interest if an insurance company delayed in paying your claim or failed to adhere to certain timelines under the insurance code in handling your claim.
  • The new Texas Insurance Code §542.060 cuts that 18% penalty interest by almost half (a 45% reduction) to only 5% on top of the interest that is already allowed by the Finance Code (about 5%).

So if your claim ends up being improperly denied, improperly handled, or not timely paid, then the insurance company would get away with a slap on the wrist instead of a much larger penalty.

How is the interest calculated or determined? Based on the timing of when you give notice of your claim. So, the advice that the State Bar of Texas president-elect, Joe Longley, is giving regarding filing claims before September 1, 2017 has merit.

Second, the majority of the bill is aimed at cutting protections for Texans once they file a lawsuit. Almost all Texans who suffered due to Hurricane Harvey won’t be filing a lawsuit before September 1, 2017, so the remaining of the bill’s changes and cuts to consumer protections will apply no matter if you file your claim before or after September 1, 2017.

These provisions will cut the amount your attorney can recover for his/her fees (which cannot legally be shared with you anyways, despite statements to the contrary) for working on your case and taking it all the way to trial and, in some cases, through the appellate process. Many of the attorneys working in this area of law have “contingency fee” contracts, which means, even if the claim takes years through the litigation process, they don’t get paid a dime until they recover something for you. Despite the fact that most insurance companies’ lawyers get paid by the hour, they still saw it fit to cut the contingency fee lawyers’ bills. This will discourage many lawyers from taking these types of cases and will leave many homeowners without local lawyers who can help them out.

If an adjuster messes up in handling your case – he / she is no longer liable for their actions. Instead, the insurance company can just take up their defense, and the lawyers are prevented from even telling the jury that the insurance company has taken up the adjuster’s defense.

The provisions will also make it easier for an insurance company to get cases filed against them dismissed. Pre-suit notice was always required even before this new law took effect. So the groups claiming that the point was to give pre-suit notice fail to inform you that this was always required. However, now, the insurance companies and our courts will determine if it is “sufficient” and if they feel as though it is not, the case will be dismissed. If you don’t give the insurance company, who has had multiple opportunities to handle your claim and inspect the damages, another bite at the apple to inspect your damages – then your case is automatically abates (meaning your lawsuit is basically put on hold).

So how can these groups claim that the protections are the same? Well, you’d have to ask them. In the meantime, The Brasher Law Firm is here to help you and we welcome your questions.

Resource Guide for Hurricane Harvey Victims

It can be terrifying to figure out where to start or what to do in the aftermath of a natural disaster like Hurricane Harvey. Therefore, we’ve created a free resource guide, that we strongly encourage you to share with your family, friends, neighbors, and loved ones who may have been affected by this horrific disaster and in need of some assistance. We encourage you to call our office with any questions that you may have. We’re here to help, and to listen.

Resource Guide for those affected by Harvey

Different Types Of Insurance That Relate To Hurricane Harvey

A Quick Summary of Relevant Law

DIFFERENT TYPES OF INSURANCE THAT RELATE TO HURRICANE HARVEY

With Hurricane Harvey there have been a lot of questions about different types of coverages available to people to compensate them for their losses.  Starting with the 130mph winds in Rockport and Corpus Christi to the floods in Houston to who knows what in the Golden Triangle, your clients will be asking what coverages apply to them and how they can use them.  Here is a quick summary of the laws that apply and resources available.

WIND COVERAGE

There are two types of wind coverage that apply to Hurricane Harvey – regular homeowners or commercial coverage and coverage through the windstorm pool (“Texas Windstorm Insurance Association” or “TWIA”). 

TWIA

TWIA is underwritten by private insurers but acts like a government entity.  In Ike, TWIA was hit with fraud issues.  Following Ike, the legislators reformed TWIA in 2011 and included a few more add-ons in 2015.  The legislators stripped the consumer protection laws that otherwise applied to TWIA, including “unfair claim settlement practices” and other protections in Texas Insurance Code 541 and the “Prompt Payment of Claims” otherwise known as Texas Insurance Code 542.  Neither apply to TWIA claims.  That means no opportunity for treble damages.  You can still win attorney’s fees in limited circumstances but there is a procedure you have to go through to dispute the amount of accepted coverage and disputed coverage claims.  There are strict deadlines to contest these – for example, you only have 60 days to dispute the amount of a payment. 

Since partial payments and partial denials are common, TWIA loves to muddy the water and do that – then look to apply the harshest possible deadlines in the statute to limit protections.  In 2015, if it was not clear before, the Legislature made it clear no “extra-contractual” remedies are available – no late payment penalty interest, treble damages, etc.  Also, in order to get damages for mishandling a claim, they erected the “clear and convincing” standard. 

To dispute coverage amounts, you are forced to appraisal rather than the courts – you do not have an option – and you only have 60 days from when you were paid (even partially paid) to invoke it and must pay half of the appraisal costs.  It is a very uneven statute that did what it accomplished – it drove lawyers away from helping clients hit the hardest in tropical storms – those in the coastal communities. 

Since the current TWIA law was already stripped down, there was no need to apply the gutting of the insurance code that occurred this past session so TWIA was explicitly exempted from the new law. 

Regular Homeowner & Commercial Policies

The TWIA changes left regular policies untouched.  This past session, Governor Abbott signed into law major reform of the Texas Insurance Code.  Some apply to claims in general, some apply to lawsuits.  Many people across both sides of the aisle have written what they believe the bill does. After a careful analysis and years of practicing in this area, here is a summary of the changes of the new law as we see it:

For Claims (whether or not a lawsuit is filed)

For storm claims (which are defined as damages or loss of property caused wholly or partly by forces of nature, including an earthquake or earth tremor, a wildfire, a flood, a tornado, lightning, a hurricane, hail, wind, a snowstorm or rainstorm) insurance companies get a 45% reduction in the late payment penalty.  Here is a comparison of the old versus new statute, which goes into effect September 1st:

Old Tex. Ins. Code §542.060:

(a) Except as provided by Subsection (c), if [] an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy or the beneficiary making the claim under the policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of 18 percent a year as damages, together with reasonable and necessary attorney’s fees. Nothing in this subsection prevents the award of prejudgment interest on the amount of the claim, as provided by law.

New Tex. Ins. Code §542.060:

(c) In an action to which Chapter 542A applies, if an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy, in addition to the amount of the claim, simple interest on the amount of the claim as damages each year at the rate determined on the date of judgment by adding five percent to the interest rate determined under Section 304.003, Finance Code, together with reasonable and necessary attorney’s fees. Nothing in this subsection prevents the award of prejudgment interest on the amount of the claim, as provided by law. Interest awarded under this subsection as damages accrues beginning on the date the claim was required to be paid.

And the effective date of this is related to when the CLAIM is given to the insurance company:

(b) Section 542.060(c), Insurance Code, as added by this Act, applies only to a claim, as defined by Section 542A.001, Insurance Code, as added by this Act, made on or after the effective date of this Act. A claim made before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose. (emphasis added)

SECTION 5. This Act takes effect September 1, 2017.

Tex. Sess. Law Serv. Ch. 151 (H.B. 1774) (VERNON’S)

Much of the changes in the law is related to the changes to the lawsuit procedures under Texas Insurance Code 542A (a new section).  But, as you can see, the changes above apply only to claims made by an insured to an insurer, in general the Texas Legislature decided to give insurance companies a 45% reduction in the late payment statute.  This is big because the late payment statute works and has always worked.  Because the interest rate is so high, it incentivized insurance companies to pay reasonable amounts promptly. Now, there is no incentive to do so.

The other changes, now called Texas Insurance Code 542A, apply to the lawsuit process:

  1. Pre-Suit Notice.  The changes are substantial and need to be read carefully.  How the notice is done will have large effects on the end result of the case.  First, the pre-suit notice must give a statement of the acts or omissions giving rise to the claims in the lawsuit. Second, the notice must provide the calculation of economic damages (with a reasonable estimate of damages) and the reasonable and necessary amount of attorney’s fees incurred (with an attached billable time sheet in accordance with the Arthur Andersen factors). If you don’t give this pre-suit notice at least 61 days before filing suit, then the Court must dismiss the case without prejudice. If defendant can show that there’s a defect with your pre-suit notice (doesn’t correspond to the above requirements), then the Court must dismiss the case without prejudice.
  2. Pre-Suit Inspection. The statute allows for a pre-suit inspection done by the insurance company (if they ask for it within 30 days of receiving notice). If you don’t give them this inspection – then the case will be automatically abated.
  3. Calculation of Attorney’s Fees.  The amount of attorney’s fees recoverable will be determined by the amount of actual damages awarded in judgment versus the amount claimed in the pre-suit notice. You are to divide the amount of actual damages awarded in judgment, by the amount of actual damages claimed in pre-suit. If the sum total of this is greater than or equal to 80%, then a claimant is entitled to their full attorney’s fees. If the sum total is less than 20%, then the claimant is not entitled to any attorney’s fees. If proper pre-suit notice was not ever given, and defendant pleads and proves the same, then the amount is limited and capped at the amount up until the date by which defendant pled the same.

A hypothetical is useful in illustrating the above point:

Judgment Actual Damages

Presuit Notice Actual Damages

< 20%

 ≥ 80%

Attorney’s Fees Awarded at trial

Attorney’s Fees Allowed

$50,000.00

$100,000.00

No

No

$220,00.00

$110,00.00

$80,000.00

$100,000.00

No

Yes

$220,000.00

$220,000.00

$15,000.00

$100,000.00

Yes

No

$220,000.00

$0

  1. Joinder of Parties. The statute allows the insurance company to pick up liability for the adjuster. Therefore, for most cases against out of state insurance companies (e.g. State Farm, Allstate, Nationwide, etc…) will be in federal court not state court.

FLOOD CLAIMS

Flood claims are usually written under the National Flood Insurance Plan (“NFIP”).  Flood claims are underwriting by FEMA but oftentimes sold through private companies – called Write Your Own (“WYO”) policy.  Because the monies come from the treasury, different rules apply.  None of the consumer protection statutes in Texas apply, cases are in federal court with a bench trial, and attorney’s fees are difficult to recovery. 

Procedurally, you should watch the FEMA advisory for Proof of Loss. It is a jurisdictional requirement to submit a sworn POL within 60 days – cannot be waived despite what the adjuster says. It may be extended, but that can ONLY come from FEMA. Any extension of time to submit POL must be by FEMA and if given in an individual case, it must be in writing from FEMA. Failure to comply with the deadline will prevent you from seeking legal relief. 

Here is a link to step-by-step instructions from FEMA:  https://www.fema.gov/nfip-file-your-claim