Legislation that passed in Austin and takes effect this Friday weakens some current protections meant to help consumers when they file property damage claims.

House Bill 1774 reduces the penalties insurance companies face when they don’t pay enough in claims, decreases the chances they will have to pay the plaintiff’s attorneys fees and protects individual agents from the negative effects of being personally sued.

“We will be telling folks to file damage claims as soon as they discover damage to their property,” said Ware Wendell, executive director of Texas Watch, a non-partisan citizen advocacy group. After Facebook posts warning of HB1774 went viral, Wendell confirmed to KPRC Channel 2 that many Texans stand to lose important legal rights beginning Sept.1.

“By filing a valid claim before 9/1, the 18% penalty interest for slow payment may be preserved,” he wrote in an email. That means currently if your insurance company drags its feet paying for your damages and you have to sue, the company will have to pay an penalty equal to 18% of the cost of your claim in addition to the claim. Under HB1774, insurers who deny or delay paying claims would only face a 10% penalty.

"To make sure your claim is processed under the current more consumer-friendly law, Ware says homeowners should file written notice of their claim before Sept. 1. It might take a lawsuit to determine if this counts as 'initiating an action' under the terms of the new law (See subsection (a) of SECTION 4); but it is the best homeowners can do at this point.

“I’ve been hearing that some insurance companies are telling people to wait a week until they have pictures of the damage before filing their claim. You do not need to attach pictures of your claim. You can always supplement with photos if need be.”

The group Texans for Lawsuit Reform lobbied on behalf of the insurance industry to pass the law. TLR’s Communication Director Lucy Nashed said the law is meant to cut down on unnecessary and abusive lawsuits against insurance companies.

“Those lawsuits tie up the courts and make it difficult for property owners with legitimate claims to have their day in court,” she said. “And they make insurance prices go up for everyone.”

Nashed said the vast majority of Texans will go through the regular insurance claims process without ever filing a lawsuit. The 18 percent penalty interest for slow payments will only apply if the homeowner files a lawsuit against their insurance company.

“The National Flood Insurance Program is a federal law and not governed by HB1774,” she said.

Ware maintains that when insurance companies fail to pay claims in a fair and timely manner, a homeowners’ last stop for recourse is the court system. Making sure laws hold big insurance companies accountable help consumers in their battle.

“You should not delay in filing your insurance claim as soon as you discover damage,” Ware wrote.

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