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New State Law Decreases Deterrents For Insurance Companies In The Wake Of Harvey


People in parts of Southeast Texas are slowing making their way back to their homes to assess the damage caused by Hurricane Harvey, with many pushing to file a claim with their insurance company before Friday.  Their urgency could be related to a Texas House Bill signed into law by Gov. Greg Abbott, via Texas Public Radio.

As Harvey began to blow damaging winds and buckets of rain across much of Houston, area-homeowner Scarlette Holley saw the encroaching flood water of a nearby creek and decided to flee for higher ground.  Her home is also located between two reservoir dams, which have been spilling over into sections of Houston’s energy corridor.


“Some of our neighbors that decided not to leave sent us pictures and the devastation, you know, water pretty much everywhere," Holley says.

House Bill 1774 was passed and signed into law at the start of Texas’ Hurricane season, which generally runs from June until November.  The law provides insurance companies some relief when comes to penalties and lawsuits related to insurance claims that aren’t settled to the satisfaction of the homeowner and in a timely manner.

Like many Texans impacted by Harvey, Holley says she heard news stories about the new state law and decided to began the claims process with her insurance company immediately.

“They’re hurting the good people," Holley says. "People with homeowners insurance, they’re not trying to milk the system. We have it because we were raised that this is the right thing to do. This is the responsible thing to do."

Texas' Blue Tarp Law, named for the typical blue tarp used to cover roofs following wind-driven rain and hail damage, will reduce the state penalties for insurance companies. After September 1, the state’s penalty for an insurance company not settling a claim within 15 days of an insurance adjuster’s assessment goes down from 18 percent of a homeowners claim to 10 percent.

Former Galveston State Rep. Craig Eiland is an attorney specializing in insurance law. Eiland says while Texas’ Blue Tarp Law doesn’t affect the claims process, he believes it will hurt homeowners because it decreases the deterrents for insurance companies to settle a claim in a timely manner.

“Why would you lower a deterrent for an insurance company to pay timely and accurately and then make it harder on the insured if they are unhappy with the offer on the claim to be able to recover their full damages in a lawsuit?" Eiland asks.

If a homeowner sues an insurance company, their attorney’s assessment of the damages must be within 80 percent of the insurance company’s assessment otherwise homeowners are responsible for the attorney’s fees, even if they win their case.

Lucy Nashed is with the group  Texans for Lawsuit Reform, who pushed for the law’s creation.  Nashed says they’re hoping the law will stop insurance attorneys from shopping homeowners impacted by a storm.

“Basically, attorneys would chase the storms and anywhere there was a hailstorm in Texas, you would see them parachute into these towns," Nashed explains. "They would go door-to-door signing people up. In some cases, people hadn’t even filed a claim with their insurance company yet."

Gov. Greg Abbott, who signed the bill into law, says the new law does not affect the claims process or a homeowner’s ability to sue an insurance company.

“Because all it really does is require a notification by a policy holder to the insurance company before a policy holder files a lawsuit and what that does is spur the insurance company to get that claim paid faster," Abbott says.

While the new law kicks in on Sept. 1, it does not apply to Texas Windstorm Insurance Association or National Flood Insurance claims.

Carlos Morales is Marfa Public Radio's News Director.