Article of Interest

Article of Interest

Understanding the New Notice Requirements for Insurance Claims in Texas
By:  Tyler DiMarino

Following Hurricane Harvey, social media was busy with articles warning those affected that a new Texas law would make it difficult, if not impossible, to recover compensation for property damage from their insurance companies. While the new Texas law does place new requirements on those filing suit against an insurance company, it does not act to limit or prevent the recovery of claims.

Texas House Bill 1774 was signed into law on May 26, 2017, and took effect September 1, 2017. It is codified in the Texas Insurance Code as Chapter 542A – Certain Consumer Actions Related to Claims for Property Damage.

The new law requires a claimant to provide written notice to their insurance company at least 61 days before initiating a lawsuit. Notice to the insurance company must contain:

          (1)  A statement of the acts or omission giving rise to the claim;
          (2)  The specific amount alleged to be owed by the insurer on the claim for damage to or loss of covered property; and
          (3)  The amount of reasonable and necessary attorney’s fees incurred by the claimant, calculated by multiplying the number of hours actually worked by the claimant’s attorney, as of the date the notice is given and as reflected in contemporaneously kept time records, by an hourly rate that is customary for similar legal services.

If an attorney is providing the notice on behalf of a claimant, the attorney must be sure to provide a copy to the claimant and include in the notice to the insurance company that a copy was provided to the claimant. Written notice is not required if the claimant believes there is insufficient time to give notice because the limitations period will expire or the action being brought is a counterclaim. Also, the claimant is still required to provide notice under any other applicable law they use to bring suit.

Within 30 days of receiving the notice letter, the insurance company may send a written request to inspect, photograph, or evaluate the property that is the subject of the claim. If possible, the inspection, photography, and evaluation must be completed within 60 days of the receipt of notice.

If proper notice is not provided, the claimant’s lawsuit may be abated. The insurance company may file a plea in abatement within 30 days of filing an original answer if: (1) the company did not receive the required notice; or (2) the company requested, but was not provided, a reasonable opportunity to inspect, photograph, or evaluate the property in question. A court must grant the plea in abatement if it finds notice was not provided or a reasonable opportunity to inspect was not given.

Furthermore, a lawsuit may be automatically abated, without a court order, if a verified plea in abatement alleges notice was not given or that a reasonable opportunity was not provided, and the abatement not controverted within 11 days by an affidavit filed by the claimant.1 Abatement will continue until the later of: (1) the 60th day after the date notice is given; or (2) the 15th day after the date of the requested inspection, photographing, or evaluating of the property is completed.

If an insurance company pleads and proves that they were entitled to written notice stating the specific amount owed on the property but failed to receive said notice, then the court may bar the recovery of any attorney’s fees from the claimant after the date the pleading is filed with the court. The insurance company is required to plead this lack of notice within 30 days of filing an original answer in the case.

The new notice requirements were enacted to encourage parties to settle or mediate their claims during the 61-day waiting period; however, given their strict requirements it is possible they may also result in the abatement of multiple lawsuits if the proper steps are not followed.

1 If the claimant’s affidavit is used to support sufficient notice, then the affidavit must: (1) include a copy of the notice document; and (2) state the date the notice was given.

Views and opinions expressed in eNews are those of their authors and not necessarily those of the Texas Young Lawyers Association or the State Bar of Texas.

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