Home Insurance and Lawsuit Restrictions

Larry Taylor, a Texas State Senator from Friendswood, introduced a bill to restrict homeowners’ ability to sue insurance companies over unpaid claims. The Senate passed his bill last Wednesday in a 21 to 10 vote, and it’s headed to the House to be voted on. If approved it, the bill will go to Governor Abbott to sign or veto it.

I am not in favor of frivolous lawsuits. I believe not every hailstorm damages a roof to the point where it needs to be replaced. I also have seen occasions where a claim was not properly handled and believe consumers should have the opportunity to have their day in court. However, this bill raises a question Texas homeowners need to answer for themselves, and that is, should their ability to sue an insurance company be restricted?

Both the people who support this bill, and those that are against it agree the growing number of lawsuits over wind damage and hail have been a problem. After this point, the sides become sharply divided over what needs to be done about it.

The supporters of the bill believe it will help reduce our home insurance rates.

  • In some areas of the state, there are litigation rates of 25 to 30%, referring to the percentage of claims winding up in lawsuits by angry policy holders.
  • In most cases, the lawsuits are settled for more than the cost of the new roof as insurance companies would rather avoid the litigation costs.
  • The explosion of lawsuits and the cost to settle them are then passed on to all policy holders through higher rates.

Those who oppose Taylor’s bill believe it unfairly favors insurance companies. Their concerns are:

  • Homeowners will be forced to accept low-ball settlements for claims.
  • Policy holders will be stripped of protections designed to ensure fair and timely payments for valid claims.

Texas homeowners pay the third highest home insurance rates in the county. This is partly due to our severe weather including hurricanes, tornadoes, and hail. What no one has stated, is how much of an impact lawsuits have had on Texas home insurance rates. Nor have insurance companies stated rates will be reduced if this bill becomes law.

State Senator Taylor changed some of the provisions of his bill to address his critics concerns. He contends consumers will still be able to take their insurer to court if they’ve been mistreated. What I’ve not seen is under what conditions they may do so.

I’m not sure this bill will have the outcome Senator Taylor believes it will have. Texas home insurance rates continue to climb in spite of the relatively light amount of hail we’ve had in the past three years. I also believe consumers need to have the ability to address their concerns if their claim has been improperly handled. What do you think? Share your thoughts, suggestions, and experiences with me on our Google +, Facebook, and LinkedIn pages. I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

Share this post with your friends