New storm insurance law takes effect on the tail of Hurricane Harvey

A damaged home is seen after Hurricane Harvey passed through on August 26, 2017 in Rockport, Texas. Harvey made landfall shortly after 11 p.m. Friday, just north of Port Aransas as a Category 4 storm and is being reported as the strongest hurricane to hit the United States since Wilma in 2005. Forecasts call for as much as 30 inches of rain to fall in the next few days. (Photo by Joe Raedle/Getty Images)
A damaged home is seen after Hurricane Harvey passed through on August 26, 2017 in Rockport, Texas. Harvey made landfall shortly after 11 p.m. Friday, just north of Port Aransas as a Category 4 storm and is being reported as the strongest hurricane to hit the United States since Wilma in 2005. Forecasts call for as much as 30 inches of rain to fall in the next few days. (Photo by Joe Raedle/Getty Images)

AUSTIN (KXAN) — A law passed during the 2017 Texas legislative session will take effect the Friday after Hurricane Harvey caused billions of dollars in damage. The insurance claim process will not change, but it will be harder to take your insurer to court if someone thinks the company is cheating them.

The new law, House Bill 1774, was passed to crack down on frivolous lawsuits.

Most of the flood damage from Hurricane Harvey will be covered under FEMA’s Flood Assistance program, but what about all that wind damage that toppled trees and smashed into houses? Experts tell KXAN that if someone trusts their insurance company they shouldn’t worry. If someone does not trust their insurer, they might want to file their claim before the end of the week.

For Peggy Loughlin, it’s not just the property but the memories.

“My husband was a man’s man. He built a man cave. Huge. You could put your boat in there. you could put your RV in there,” said Loughlin.

She’s making a home insurance claim for the first time, after more than 100 mph winds battered her properties in Port Aransas and Aransas Pass.

“Some of the questions are like, well did you know when water hit. I’m like, no, cause I didn’t stay there,” said Loughlin.

Dr. Etti Baranoff teaches finance and insurance at Virginia Commonwealth University, and is well versed in Texas law. She wrote the textbook on the issue that is taught at the University of Texas at Austin.

She says after Sept 1., someone will have to wait 61 days before filing a suit with their insurer.

“[There would] be a cool-off time and then they can negotiate themselves with the insurance company before entering into a lawsuit that costs both sides a lot of money,” said Baranoff, describing how a written complaint with the insurance company could lead to mediation — the plaintiff and the insurance company working it out before going to court.

If you win more than 80 percent of a contested claim in court, you can get all your legal fees paid by the insurer. But now, anything under 80 percent plaintiffs could pay a larger share to their lawyers. Late fees are smaller too for an insurance company that acts too slowly.

“If you’re afraid that you will have a controversial relationship with your insurance company, try to [file a claim] before [the law takes effect], said Baranoff.

She says this new law will not affect the claims process or the amount of money you’ll pay in premiums.

Loughlin trusts her insurance company, but will document everything as the law changes. She’s going to file her claim this week. “The thing to do is get your foot in the door, get that number,” said Loughlin.

The Texas Department of Insurance found that some parts of the state are more likely to have damage claims that lead to lawsuits.

For example, between 2010 and 2015 South Texas had less than 4 percent of all insurance claims for windstorm and hail damage but more than half of the claims involving lawsuits came from that area. Most of those claims came after a pair of severe storms in 2012 and 2013.

Compare that to Central Texas which had nearly 19 percent of claims with less than 6 percent leading to lawsuits.

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