Bill Text: TX HB1774 | 2017-2018 | 85th Legislature | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to actions on and liability associated with certain insurance claims.
Spectrum: Partisan Bill (Republican 86-1)
Status: (Passed) 2017-05-26 - Effective on 9/1/17 [HB1774 Detail]
Download: Texas-2017-HB1774-Comm_Sub.html
Bill Title: Relating to actions on and liability associated with certain insurance claims.
Spectrum: Partisan Bill (Republican 86-1)
Status: (Passed) 2017-05-26 - Effective on 9/1/17 [HB1774 Detail]
Download: Texas-2017-HB1774-Comm_Sub.html
85R20435 LED-F | |||
By: Bonnen of Galveston, Lucio III, Parker, | H.B. No. 1774 | ||
Frullo, Phillips, et al. | |||
Substitute the following for H.B. No. 1774: | |||
By: Phillips | C.S.H.B. No. 1774 |
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relating to actions on and liability associated with certain | ||
insurance claims. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 541.156(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) A person who receives notice provided under Section | ||
541.154 or 542A.003 may make a settlement offer during a period | ||
beginning on the date notice under Section 541.154 or 542A.003 is | ||
received and ending on the 60th day after that date. | ||
SECTION 2. Section 542.060, Insurance Code, is amended by | ||
amending Subsection (a) and adding Subsection (c) to read as | ||
follows: | ||
(a) Except as provided by Subsection (c), if [ |
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that is liable for a claim under an insurance policy is not in | ||
compliance with this subchapter, the insurer is liable to pay the | ||
holder of the policy or the beneficiary making the claim under the | ||
policy, in addition to the amount of the claim, interest on the | ||
amount of the claim at the rate of 18 percent a year as damages, | ||
together with reasonable and necessary attorney's fees. Nothing in | ||
this subsection prevents the award of prejudgment interest on the | ||
amount of the claim, as provided by law. | ||
(c) In an action to which Chapter 542A applies, if an | ||
insurer that is liable for a claim under an insurance policy is not | ||
in compliance with this subchapter, the insurer is liable to pay the | ||
holder of the policy, in addition to the amount of the claim, simple | ||
interest on the amount of the claim as damages each year at the rate | ||
determined on the date of judgment by adding five percent to the | ||
interest rate determined under Section 304.003, Finance Code, | ||
together with reasonable and necessary attorney's fees. Nothing in | ||
this subsection prevents the award of prejudgment interest on the | ||
amount of the claim, as provided by law. Interest awarded under | ||
this subsection as damages accrues beginning on the date the claim | ||
was required to be paid. | ||
SECTION 3. Subtitle C, Title 5, Insurance Code, is amended | ||
by adding Chapter 542A to read as follows: | ||
CHAPTER 542A. CERTAIN CONSUMER ACTIONS RELATED TO CLAIMS FOR | ||
PROPERTY DAMAGE | ||
Sec. 542A.001. DEFINITIONS. In this chapter: | ||
(1) "Agent" means an employee, agent, representative, | ||
or adjuster who performs any act on behalf of an insurer. | ||
(2) "Claim" means a first-party claim that: | ||
(A) is made by an insured under an insurance | ||
policy providing coverage for real property or improvements to real | ||
property; | ||
(B) must be paid by the insurer directly to the | ||
insured; and | ||
(C) arises from damage to or loss of covered | ||
property caused, wholly or partly, by forces of nature, including | ||
an earthquake or earth tremor, a wildfire, a flood, a tornado, | ||
lightning, a hurricane, hail, wind, a snowstorm, or a rainstorm. | ||
(3) "Claimant" means a person making a claim. | ||
(4) "Insurer" means a corporation, association, | ||
partnership, or individual, other than the Texas Windstorm | ||
Insurance Association, engaged as a principal in the business of | ||
insurance and authorized or eligible to write property insurance in | ||
this state, including: | ||
(A) an insurance company; | ||
(B) a reciprocal or interinsurance exchange; | ||
(C) a mutual insurance company; | ||
(D) a capital stock insurance company; | ||
(E) a county mutual insurance company; | ||
(F) a farm mutual insurance company; | ||
(G) a Lloyd's plan; | ||
(H) an eligible surplus lines insurer; or | ||
(I) the FAIR Plan Association. | ||
(5) "Person" means a corporation, association, | ||
partnership, or other legal entity or individual. | ||
Sec. 542A.002. APPLICABILITY OF CHAPTER. (a) Except as | ||
provided by Subsection (b), this chapter applies to an action on a | ||
claim against an insurer or agent, including: | ||
(1) an action alleging a breach of contract; | ||
(2) an action alleging negligence, misrepresentation, | ||
fraud, or breach of a common law duty; or | ||
(3) an action brought under: | ||
(A) Subchapter D, Chapter 541; | ||
(B) Subchapter B, Chapter 542; or | ||
(C) Subchapter E, Chapter 17, Business & Commerce | ||
Code. | ||
(b) This chapter does not apply to an action against the | ||
Texas Windstorm Insurance Association or to an action relating to | ||
or arising from a policy ceded to an insurer by the Texas Windstorm | ||
Insurance Association under Subchapter O, Chapter 2210. An action | ||
against the Texas Windstorm Insurance Association or that relates | ||
to or arises from a policy ceded to an insurer by the Texas | ||
Windstorm Insurance Association under Subchapter O, Chapter 2210, | ||
is governed by Chapter 2210. | ||
Sec. 542A.003. NOTICE REQUIRED. (a) In addition to any | ||
other notice required by law or the applicable insurance policy, | ||
not later than the 61st day before the date a claimant files an | ||
action to which this chapter applies in which the claimant seeks | ||
damages from any person, the claimant must give written notice to | ||
the person in accordance with this section as a prerequisite to | ||
filing the action. | ||
(b) The notice required under this section must provide: | ||
(1) a statement of the acts or omissions 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. | ||
(c) If an attorney or other representative gives the notice | ||
required under this section on behalf of a claimant, the attorney or | ||
representative shall: | ||
(1) provide a copy of the notice to the claimant; and | ||
(2) include in the notice a statement that a copy of | ||
the notice was provided to the claimant. | ||
(d) A presuit notice under Subsection (a) is not required if | ||
giving notice is impracticable because: | ||
(1) the claimant has a reasonable basis for believing | ||
there is insufficient time to give the presuit notice before the | ||
limitations period will expire; or | ||
(2) the action is asserted as a counterclaim. | ||
(e) To ensure that a claimant is not prejudiced by having | ||
given the presuit notice required by this chapter, a court shall | ||
dismiss without prejudice an action relating to the claim for which | ||
notice is given by the claimant and commenced: | ||
(1) before the 61st day after the date the claimant | ||
provides presuit notice under Subsection (a); | ||
(2) by a person to whom presuit notice is given under | ||
Subsection (a); and | ||
(3) against the claimant giving the notice. | ||
(f) A claimant who gives notice in accordance with this | ||
chapter is not relieved of the obligation to give notice under any | ||
other applicable law. Notice given under this chapter may be | ||
combined with notice given under any other law. | ||
(g) Notice given under this chapter is admissible in | ||
evidence in a civil action or alternative dispute resolution | ||
proceeding relating to the claim for which the notice is given. | ||
(h) The giving of a notice under this chapter does not | ||
provide a basis for limiting the evidence of attorney's fees, | ||
damage, or loss a claimant may offer at trial. | ||
Sec. 542A.004. INSPECTION. Once notice is given under | ||
Section 542A.003(a), a person to whom notice is given may send a | ||
written request to the claimant to inspect, photograph, or | ||
evaluate, in a reasonable manner and at a reasonable time, the | ||
property that is the subject of the claim. | ||
Sec. 542A.005. ABATEMENT. (a) In addition to taking any | ||
other act allowed by contract or by any other law, a person against | ||
whom an action to which this chapter applies is pending may file a | ||
plea in abatement not later than the 30th day after the date the | ||
person files an original answer in the court in which the action is | ||
pending if the person: | ||
(1) did not receive a presuit notice complying with | ||
Section 542A.003; or | ||
(2) requested under Section 542A.004 but was not | ||
provided a reasonable opportunity to inspect, photograph, or | ||
evaluate the property that is the subject of the claim. | ||
(b) The court shall abate the action if the court finds that | ||
the person filing the plea in abatement: | ||
(1) did not, for any reason, receive a presuit notice | ||
complying with Section 542A.003; or | ||
(2) requested under Section 542A.004 but was not | ||
provided a reasonable opportunity to inspect, photograph, or | ||
evaluate the property that is the subject of the claim. | ||
(c) An action is automatically abated without a court order | ||
beginning on the 11th day after the date a plea in abatement is | ||
filed if the plea: | ||
(1) is verified and alleges that the person against | ||
whom the action is pending: | ||
(A) did not receive a presuit notice complying | ||
with Section 542A.003; or | ||
(B) requested under Section 542A.004 but was not | ||
provided a reasonable opportunity to inspect, photograph, or | ||
evaluate the property that is the subject of the claim; and | ||
(2) is not controverted by an affidavit filed by the | ||
claimant before the 11th day after the date the plea in abatement is | ||
filed. | ||
(d) An affidavit described by Subsection (c)(2) | ||
controverting whether the person against whom the action is pending | ||
received a presuit notice complying with Section 542A.003 must: | ||
(1) include as an attachment a copy of the document the | ||
claimant sent to give notice of the claimant's action; and | ||
(2) state the date on which the notice was given. | ||
(e) An abatement under this section continues until the | ||
later of: | ||
(1) the 60th day after the date a notice complying with | ||
Section 542A.003 is given; or | ||
(2) the 15th day after the date of the requested | ||
inspection, photographing, or evaluating of the property is | ||
completed. | ||
(f) If an action is abated under this section, a court may | ||
not compel participation in an alternative dispute resolution | ||
proceeding until after the abatement period provided by Subsection | ||
(e) has expired. | ||
Sec. 542A.006. ACTION AGAINST AGENT; INSURER ELECTION OF | ||
LEGAL RESPONSIBILITY. (a) Except as provided by Subsection (h), in | ||
an action to which this chapter applies, an insurer that is a party | ||
to the action may elect to accept whatever liability an agent might | ||
have to the claimant for the agent's acts or omissions related to | ||
the claim by providing written notice to the claimant. | ||
(b) If an insurer makes an election under Subsection (a) | ||
before a claimant files an action to which this chapter applies, no | ||
cause of action exists against the agent related to the claimant's | ||
claim, and, if the claimant files an action against the agent, the | ||
court shall dismiss that action with prejudice. | ||
(c) If a claimant files an action to which this chapter | ||
applies against an agent and the insurer thereafter makes an | ||
election under Subsection (a) with respect to the agent, the court | ||
shall dismiss the action against the agent with prejudice. | ||
(d) If an insurer makes an election under Subsection (a) | ||
but, after having been served with a notice of intent to take a | ||
deposition of the agent who is the subject of the election, fails to | ||
make that agent available at a reasonable time and place to give | ||
deposition testimony, Sections 542A.007(a), (b), and (c) do not | ||
apply to the action with respect to which the insurer made the | ||
election unless the court finds that: | ||
(1) it is impracticable for the insurer to make the | ||
agent available due to a change in circumstances arising after the | ||
insurer made the election under Subsection (a); | ||
(2) the agent whose liability was assumed would not | ||
have been a proper party to the action; or | ||
(3) obtaining the agent's deposition testimony is not | ||
warranted under the law. | ||
(e) An insurer's election under Subsection (a) is | ||
ineffective to obtain the dismissal of an action against an agent if | ||
the insurer's election is conditioned in a way that will result in | ||
the insurer avoiding liability for any claim-related damage caused | ||
to the claimant by the agent's acts or omissions. | ||
(f) An insurer may not revoke, and a court may not nullify, | ||
an insurer's election under Subsection (a). | ||
(g) If an insurer makes an election under Subsection (a) and | ||
the agent is not a party to the action, evidence of the agent's acts | ||
or omissions may be offered at trial and, if sufficient evidence | ||
supports the submission, a jury may be asked to determine the | ||
agent's responsibility for claim-related damage caused to the | ||
claimant. To the extent there is a conflict between this subsection | ||
and Chapter 33, Civil Practice and Remedies Code, this subsection | ||
prevails. | ||
(h) If an insurer is in receivership at the time the | ||
claimant commences an action against the insurer, the insurer may | ||
not make an election under Subsection (a), and the court shall | ||
disregard any prior election made by the insurer relating to the | ||
claimant's claim. | ||
(i) In an action tried by a jury, an insurer's election | ||
under Subsection (a) may not be made known to the jury. | ||
Sec. 542A.007. AWARD OF ATTORNEY'S FEES. (a) Except as | ||
otherwise provided by this section, the amount of attorney's fees | ||
that may be awarded to a claimant in an action to which this chapter | ||
applies is the lesser of: | ||
(1) the amount of reasonable and necessary attorney's | ||
fees supported at trial by sufficient evidence and determined by | ||
the trier of fact to have been incurred by the claimant in bringing | ||
the action; | ||
(2) the amount of attorney's fees that may be awarded | ||
to the claimant under other applicable law; or | ||
(3) the amount calculated by: | ||
(A) dividing the amount to be awarded in the | ||
judgment to the claimant for the claimant's claim under the | ||
insurance policy for damage to or loss of covered property by the | ||
amount alleged to be owed on the claim for that damage or loss in a | ||
notice given under this chapter; and | ||
(B) multiplying the amount calculated under | ||
Paragraph (A) by the total amount of reasonable and necessary | ||
attorney's fees supported at trial by sufficient evidence and | ||
determined by the trier of fact to have been incurred by the | ||
claimant in bringing the action. | ||
(b) Except as provided by Subsection (d), the court shall | ||
award to the claimant the full amount of reasonable and necessary | ||
attorney's fees supported at trial by sufficient evidence and | ||
determined by the trier of fact to have been incurred by the | ||
claimant in bringing the action if the amount calculated under | ||
Subsection (a)(3)(A) is: | ||
(1) greater than or equal to 0.8; | ||
(2) not limited by this section or another law; and | ||
(3) otherwise recoverable under law. | ||
(c) The court may not award attorney's fees to the claimant | ||
if the amount calculated under Subsection (a)(3)(A) is less than | ||
0.2. | ||
(d) If a defendant in an action to which this chapter | ||
applies pleads and proves that the defendant was entitled to but was | ||
not given a presuit notice stating the specific amount alleged to be | ||
owed by the insurer under Section 542A.003(b)(2) at least 61 days | ||
before the date the action was filed by the claimant, the court may | ||
not award to the claimant any attorney's fees incurred after the | ||
date the defendant files the pleading with the court. A pleading | ||
under this subsection must be filed not later than the 30th day | ||
after the date the defendant files an original answer in the court | ||
in which the action is pending. | ||
SECTION 4. (a) Section 541.156, Insurance Code, as amended | ||
by this Act, and Chapter 542A, Insurance Code, as added by this Act, | ||
apply only to an action filed on or after the effective date of this | ||
Act. An action that is filed before the effective date of this Act | ||
is governed by the law as it existed immediately before the | ||
effective date of this Act, and that law is continued in effect for | ||
that purpose. | ||
(b) Section 542.060(c), Insurance Code, as added by this | ||
Act, applies only to a claim, as defined by Section 542A.001, | ||
Insurance Code, as added by this Act, made on or after the effective | ||
date of this Act. A claim made before the effective date of this Act | ||
is governed by the law as it existed immediately before the | ||
effective date of this Act, and that law is continued in effect for | ||
that purpose. | ||
SECTION 5. This Act takes effect immediately if it receives | ||
a vote of two-thirds of all the members elected to each house, as | ||
provided by Section 39, Article III, Texas Constitution. If this | ||
Act does not receive the vote necessary for immediate effect, this | ||
Act takes effect September 1, 2017. |