H.B. No. 1774

	AN ACT
	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 [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 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, unless a
	claim-related dispute resolution procedure is available to
	policyholders under Chapter 2211.
	(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.  This
	chapter applies to an action that relates to or arises from a policy
	renewed under Section 2210.703.
	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. Not later than the 30th day
	after receiving a presuit notice 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.  If reasonably possible, the inspection, photography,
	and evaluation must be completed not later than the 60th day after
	the date the person receives the presuit notice.
	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 supported by sufficient
	evidence, the trier of fact may be asked to resolve fact issues as
	if the agent were a defendant, and a judgment against the insurer
	must include any liability that would have been assessed against
	the agent.  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 September 1, 2017.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I certify that H.B. No. 1774 was passed by the House on May 5,
	2017, by the following vote:  Yeas 92, Nays 55, 2 present, not
	voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 1774 was passed by the Senate on May
	17, 2017, by the following vote:  Yeas 21, Nays 7, 1 present, not
	voting
	.
	______________________________
	Secretary of the Senate
	APPROVED:  _____________________
	Date
	_____________________
	Governor