Bill Text: TX HB4419 | 2021-2022 | 87th Legislature | Introduced

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Bill Title: Relating to settlement and resolution of claims against the Texas Windstorm Insurance Association.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2021-03-29 - Referred to Insurance [HB4419 Detail]

Download: Texas-2021-HB4419-Introduced.html

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By: Middleton H.B. No. 4419

A BILL TO BE ENTITLED
AN ACT
relating to settlement and resolution of claims against the Texas
Windstorm Insurance Association.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2210.573(a) and (f), Insurance Code, are
amended to read as follows:
Sec. 2210.573. FILING OF CLAIM; CLAIM PROCESSING. (a)
Subject to Section 2210.205(b), an insured must file a claim under
an association policy not later than the first anniversary of the
date on which the damage to property that is the basis of the claim
occurs. For purposes of this Section, an insured is only required to
file one claim under an association policy per event. After a claim
has been filed, all losses under an association policy for the same
event shall be deemed claimed.
(f) In a notice described by Subsection (d)(2) or (3), the
association must provide [inform] the claimant with [of], as
applicable:
(1) a detailed explanation of the portion of the loss
for which the association accepts coverage and the amount of loss
the association will pay;
(2) a detailed explanation of the portion of the loss
for which the association denies coverage and a detailed summary of
the manner in which the association determined not to accept
coverage for that portion of the claim; and
(3) the time limit to:
(A) request appraisal under Section 2210.574 of
the portion of the loss for which the association accepts coverage;
and
(B) provide notice of intent to bring an action
as required by Section 2210.575.
SECTION 2. Section 2210.5731, Insurance Code, is amended by
adding Subsection (c) to read as follows:
(c) If the association fails to make payment within the
timeline established by Subsection (a), the association shall pay
an additional interest at a rate of 18 per cent per annum on the
amount of the claim that has not been paid. Interest shall begin to
accrue on the date after the payment became past due until the claim
has been paid.
SECTION 3. Section 2210.574, Insurance Code, is amended to
read as follows:
Sec. 2210.574. DISPUTES CONCERNING AMOUNT OF ACCEPTED
COVERAGE. (a) If the association accepts coverage for a claim in
full and a claimant disputes only the amount of loss the association
will pay for the claim, or if the association accepts coverage for a
claim in part and a claimant disputes the amount of loss the
association will pay for the accepted portion of the claim, the
association shall provide to the claimant [may request from the
association] a detailed summary of the manner in which the
association determined the amount of loss the association will pay
for each portion of the accepted claim.
(b) If a claimant disputes the amount of loss the
association will pay for a claim or a portion of a claim, the
claimant, not later than the 60th day after the date the claimant
receives the notice described by Section 2210.573(d)(1) or (2), may
demand appraisal in accordance with the terms of the association
policy.
(c) If a claimant, on a showing of good cause and not later
than the 15th day after the expiration of the 60-day period
described by Subsection (b), requests in writing that the 60-day
period be extended, the association may grant an additional 30-day
period in which the claimant may demand appraisal.
(d) If a claimant demands appraisal under this section:
(1) the appraisal must be conducted as provided by the
association policy; [and]
(2) the appraisal must be completed within a timeframe
agreed upon in writing by the appraisers of the parties, or as
ordered by an umpire, but may not exceed 180 days after the date an
appraisal is demanded;
(3) the association shall adequately detail the scope
of the appraisal, including, as applicable, a list of any portions
of the claim that have been accepted; and
(4) the claimant and the association are responsible
in equal shares for paying any costs incurred or charged in
connection with the appraisal, including a fee charged under
Subsection (e).
(e) If a claimant demands appraisal under this section and
the appraiser retained by the claimant and the appraiser retained
by the association are able to agree on an appraisal umpire to
participate in the resolution of the dispute, the appraisal umpire
is the umpire chosen by the two appraisers. If the appraiser
retained by the claimant and the appraiser retained by the
association are unable to agree on an appraisal umpire to
participate in the resolution of the dispute, the commissioner
shall select an appraisal umpire from a roster of qualified umpires
maintained by the department. The department may:
(1) require appraisers to register with the department
as a condition of being placed on the roster of umpires; and
(2) charge a reasonable registration fee to defray the
cost incurred by the department in maintaining the roster and the
commissioner in selecting an appraisal umpire under this
subsection.
(f) If the claimant and the association fail to reach a
settlement agreement within 180 days from the date of the
appraisal, interest shall begin to accrue at a rate of 10 per cent
per annum on the higher of the appraised values. Once a settlement
has been reached, the amount of accrued interest shall be added to
the settlement amount and paid by the association.
(g) Except as provided by Subsection (h) [(g)], the
appraisal decision is binding on the claimant and the association
as to the amount of loss the association will pay for a fully
accepted claim or the accepted portion of a partially accepted
claim and is not appealable or otherwise reviewable. The appraisal
decision becomes binding once it is signed by the umpire and the
appraiser for the claimant or the association. A claimant that does
not demand appraisal before the expiration of the periods described
by Subsections (b) and (c) waives the claimant's right to contest
the association's determination of the amount of loss the
association will pay with reference to a fully accepted claim or the
accepted portion of a partially accepted claim.
(h) [(g)] A claimant or the association may, not later than
the 30 days after [second anniversary of] the date of an appraisal
decision becomes binding, give notice that the claimant or
association will dispute the appraisal decision. Within 30 days
after such notice is provided, the claimant or association may file
an action in a district court in the county in which the loss that is
the subject of the appraisal occurred to modify the appraisal
decision, or to vacate the appraisal decision and begin a new
appraisal process only if:
(1) the appraisal decision was obtained by corruption,
fraud, or other undue means;
(2) the rights of the claimant or the association were
prejudiced by:
(A) evident partiality by an appraisal umpire;
(B) corruption in an appraiser or appraisal
umpire; or
(C) misconduct or wilful misbehavior of an
appraiser or appraisal umpire; or
(3) an appraiser or appraisal umpire:
(A) exceeded the appraiser's or appraisal
umpire's powers;
(B) refused to postpone the appraisal after a
showing of sufficient cause for the postponement;
(C) refused to consider evidence material to the
claim; or
(D) conducted the appraisal in a manner that
substantially prejudiced the rights of the claimant or the
association.
(i) [(h)] Except as provided by Subsection (h) [(g)], a
claimant may not bring an action against the association with
reference to a claim for which the association has accepted
coverage in full.
SECTION 4. Section 2210.5741, Insurance Code, is amended to
read as follows:
Sec. 2210.5741. REPLACEMENT COST COVERAGE CLAIM
PROCESSING. (a) After the association accepts coverage for a claim
in full or in part, a claimant whose association policy includes
replacement cost coverage for a [the] claim may request the
replacement cost payment [by submitting to the association
documentation of the cost and completion of the repairs related to
the claim not later than the 545th day after the date the claimant
receives a notification under Section 2210.573(d)(1) or (2)].
(b) Not later than the 60th [30th] day after the date the
association receives a request [documentation] under Subsection
(a), the association shall provide the claimant, in writing,
notification of:
(1) the amount of the replacement cost payment the
association will make; and
(2) the deadline to request appraisal under this
section.
(c) The association shall pay the amount described by
Subsection (b)(1) not later than the 10th day after the date
notification is provided under Subsection (b).
(d) If a claimant has not demanded appraisal with respect to
a claim under Section 2210.574 and the claimant disputes the
replacement cost amount the association will pay with respect to
the claim, the claimant may demand appraisal of the replacement
cost amount not later than the 30th day after the date the claimant
receives the notification under Subsection (b). A claimant may
demand appraisal under this section without regard to whether [all]
repairs related to the claim have begun or are complete.
(e) Except with respect to the deadlines applicable to an
appraisal under this section, the appraisal under this section
shall be conducted in the same manner as an appraisal demanded under
Section 2210.574.
(f) If a claimant's association policy includes replacement
cost coverage, the written notification provided to the claimant
under Section 2210.573(d)(1) or (2) must notify the claimant of the
deadlines under this section for[:
(1) completing repairs and submitting documentation
under Subsection (a); and
(2)] demanding appraisal under this section.
SECTION 5. Section 2210.575(a), Insurance Code, is amended
to read as follows:
(a) If the association denies coverage for a claim in part
or in full and the claimant disputes that determination, the
claimant, not later than the expiration of the limitations period
described by Section 2210.577(a), but after the date the claimant
receives the notice described by Section 2210.573(d)(2) or (3),
must provide the association with notice that the claimant intends
to bring an action against the association concerning the partial
or full denial of the claim. The date the last notice by the
association under Section 2210.573(d)(2) or (3) is received shall
determine the deadline to provide a notice of intent to bring action
under this section.
SECTION 6. Section 2210.576, Insurance Code, is amended to
read as follows:
Sec. 2210.576. ISSUES BROUGHT TO SUIT; LIMITATIONS ON
RECOVERY. (a) In [The only issues a claimant may raise in] an
action brought against the association under Section 2210.575 a
claimant may raise [are]:
(1) whether the association's denial of coverage was
proper; and
(2) the amount of the damages described by Subsection
(b) to which the claimant is entitled, if any.
(b) Except as provided by Subsections (c) and (d), a
claimant who prevails in [that brings] an action against the
association under Section 2210.575 shall [may] recover [only]:
(1) the covered loss payable under the terms of the
association policy less, if applicable, the amount of loss already
paid by the association for any portion of a covered loss for which
the association accepted coverage;
(2) prejudgment interest beginning the 11th [from the
first] day after the date specified in Section 2210.573(d)[Section
2210.5731 by which the association was or would have been required
to pay an accepted claim or the accepted portion of a claim,] at the
prejudgment interest rate provided in Subchapter B, Chapter 304,
Finance Code; and
(3) court costs and reasonable and necessary
attorney's fees.
(c) Nothing in this chapter, including Subsection (b), may
be construed to limit the consequential damages, or the amount of
consequential damages, that a claimant may recover under common law
in an action against the association.
(d) A claimant that brings an action against the association
under Section 2210.575 may, in addition to the covered loss
described by Subsection (b)(1) and any consequential damages
recovered by the claimant under common law, recover damages in an
amount not to exceed the aggregated amount of the covered loss
described by Subsection (b)(1) and the consequential damages
recovered under common law if the claimant proves by clear and
convincing evidence that the association mishandled the claimant's
claim to the claimant's detriment by intentionally:
(1) failing to meet the deadlines or timelines
established under this subchapter without good cause, including the
applicable deadline established under Section 2210.5731 for
payment of an accepted claim or the accepted portion of a claim;
(2) disregarding applicable guidelines published by
the commissioner under Section 2210.578(f);
(3) failing to provide the notice required under
Section 2210.573(d);
(4) rejecting a claim without conducting a reasonable
investigation with respect to the claim; [or]
(5) denying coverage for a claim in part or in full if
the association's liability has become reasonably clear [as a
result of the association's investigation with respect to the
portion of the claim that was denied];
(6) unreasonably delaying payment of a claim in part
or in full once the liability of the association has become
reasonably clear; or
(7) providing an amount of loss the association will
pay, in a notice under Section 2210.573, that is substantially less
than the amount awarded in an appraisal or as determined by a
factfinder in an action under this chapter.
(e) For purposes of Subsection (d), "intentionally" means
actual awareness of the facts surrounding the act or practice
listed in Subsection (d)(1), (2), (3), (4), or (5), coupled with the
specific intent that the claimant suffer harm or damages as a result
of the act or practice. Specific intent may be inferred from
objective manifestations that the association acted intentionally
or from facts that show that the association acted with flagrant
disregard of the duty to avoid the acts or practices listed in
Subsection (d)(1), (2), (3), (4), or (5).
SECTION 7. The Texas Windstorm Insurance Association shall
amend the association 's plan of operation to conform to the changes
in law made by this Act not later than the 60th day after the
effective date of this Act.
SECTION 8. This Act takes effect September 1, 2021.