Bill Text: TX SB10 | 2017-2018 | 85th Legislature | Comm Sub


Bill Title: Relating to actions on and liability associated with certain insurance claims.

Spectrum: Partisan Bill (Republican 20-1)

Status: (Introduced) 2017-05-09 - Not again placed on intent calendar [SB10 Detail]

Download: Texas-2017-SB10-Comm_Sub.html
 
 
  By: Hancock, et al.  S.B. No. 10
         (In the Senate - Filed February 13, 2017; February 14, 2017,
  read first time and referred to Committee on Business & Commerce;
  April 24, 2017, reported adversely, with favorable Committee
  Substitute by the following vote:  Yeas 7, Nays 2; April 24, 2017,
  sent to printer.)
Click here to see the committee vote
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 10 By:  Hancock
 
 
A BILL TO BE ENTITLED
 
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.
               (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.
 
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