SDV Insights

Property Damage in Texas? File Your Claim Before 9/1

As Hurricane Harvey leaves its destructive mark on Texas, policyholders are left to pick up the pieces. Coincidentally, a new Texas law scheduled to take effect on September 1 could limit your insurance recovery. As a result, policyholders who have suffered property damage in Texas should file a claim with their insurer before September 1, 2017.

Texas House Bill 1774 applies to lawsuits arising out of claims for property damage caused by “forces of nature” – i.e., earthquake or tremor, wildfire, flood, tornado, lightning, hurricane, hail, wind, snowstorm, or rainstorm.

The Bill is intended to prevent frivolous lawsuits by adding extra protections for insurers.  However, the Bill is detrimental to policyholders, as it creates additional procedural hurdles for policyholders who file a lawsuit against their insurer, and potentially reduces the amount of available prejudgment interest and attorney’s fees that can be recovered.

Notably, the Bill:

1)     Requires that a policyholder provide written notice to its insurer 61 days
before it files suit;

2)     Requires that a policyholder permit the insurer to inspect the property;

3)     Allows the insurer to abate the policyholder’s lawsuit if the policyholder fails to comply
with 1) and 2) above;

4)     Implements a new market-based formula for determining the amount of prejudgment interest
an insurer must pay if it is found to have delayed payment or wrongfully denied or underpaid
a meritorious claim is changed (interest was previously fixed at 18% and is now about 10%); and

5)     Only permits a full award of attorney’s fees if proper pre-suit notice is provided and the
policyholder estimated its damages with 80% accuracy.

If a claim for property damage is submitted to an insurer prior to September 1, 2017, any future lawsuit arising out of the claim will be subject to the interest provision of the current statute, and will not be subject to the interest provision of the new Bill. SDV therefore encourages Texas policyholders to consider filing any claims for property damage, including claims for damage due to Hurricane Harvey, no later than August 31.


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