A bill that is polarizing the Texas constituency passed the Senate committee level this week, and is now waiting for its turn to be voted on by the Upper House in the final six weeks of the session.
SB 10 aims to address “abusive” lawsuits which have proliferated as a series of foul weather systems have pummelled the state over the years. The Senate Business & Commerce Committee advanced the proposed law by a 7-1 vote without any discussion.
According to local media outlet Chron
, its provisions include the requirement of a pre-suit notice to be served. The notice must outline “acts or omissions” that resulted in the claim, the purported amount owed to the policyholder, and the amount of “reasonable and necessary” attorney’s fees. Furthermore, the bill states that if the pre-suit deadline is missed, the complainant’s lawyer cannot collect fees from the lawsuit, whereas the law currently in place requires the plaintiff’s attorney to notify the insurance company 60 days or more prior to filing a suit.
Apart from hail, the bill applies to other natural catastrophes such as earthquakes or tremors, wildfire, flood, tornado, lightning, hurricane, wind, snowstorms and rain.
In response to the criticism that the bill limits consumer rights by restricting their legal reach, proponents maintain that it still protects the policyholder’s right to sue their insurance company during instances when it acted in bad faith or in an unfair manner.
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However, the bill reduces the penalty that insurance firms have to pay if they do not fulfil a claim in a timely manner at the full amount. From 18%, the bill brings it down to 10%, which is 5% higher than the Texas judgement rate of 5%.
Consumer advocate Ware Wendell said in the report that the proposed measure is a “blue tarp bill” because it could potentially delay storm damage repair.
Wendell, executive director of the non-profit consumer group Texas Watch, said in a statement: “This legislation threatens every property owner in this state. It is a giveaway to insurance companies at the expense of Texas families, businesses, churches, and schools. Lawmakers should represent their constituents, not the insurance industry.”
Meanwhile, Texans for Lawsuit Reform, an enterprise-backed non-profit, lauded the committee approval of the proposed law.
Lucy Nashed, TLR spokeswoman, said in the report that the bill “provides a common-sense solution to the worst lawsuit abuse in Texas today, shutting down the abusive lawsuit mills that are jeopardizing affordable property insurance coverage for all Texans while maintaining the strongest consumer protections in the nation for property owners.”
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