Our hearts and thoughts go out to all of our employees, clients, and friends affected by Hurricane Harvey and the devastation caused by the storm. Your personal safety, and that of your family and loved ones, is our top priority and concern.

As the impact of Hurricane Harvey continues this week, there has been a considerable amount of attention about Texas House Bill 1774, which was passed during the recent legislative session and goes into effect on September 1, 2017. The goal of this article is to explain the new law, including what it does and does not do.

As an initial matter, it is important to note what House Bill 1774 does not do.

• It does not expand or reduce coverage under property insurance policies. Losses that would be covered before September 1, 2017, are still covered.
• It does not change an insurer’s requirements to promptly acknowledge, accept or deny, and pay claims in accordance with time tables set out in the Prompt Payment of Claims provisions in the Texas Insurance Code (Section 542.051, et seq.).

In short, the new law does not affect the claims process or the insurance policies themselves.

So what does this new law do?

1. For claims made (not lawsuits) on or after September 1, 2017, the interest penalty that insurers will have to pay if they wrongfully deny or underpay a covered claim changes from 18% under the current law, to around 10% currently (the interest rate can float). In order to preserve the potential right to recover the higher interest penalty if a lawsuit becomes necessary, the insured must file a written claim with its insurer, via e-mail or fax, on or before August 31, 2017.
2. For lawsuits filed on or after September 1, 2017,
   1. policyholders will generally be required to provide a detailed notice of their complaints and the amounts sought from the insurer at least 60 days before filing suit (absent limited exceptions, such as insufficient time before a limitations period expires);
   2. attorney’s fees recoveries may be reduced or eliminated depending on the outcome of the lawsuit; and
   3. insurers may elect to accept liability based on the conduct of agents (including adjusters).

As you begin to think about next steps following Hurricane Harvey, we have put together a list of insurance FAQs that may assist you with potential property and automobile insurance claims.