AUSTIN, Texas — Texas lawmakers are currently considering legislation designed to curb hail lawsuit abuse and protect consumers, and newly released data underscores the urgent need for reform.
In 2016, 500,0000 hail claims were filed in Texas, and losses exceeded $4 billion, according to the Insurance Council of Texas. Not counting 2008, the year Texas suffered $12 billion worth of damages from Hurricane Ike, 2016 was the costliest year for storm damage in the state’s history.
“The prevalence of severe weather and the high risk for property damage in Texas has spawned a growing industry that tries to profit off the misfortune of storm victims,” said Joe Woods, vice president, state government relations for the Property Casualty Insurers Association of America (PCI). “In many Texas communities hit by hail storms, these bad actors are going door-to-door and encouraging homeowners to sue their insurance companies. Certain roofing contractors, public adjusters and plaintiff attorneys are misleading storm victims and promising big payouts without any cost. Unfortunately, homeowners who sign on the dotted line often do not realize that they are entering into a lawsuit that could delay the process for settling their claim. It also could ultimately increase their insurance costs.”
The magnitude of the hail litigation problem is growing. Some insurance companies in Texas have been sued on 35 percent of claims after a hail storm; nationally, the industry is sued on less than 2 percent of claims. Texas lawmakers recently heard testimony from local insurance companies that have been forced to leave areas of the state because of the large numbers of lawsuits.
“A process is already in place for resolving insurance claim disputes that does not involve litigation, but trial lawyers and public adjusters are increasingly pushing these highly leveraged, nuisance suits in order to line their own pockets,” said Woods. “Unfortunately, it’s the consumer who could ultimately pay the price when property insurance becomes unavailable or possibly unaffordable.”
Texas consistently ranks among the top 10 states for severe weather events and it ranks first in the nation for hail claims. “Last year’s storm season was extreme costly,” said Woods. “With the most active months for severe weather around the corner, we strongly urge Texas lawmakers to support Senate Bill 10 and House Bill 1774 to help stop hail lawsuit abuse and protect consumers.”