Two Bills Relating to Auto Insurance Claims Practices Advance in Texas
The Texas House of Representatives recently advance two pieces of legislation that address claims arising out of vehicle accidents.
The Texas House May 7 passed House Bill 359, which addresses delaying tactics practiced by insurers in claims involving uninsured or underinsured motorist coverage.
According to legislative analysis of HB359 by Rep. Charlie Geren, District 99, the legislation was filed over “concerns that insurance carriers that delay claim evaluations, significantly undervalue claims, or delay or deny payment on valid claims are not penalized for doing so. As a result, policy holders with valid automobile insurance claims are often forced to sue their own insurance company to receive payment under their auto insurance policy’s uninsured or underinsured motorist coverage.”
To stem such tactics, “HB359 amends the Insurance Code to authorize an insured to provide an insurer written notification of a claim for uninsured or underinsured motorist coverage that reasonably informs the insurer of the facts of the claim to satisfy notice requirements for purposes of statutory provisions relating to unfair settlement practices in the business of insurance.”
The legislation “limits the extra-contractual cause of action available to an insured to recover damages for a violation of statutory provisions relating to unfair claim settlement practices to statutory provisions relating to authorized private action for damages.”
The bill is backed by consumer advocacy and trial attorney representatives. The National Association of Mutual Insurance Companies (NAMIC) and the American Property and Casualty Insurance Association oppose the bill.
HB359 was sent to the Senate for consideration. If passed, it would be effective on Sept. 1, 2021, and would apply to policies in effect on or after Jan. 1, 2022.
The Texas House Insurance Committee recently advanced legislation aimed at prohibiting what has been deemed “predatory practices” by auto insurance companies in claims settlements involving injured motorists.
Committee Substitute House Bill 1793 by Rep. Julie Johnson has been passed to the full House for consideration.
A legislative analysis describing the purpose of CSHB states: “It has been suggested that people injured by motorists need protection from predatory practices engaged in by personal and commercial automobile insurers that seek to induce injured motorists into settling and releasing their legal claims for an amount that is insufficient to compensate their losses at a time when these losses are not known with any certainty, which results in costs both to the injured person and medical providers, whose care and services may go uncompensated.”
The bill “seeks to provide protections regarding such oral contracts,” the analysis states.
If passed, the legislation would amend the state’s insurance code to “prohibit a claimant and an insurer writing personal or commercial automobile insurance in Texas or another individual or entity from entering into an oral release for claims arising out of property damage or a bodily or psychological injury for which an insurer may be liable under an automobile insurance policy.”
It specifies that a release of a claim arising out of property damage or injury “is not enforceable unless the contract is in writing.”
It would apply to insurance contracts entered into on or after Jan. 1, 2022.
If passed by the legislature it would be effective on Sept. 1, 2021.
Source: Texas Legislature