Don’t Let Insurance Companies Fool You

Posted By The Law Office of Daniel D. Horowitz, III, PC || 14-Sep-2017

photo of city landscape at night

While the rain has stopped and we are trying to rebuild, many of our clients, friends, and family are still out of their homes and businesses, and will be for a while. Below is some information about the insurance claims process for various types of coverage. If you have questions about your claim, don’t hesitate to email our office directly at [email protected] Thank you to our friend Clint Brasher for putting some helpful information together.

FEMA Assistance for Un-insured
Even if you do not have flood insurance but your property sustained flood damage, you may qualify for federal assistance through FEMA’s individual assistance.
FEMA has declared Hurricane Harvey a major disaster and has designated the following counties wherein it will help with individual assistance, if you qualify: Aransas, Bee, Brazoria, Calhoun, Chambers, Colorado, Fayette, Fort Bend, Galveston, Goliad, Hardin, Harris, Jackson, Jasper, Jefferson, Kleberg, Liberty, Matagorda, Montgomery, Newton, Nueces, Orange, Refugio, Sabine, San Jacinto, San Patricio, Victoria, Waller, Wharton.

To apply for individual assistance, go here: https://www.disasterassistance.gov/
You can also call FEMA (if you’re unable to apply online) at: 1-800-621-3362
The application deadline is November 30, 2017.
After you apply, FEMA will conduct an inspection. You will need the following documents (proof of ownership – deed, tax record, mortgage payment, or insurance policy for the address).

U.S. Small Business Administration Loans
The United States Small Business Administration (SBA) provides low-interest disaster loans to businesses, private non-profit groups, homeowners, and renters.
You can apply here: https://disasterloan.sba.gov/ela/Account/Login?ReturnUrl=%2Fela
In Jackson County, there will be a Jackson County Mobile Registration Intake Center beginning August 31, 2017 at 12pm, located at the Jackson County Memorial Library Parking Lot (411 N. Wells St., Edna, TX 77957).
Current counties included in SBA’s physical damage loan assistance program as of 8/25/2017: Colorado, Fayette, Hardin, Jasper, Jefferson, Montgomery, Newton, Orange, Sabine, San Jacinto, and Waller.
You can also call SBA’s Disaster Assistance at: (800) 659-2955.
The application deadline for physical damage applications is October 24, 2017.

How to File an Insurance Claim
Flood: If you have flood insurance on your house, it is most likely covered under the National Flood Insurance Program issued by FEMA and written by another carrier (such as State Farm, Allstate, Farmers, etc…). There are certain deadlines that you have to meet and certain requirements you must following in filing your claim.
First, you should call or send a written notice of your claim with your insurance agent or insurance company directly as soon as possible to start the claim process.
If you evacuated from your home, when you return, take pictures of the damage. Ask your insurance company before beginning to remove any debris in your home. Your insurance company will ask you to take stock of the contents that were damaged. You will need to know the approximate value of the contents (and if you don’t have receipts, will need to do comparison analysis for similar or same products online), age of the items, and condition they were in prior to loss (for example, with furniture items, were there any scratches or marks on it beforehand). You may also have coverage available for additional living expenses if you are displaced from your home or cannot live at home during the course of repairs. If that is the case, keep all receipts you incur during this time period – food, lodging, fuel, clothing, etc.
It is not your job to know every damage in your house. That is the insurance adjuster’s job. It is your job to give a summary of what is damaged in your house. Go room by room and look for ceiling leaks, water lines on the wall, etc.
Your insurance company may recommend a mitigation/remediation company like ServPro to handle the cleanup aspect of your claim. Do your own research and see what the best mitigation/remediation company in your area is. You are under NO obligation to use the one(s) recommended by your insurance company. There are other companies out there that may be more competitive. Read reviews online of the company before choosing one. Read carefully all documents that these companies hand you. You might be signing a contract that gives away your right to fight them if something were to go wrong.
You will need to complete and submit a proof of loss. Usually you have 60 days to do so. FEMA may extend this, but unless that is in a FEMA directive / bulletin, or given to you in writing, you will need to complete this BEFORE you will be paid anything. Do not just accept whatever adjustment the adjuster gives you.
Talk to local contractors and estimators in your area and see if this was a fair adjustment of your damages. Many contractors are happy to do free consultations or low-priced consultations.

Wind

As you return to your area of residence, be careful around downed trees and power lines. Hold off on clearing that debris until your local authorities confirm the status of the power lines, and until you make a claim with the insurance company.
Take pictures of the damage. When you are walking your property, look for shingles in the yard and other signs of wind damage. Do not move them. Take pictures of where the shingles are in relation to the property and report that to your insurance company.
Notify your insurance agent and your insurance company as soon as you learn of the damage. It is preferable if you give written notice, instead of just calling them. If there are shingles down, look for spots on the roof where you can see the decking or the paper under the shingles. In those areas, water will have entered your property. If you have a ladder, and are comfortable climbing, take pictures of the slopes of your roof looking for misplaced shingles, torn shingles, and photograph the gutters to show the debris and roofing materials that were blown there.
If you have damage to items outside your home – play sets, furniture, grills, pool, etc. – take pictures of those as well.
Inside your home, walk the home looking at each room. Your nose can guide you to walls where water has intruded. Water works its way to the ground from the top in the easiest possible path. If your roof sustained wind damage, water will enter and travel down the walls. Look for swollen sheetrock seams, water stains on the ceiling, discoloration, or bubbling. Photograph the damage you find.
Take stock of your personal belongings that were damaged.
Before you throw anything out, photograph your personal property that was damaged. It could be shoes, clothes, bedding, furniture, heirlooms, etc. You will want to make a list of these items but be sure to photograph the condition of the belongings as you inspect. Your insurance company may ask you for a list of contents with their approximate value and age of the items. As you start going through your damaged items, start thinking about this and making a list. It’s easier to document what was damaged if it’s right in front of you.

For any expenses you incurred, while having to leave your house, please try to keep all receipts (food, fuel, lodging, etc.). Your policy may have additional living expenses benefits available to you. It is important to have this information to recover these benefits.
Your insurance company has a duty to investigate your loss. Your role is to provide information to them and share with them what you saw. But they are not expected to limit their investigation to just what you tell them – a good adjuster will use his or her experience to track all the storm-related damage, and advise you of all of your options / coverages under your policy.
Your insurance company also has to complete the investigation within certain deadlines and has a limited time to (1) ask for more information, (2) ask for extra time to complete their investigation, and finally to (3) accept or reject your claim. If parts of your claim are rejected for “coverage” issues, those reasons must be in writing.
You do not have to accept the first adjustment. Over and over again we find that insurance companies find “more coverage” after you press them on the first adjustment – like it is some sort of negotiation. It shouldn’t be. But, if you are unhappy at any stage along the way, phone in and note your dissatisfaction. Be polite but firm.

Wind Coverage
There are two types of wind coverage that apply to Hurricane Harvey – regular homeowners or commercial coverage and coverage through the windstorm pool (Texas Windstorm Insurance Association or “TWIA”).

TWIA
TWIA is underwritten by private insurers but acts like a government entity. In Ike, TWIA was hit with fraud issues. Following Ike, the legislators reformed TWIA in 2011 and included a few more add-ons in 2015. The legislators stripped the consumer protection laws that otherwise applied to TWIA, including “unfair claim settlement practices” and other protections in Texas Insurance Code 541 and the “Prompt Payment of Claims” otherwise known as Texas Insurance Code 542. Neither apply to TWIA claims. That means no opportunity for treble damages. You can still win attorney’s fees in limited circumstances but there is a procedure you have to go through to dispute the amount of accepted coverage and disputed coverage claims. There are strict deadlines to contest these – for example, you only have 60 days to dispute the amount of a payment.
Since partial payments and partial denials are common, TWIA loves to muddy the water and do that – then look to apply the harshest possible deadlines in the statute to limit protections. In 2015, if it was not clear before, the Legislature made it clear no “extracontractual” remedies are available – no late payment penalty interest, treble damages, etc. Also, in order to get damages for mishandling a claim, they erected the “clear and convincing” standard.
To dispute coverage amounts, you are forced to appraisal rather than the courts – you do not have an option – and you only have 60 days from when you were paid (even partially paid) to invoke it and must pay half of the appraisal costs. It is a very uneven statute that did what it accomplished – it drove lawyers away from helping clients hit the hardest in tropical storms – those in the coastal communities.
Since the current TWIA law was already stripped down, there was no need to apply the gutting of the insurance code that occurred this past session so TWIA was explicitly exempted from the new law.
Regular Homeowner & Commercial Policies
The TWIA changes left regular policies untouched. This past session, Governor Abbott signed into law major reform of the Texas Insurance Code. Some apply to claims in general, some apply to lawsuits. Many people across both sides of the aisle have written what they believe the bill does. After a careful analysis and years of practicing in this area, here is a summary of the changes of the new law as we see it:
For Claims (whether or not a lawsuit is filed)
For storm claims (which are defined as damages or loss of property caused wholly or partly by forces of nature, including an earthquake or earth tremor, a wildfire, a flood, a tornado, lightning, a hurricane, hail, wind, a snowstorm or rainstorm) insurance companies get a 45% reduction in the late payment penalty. Here is a comparison of the old versus new statute, which goes into effect September 1st:
Old Tex. Ins. Code §542.060:
(a) Except as provided by Subsection (c), if an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy or the beneficiary making the claim under the policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of 18 percent a year as damages, together with reasonable and necessary attorney’s fees. Nothing in this subsection prevents the award of prejudgment interest on the amount of the claim, as provided by law.
New Tex. Ins. Code §542.060:
(c) In an action to which Chapter 542A applies, if an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy, in addition to the amount of the claim, simple interest on the amount of the claim as damages each year at the rate determined on the date of judgment by adding five percent to the interest rate determined under Section 304.003, Finance Code, together with reasonable and necessary attorney’s fees. Nothing in this subsection prevents the award of prejudgment interest on the amount of the claim, as provided by law. Interest awarded under this subsection as damages accrues beginning on the date the claim was required to be paid.
And the effective date of this is related to when the CLAIM is given to the insurance company:
(b) Section 542.060(c), Insurance Code, as added by this Act, applies only to a claim, as defined by Section 542A.001, Insurance Code, as added by this Act, made on or after the effective date of this Act. A claim made before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.
(emphasis added)
SECTION 5. This Act takes effect September 1, 2017.
Tex. Sess. Law Serv. Ch. 151 (H.B. 1774) (VERNON’S)
Much of the changes in the law is related to the changes to the lawsuit procedures under Texas Insurance Code 542A (a new section). But, as you can see, the changes above apply only to claims made by an insured to an insurer, in general the Texas Legislature decided to give insurance companies a 45% reduction in the late payment statute. This is big because the late payment statute works and has always worked. Because the interest rate is so high, it incentivized insurance companies to pay reasonable amounts promptly. Now, there is no incentive to do so.
The other changes, now called Texas Insurance Code 542A, apply to the lawsuit process:
1. Pre-Suit Notice. The changes are substantial and need to be read carefully. How the notice is done will have large effects on the end result of the case. First, the pre-suit notice must give a statement of the acts or omissions giving rise to the claims in the lawsuit. Second, the notice must provide the calculation of economic damages (with a reasonable estimate of damages) and the reasonable and necessary amount of attorney’s fees incurred (with an attached billable time sheet in accordance with the Arthur Andersen factors). If you don’t give this presuit notice at least 61 days before filing suit, then the Court must dismiss the case without prejudice. If defendant can show that there’s a defect with your pre-suit notice (doesn’t correspond to the above requirements), then the Court must dismiss the case without prejudice.
2. Pre-Suit Inspection. The statute allows for a pre-suit inspection done by the insurance company (if they ask for it within 30 days of receiving notice). If you don’t give them this inspection – then the case will be automatically abated.
3. Calculation of Attorney’s Fees. The amount of attorney’s fees recoverable will be determined by the amount of actual damages awarded in judgment versus the amount claimed in the pre-suit notice. You are to divide the amount of actual damages awarded in judgment, by the amount of actual damages claimed in pre-suit. If the sum total of this is greater than or equal to 80%, then a claimant is entitled to their full attorney’s fees. If the sum total is less than 20%, then the claimant is not entitled to any attorney’s fees. If proper pre-suit notice was not ever given, and defendant pleads and proves the same, then the amount is limited and capped at the amount up until the date by which defendant pled the same.

A hypothetical is useful in illustrating the above point:

RMH DDH Website Blog Harvey

4. Joinder of Parties. The statute allows the insurance company to pick up liability for the adjuster. Therefore, for most cases against out of state insurance companies (e.g. State Farm, Allstate, Nationwide, etc.) will be in federal court not state court.

Flood Claims
Flood claims are usually written under the National Flood Insurance Plan (“NFIP”). Flood claims are underwritten by FEMA but oftentimes sold through private companies – called Write Your Own (“WYO”) policy. Because the monies come from the treasury, different rules apply. None of the consumer protection statutes in Texas apply, cases are in federal court with a bench trial, and attorney’s fees are difficult to recover.
Procedurally, you should watch the FEMA advisory for Proof of Loss. It is a jurisdictional requirement to submit a sworn POL within 60 days – cannot be waived despite what the adjuster says. It may be extended, but that can ONLY come from FEMA. Any extension of time to submit POL must be by FEMA and if given in an individual case, it must be in writing from FEMA. Failure to comply with the deadline will prevent you from seeking legal relief.
Here is a link to step-by-step instructions from FEMA: https://www.fema.gov/nfip-fileyour-claim.

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