House Bill 1774, which applies to all insurers covering damage to real property caused by forces of nature, creates a new section of the Texas Insurance Code, §528A, designed to curtail fraudulent and frivolous property damage claims against insurers. Additionally, the Bill provides for revisions to Texas Insurance Code §542.060 which cap the amount of interest applicable to actions brought under the new §528A. Previously, interest on claims payments deemed to be slow, low, or improperly denied, had been assessed at an 18% rate. The new changes effective September 1st will cap interests on payments under §528A to 5% plus either the prime rate as established by the Federal Reserve, 5% if the prime rate is less than 5%, or 15% if the prime rate is above 15%. Some Texas state legislators have called for a delay in the effective date as a result of Hurricane Harvey damage, however at current the Bill is slated to take effect on September 1st as planned.
For further information regarding Texas legislative updates, the applicability of House Bill 1774, or natural disaster claims management, please contact Westmont Associates, Inc.