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In the legislative session that ended in May 2017, the Texas Legislature passed HB 1774, which finally prevented abusive lawsuits that dramatically increased the cost of home insurance for all Texans. Unscrupulous people are taking advantage of the devastation caused by Hurricane Harvey in Texas to spread false stories about what HB 1774 did and did not change.

Fortunately the organization Texans for Lawsuit Reform has released a solid factual statement with the truth, the short answer of which is a resounding NO!:

Statement Regarding Hurricane Harvey and HB 1774

AUSTIN – Texans for Lawsuit Reform today issued the following statement regarding Hurricane Harvey:

“TLR was founded in Houston and continues to have strong roots in the community. We are devastated to see the damage that has been unleashed on the city, and on our friends, family and neighbors,” TLR President Dick Trabulsi said. “The Texans affected by this historic disaster deserve our full support as they begin to pick up the pieces. To assist with disaster relief efforts across the impacted area, TLR has made a donation to the American Red Cross, and we ask all Texans to join us supporting the relief efforts and in praying for all who have been impacted.”

As with any evolving situation of this nature, misinformation can spread quickly. Texans should have the facts about insurance claims following Hurricane Harvey:

The normal insurance claims process has not changed. Reform legislation passed in the last legislative session (HB 1774) goes into effect on September 1, 2017, and applies to lawsuitsfiled after that date. A person making a claim with her insurance company after September 1, 2017 will go through the same process as a person making a claim before September 1, 2017. Texans should contact their insurance companies directly to file claims.

Lawsuits are the exception – not the rule, and the vast majority of Texans will resolve their claims without needing to file a lawsuit.

Beware of anyone—lawyer, adjuster, contractor, or anyone else—claiming to help you get more money from your insurance company.

If your insurer does improperly deny or delay paying your claim, Texas has the strongest consumer protections in the nation for you, which will continue to be the case after September 1, 2017. Texans can receive full damages for unpaid claims, can recover attorney fees for legal action taken to recover those damages, and can also recover penalty interest. If an insurer acts fraudulently or in bad faith, additional remedies, including the recovery of triple damages, are available to Texans. This is true today, and it will be true after the reform legislation HB 1774 goes into effect on September 1, 2017.

The primary purpose of the new statute is to require written notice of a dispute before a lawsuit is filed. If a lawsuit is filed, it would happen months or years after the initial claim was made with the insurance company. Nothing in the new law passed by the Legislature earlier this year requires that the initial insurance claim be made in writing or by a specific date.

• The requirement for a written pre-lawsuit notice (not pre-claim notice) to the insurance company ensures the company is aware of its policyholder’s complaint and has had an opportunity to adequately address that complaint before being sued. It is a part of existing Texas law and does not disadvantage policyholders.

Furthermore, the new law will not apply to most claims or lawsuits arising from Harvey, because most of the policyholders’ claims will be for damage caused by flooding. These claims will be made under the federal flood insurance program and governed by federal law.

Similarly, the new law will not apply to lawsuits pursued against the Texas Windstorm Insurance Association (TWIA), which is subject to an entirely different statute governing post-disaster lawsuits. TWIA provides insurance for many people affected by Harvey in our coastal counties.

The law that will become effective on September 1, 2017, is designed to do two important things:

1. Discourage the feeding frenzy by lawyers and contractors following natural events occurring in Texas over the past several years. These unscrupulous actors have taken advantage of thousands of hard-working Texans over the past several years.

2. Encourage out-of-state insurance adjusters to come work in Texas following a massive disaster like Harvey. In the following days and weeks, it will be critically important for out-of-state adjusters to work in Texas to ensure that insurance claims are evaluated and paid in a timely manner.

In sum, the new law does not affect the claims process. Instead, it affects only the lawsuits that sometimes follow the claims process. Furthermore, it does not create a new deadline for action by policyholders.

Hurricane Sandy

Photo courtesy Brian Birke

Fortunately when Sandy hit landfall winds were down to 80 miles per hour and she was no longer a full hurricane.

But with a death toll that has already reached 88, estimated economic losses exceeding $50 billion, and over 3 million people still without power, her impact was still massive.

At times like this we are especially proud to be part of an industry that exists to help people rebuild. Much of the damage in this case has been due to flooding, which is not covered by homeowners insurance. But estimates are that up to $20 billion of the losses will be covered by insurance. As agents, carriers, and adjusters work with customers all over the affected areas, the public will once again have the chance to see our industry come through for those in need.

While we would never compare our experience to the devastation suffered by many on the coast, over 1,000 miles away we were directly impacted by Sandy, and we learned some lessons the hard way as a result.

Make Sure You (Really) Have a Backup

This sounds so silly, and we thought we had it covered. Our systems are located in two data centers hundreds of miles apart and in the middle of the country in areas not susceptible to natural disasters. The two locations are on different power grids, with multiple connections to the internet and backup power.

But we outsource our email. Our email provider also has two data centers. But they’re only 100 miles apart. And they’re both on the coast – in New York City and New Jersey. As a result – and because of one more important lesson they hadn’t learned yet – for almost two full days we found ourselves without email.

Make Sure You (Really) Have a Contingency Plan

In addition to email being down for almost two days we had another internal service we use go down for a few hours. Their experience was enlightening, to say the least.

Their data center was on the 17th floor in a building in downtown Manhattan. So far so good. It had huge backup generators to provide power in case the electricity went out – which it did. Generators require fuel, though. So they had big tanks of diesel fuel in the basement. Still fine.

But the pumps that pumped the diesel fuel from the basement to the 17th floor were also in the basement. Below sea level. Just a few blocks from the Atlantic Ocean. The basement flooded almost immediately, rendering the pumps (and therefore the generators) completely useless.

In order to restore power they literally had to form a bucket brigade and carry diesel fuel up 17 floors a few gallons at a time.

Our email provider had a similar issue at both their data centers. It’s mind boggling that no one had thought to consider the impact of flooding – only of a power outage.

So What Now?

We are:

  1. Reviewing contingency and backup plans with each of our vendors.
  2. Ensuring that their (and our) backup plans consider multiple failures for different or multiple concurrent causes.
  3. Switching to vendors with better contingency plans.
You may want to consider the same.

Our thoughts and prayers are with those struggling to rebuild. If you would like to help personally, we recommend that you text the word REDCROSS to 90999 to donate $10 to American Red Cross Disaster Relief. The Red Cross has an amazing history of helping people in situations exactly like this.

Hurricane Irene's massive size dwarfs the Bahamas on August 24, 2011.

Photo courtesy of NASA

Our thoughts and prayers are with all those who are preparing for what Hurricane Irene may bring this weekend.

Because of her path along the heavily populated East coast of the United States Irene is forecast to affect as much as 1/5th of our nation’s population.

For those of us fortunate enough not to be in that path, it’s important that we take this time to check our own preparations. Hurricanes can cause:

  1. Flooding from storm surge along the coast,
  2. Wind damage both along the coast and inland, and
  3. Flooding inland from heavy rains.
  4. Damage from trees blown down and on to the house.

Texans who live in “Tier 1” (coastal) counties need a special wind coverage policy from the Texas Windstorm Insurance Association (also known as TWIA or “the Texas Windstorm Pool”). All other Texans have coverage for wind automatically on their Homeowners insurance policy.

No Homeowners insurance policy includes flood coverage, though. So if you want or need coverage in case of flooding, contact your independent insurance agent about a flood policy. These are very easy to purchase and, in most cases, very reasonably priced.

If you would like, we’d be happy to refer you to a great independent insurance agent who can make sure you have the coverages you need.

Two years ago today Hurricane Ike slammed into the Texas coast as a Category 2 hurricane but with a storm surge the equivalent of a Category 5. It was the third costliest hurricane in U.S. history (behind only Andrew and Katrina), with almost $30 billion in damages.

We have not yet found any way to prevent a hurricane, or tornado, or any number of other natural disasters. But we can and should be proud of the critical role the insurance industry plays in replacing or repairing damaged property in these catastrophes. Being prepared is key to filling that role in the best way possible.

So, this day, as we remember the devastating losses of two years ago, may we suggest two things:

  1. Make sure your customers know about the damage caused by Ike and other natural disasters and their coverage options including national flood and state wind policy options, if applicable.
  2. Review your agency’s disaster recovery plan. How will you access your documents and systems if your office is inaccessible? How will your insureds know how to reach you?

We are pleased to announce that – now that Hurricane Alex is dissipating as it moves across Mexico and the risk to Texas has passed – the temporary binding restriction in counties along the coast has been lifted.

Once again you can immediately issue eligible policies in all iMGA products (MobileHome, TDP1/TDP3 Dwelling Fire, HOA/HOA+, Vacant/Renovator and Non-Admitted HOA/HOA+/HOB) across the entire state. Normal eligibility rules still apply, of course. So, please, quote a policy today.

It looks like Texas missed the vast majority of the damage from Hurricane Alex as it hit landfall about 110 miles south of Brownsville in Mexico about 9pm CST tonight.

Some limited tornado activity has been spotted in Texas and rainfall levels will be high, but otherwise damages in Texas are expected to be minimal. We are thankful for that.

As of 1pm today, Alex had been upgraded to a Category 1 hurricane and was located about 130 miles south-southeast of Brownsville, TX.

It’s expected to make landfall in Mexico tonight, but hurricane force winds (currently at 85 mph) are expected to extend 60 miles and tropical storm force winds up to 200 miles from the center. Hurricane warnings are now in effect from Baffin Bay, Texas south to La Cruz, Mexico. A tropical storm warning is in effect north of the hurricane warning from Baffin Bay to Port O’Connor.

Alex is expected to produce 6-12 inches of rain in parts of south Texas through Friday. Isolated tornadoes are possible in the same area today and tonight.

If you’re in or near the affected areas, please stay tuned to your local weather and take precautions as necessary. Our thoughts are with you.

Hurricane season just started and there’s already a tropical storm potentially threatening at least part of the Texas coast.

So, effective immediately and until further notice, additional exposure cannot be bound in the following counties in any line of business (MobileHome, TDP1/TDP3 Dwelling Fire, Admitted HOA/HOA+, Vacant or Non-Admitted HOA/HOA+/HOB):

Angelina, Aransas, Atascosa, Austin, Bastrop, Bee, Brazoria, Brooks, Caldwell, Calhoun, Cameron, Chambers, Colorado, De Witt, Duval, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Guadalupe, Hardin, Harris, Hidalgo, Jackson, Jasper, Jefferson, Jim Hogg, Jim Wells, Karnes, Kenedy, Kleberg, La Salle, Lavaca, Liberty, Live Oak, Matagorda, McMullen, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Augustine, San Jacinto, San Patricio, Starr, Trinity, Tyler, Victoria, Walker, Waller, Washington, Webb, Wharton, Willacy, Wilson, Zapata

Also, additional exposure cannot be bound in the following counties for the Non-Admitted HOA/HOA+/HOB line of business:

Bandera, Bexar, Blanco, Brazos, Burleson, Caldwell, Cherokee, Comal, Dimmit, Frio, Hays, Houston, Kendall, Lee, Leon, Madison, Medina, Milam, Nacogdoches, Panola, Robertson, Rusk, Shelby, Travis, Trinity, Uvalde, Williamson, Zavala

We will let you know as soon as we can resume business as usual. In the meantime, our thoughts are with those who might be affected.

Please visit our web site for policy status, endorsements or quoting, or call Mike at 512.494.4161 x13 or Tony at x12 if you have any questions.

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