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CSHB 1774 is referred to as the Property Litigation Reform Bill that has been needed to address the proliferation of lawsuits arising out of property insurance claims, particularly after a hurricane or hail storm.  
 
 This bill passed the Texas House of Representatives on May 5, 2017 and received final approval from the Texas Senate on May 17, 2017.   3 floor amendments were adopted in the House that were largely clarifying changes that did not impact the important reform provisions in this bill.  This bill was approved by the Texas Senate without amendments. 

The following is a summary of the key provisions of this important legislation: 
 
1.  AMENDMENT TO UNFAIR TRADE PRACTICES, SEC. 541.156(A), INSURANCE CODE
 
 Permits an insurer to make a settlement offer for notices under new Ch. 542A as well as notices under Ch. 541. Other provisions in Section 541.156 that were not amended were provisions allowing a person who receives an notice under either Section 541.151 or the new law, Ch. 542A, to be able to make a settlement offer.  Other provisions that limit recovery of settlement offers under Section 541.156 should be applicable.  These provisions would be in addition to the ability to make settlement offers under Ch. 42, Civil Practices and Remedies Code and also in addition to the limit on attorney’s fees provisions in new Chapter 542A.  
 
2.  PROMPT PAY AMENDMENTS TO SEC. 542.060, INSURANCE CODE: 
 
 Attorney’s Fees must be reasonable and necessary.  Nothing in the section prohibits prejudgment interest. Separate Interest Rate for ch. 542A Claims:  5% above the prejudgment interest rate in Sec. 304.003, Finance Code, interest accrues on the date the claim was required to be paid. The previous law provides for 18% interest and will still apply to all first party claims not subject to Ch. 542A.  (life, health, auto, disability, and certain health insurance claims). 
 
3.  CLAIMS FOR PROPERTY DAMAGE, NEW CHAPTER 542A, INSURANCE CODE 
 
 Applies to first party property damage claims from damage by forces of nature including earthquake, wildfire, flood, tornado, lightning, hurricane, hail, wind, snowstorm, or rainstorm.  Applies to all insurers including stock, mutuals, Lloyds, farm mutuals, reciprocals and county mutual insurers. The FAIR Plan is excluded if there is a dispute resolution procedure available to policyholders under the FAIR Plan Act, Ch. 2211. Separate legislation to create a dispute resolution procedure for FAIR Plan similar to TWIA is still pending. Applies to all causes of action including breach of contract, negligence, actions under Ch. 541, 542, Ch. 17 (DTPA).  Does not apply to TWIA or policy ceded by an insurer by TWIA under the assumption reinsurance program.       NOTICE PRIOR TO SUIT IS REQUIRED 
 
Notice is in addition to any other notice required by law or in the policy. NOT LATER THAN THE 61ST DAY BEFORE FILING SUIT WRITTEN NOTICE IS REQUIRED AS A PREREQUISITE TO SUIT CONTENTS OF NOTICE:        
1. Statement of Acts or omissions giving rise to the claim
2. Specific amount alleged to be owed
3. Amount of reasonable and necessary attorney’s fees using the hours actually worked as of the date of notice at a rate customary for similar legal services. 
4. Notice must be provided to the claimant if given by the attorney or representative. 
 
Dismissal is required for suits filed without notice if notice is given by the claimant and given before the 61st day. Notice is admissible in evidence.  
INSURER’S RIGHT TO INSPECTION 
 
Not later than 30 days after pre-suit notice, an insurer may send written request for inspection. If reasonably possible, inspection must be completed not later than 60 days after receipt of pre-suit notice.  
 
ABATEMENT

 
 Can be filed 30 days after answer that presuit notice not given and right -to inspection not given. Court shall abate.  Automatic abatement without court order if on the 11th day after a plea is filed, if the plea is verified and not controverted by affidavit. Case is abated until the later of 60th day after complying notice is given or 15th day after requested inspection is completed. Court may not compel mediation of alternative dispute resolution until after the abatement period. 
 
 ACTION AGAINST AGENT; INSURER ELECTION OF LEGAL RESPONSIBILITY
 
 Insurer may elect to accept whatever liability an agent may have by providing notice to a claimant. For purposes of this section, agent is broadly defined to include an employee, agent, representative, or adjuster who performs acts on behalf of an insurer.   If an insurer makes the election, the court shall dismiss an action against the agent. Procedures are included to require an insurer to make an agent available for a deposition.   An insurer’s election cannot be made known to the jury. Evidence of an agent’s acts may be offered at trial. An insurer in receivership may not make an election.  
 
 AWARD OF ATTORNEY’S FEES
 
 Must be reasonable and necessary and supported by sufficient evidence to have been incurred by the claimant. Amount based on an 80/20 rule tied to the notice and amount awarded.  If the amount awarded is greater than 80% of the amount demanded in the notice, the attorney’s fees will be the full amount found to be reasonable and necessary. If the amount awarded is less than 20% of the amount demanded in the notice, the court may not award attorney’s fees. A court may not award attorney’s fees if defendant proves it was entitled to but not given pre-suit notice.  A pleading for no notice must be filed not later than the 30th day after the original answer
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