Editor's note: This story has been updated to reflect that the Texas House gave final approval on May 5 to House Bill 1774.
The Texas House on Thursday tentatively approved a bill that would discourage home and business owners from taking their insurance companies to court over claims involving hailstorms, floods and hurricanes.
State representatives voted 91-55 to approve House Bill 1774, which would reduce the penalties insurance companies face when they don’t pay enough, decrease the chances they will have to pay the plaintiff’s attorneys fees and protect individual agents from the negative effects of being personally sued — most notably diminished credit scores. It awaits a final House vote before it can proceed to the Senate. (Update, May 5: The Texas House gave final approval to HB 1774 with a 92-55 vote on Friday.)
The bill's author, Rep. Greg Bonnen, R-Friendswood, told lawmakers the legislation would target the "worst lawsuit abuse we have in the state" while protecting the rights of Texans to sue an insurance company.
Lawmakers fought over the scope of the bill and whether it targeted what it stated it would. Several amendments were shot down.
Rep. Travis Clardy, R-Nacogdoches, proposed a failed amendment that would keep the current 18 percent penalty rate that insurers must pay in addition to damages when it is found they have delayed, denied or underpaid claims. The legislation replaces this penalty with an amount pegged to interest rates — a move that opponents to the bill say will decrease incentives to pay valid claims on time.
Clardy said the current law shouldn't be changed because it ensures that "if you don't pay claims promptly and honor your contract with the citizens of Texas, there is an additional penalty you have to pay."
Rep. Ken King, R-Canadian, who put forward two failed amendments, was suspicious about the legislation's intentions.
"If this is truly about lawsuit abuse, let's go after the abuse," King said, saying the bill was sold to the Legislature as one that would address hailstorm litigation but that it actually affects all weather-related damage, including wildfires, floods and hurricanes.
One of King's proposed amendments would have limited the bill’s reach to litigation as a result of hail damage, and the other would have restricted its impact to residential properties — not churches, schools or hospitals, for example.
Opponents of the bill worried it would tip the balance of power heavily toward already powerful insurance companies. A handful of lawmakers attempted to exempt different groups from the bill — religious institutions, the elderly, veterans and the disabled. All failed.
One amendment that did make into HB 1774 stipulated that the bill, if made law, would take effect on Sept. 1, 2017.
The vote marks a victory for the powerful GOP-backed tort reform group pushing the legislation, Texans for Lawsuit Reform, which says the bill will crack down on lawsuit abuse by money-hungry trial lawyers who chase storms and take advantage of homeowners and insurers for big payouts that the group says leads to higher premiums for all Texas property owners.
The organization cites a 2017 Texas Department of Insurance Report showing that from 2012 to 2015, there was a 1,400 percent increase in the number of hail and windstorm claims resulting in lawsuits.
Trial lawyers and consumer groups attribute the increase in the likelihood of lawsuits in these cases to insurance companies stonewalling property owners.
The Texas Trial Lawyers Association, which is against the bill, released a statement shortly after the vote claiming it "guts the rights of Texas property owners."
“As HB 1774 moves to the Senate, TTLA will continue to work with lawmakers in both chambers so that all Texans – homeowners and businesses alike — have the ability to hold their insurance company accountable for wrongfully denying, delaying, or underpaying valid claims,” the statement read.
But Texans for Lawsuit Reform said that HB 1774 is a strong step toward ending lawsuit abuse and helping Texas property owners greater access to affordable insurance.
“By putting consumer protection first, the House has brought us one step closer to shutting down abusive lawsuit mills and stopping storm-chasing lawyers from hijacking Texans’ property insurance," Texans for Lawsuit Reform's communications director, Lucy Nashed, said in a statement.
Disclosure: Texans for Lawsuit Reform and the Texas Trial Lawyers Association have been financial supporters of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.
Correction: An earlier version of this story included the incorrect date for when House Bill 1774 would take effect. If signed into law, HB 1774 would take effect on Sept. 1.