As floodwaters have risen in Houston this week, so has warnings to file insurance claims by Friday, or potentially forfeit some of what you’ve got coming to you. This is in reference to a new Texas law set to take effect September 1. Among other things, it reduces the penalty insurers pay if they stall claims during a lawsuit.
The penalty was adopted in the 1990s as an incentive for property insurers to process claims quickly. The new law shrinks the penalty from 18 percent to 10 percent, shrinking policyholders’ leverage with it.
It sounds like one more setback for homeowners, coming at a very coincidental time.
According to an Insurance Information Institute survey, about 15 percent of homes in Harris County, which includes Houston, have flood insurance. It’s important to mention this survey does not take into account the surrounding counties.
Of the number who have flood insurance, the majority purchased through the federal government’s National Flood Insurance Program, which is exempt from state laws. Neither the existing Texas penalty nor the new one applies to the federal program.
The Texas Trial Lawyers Association has confirmed the new law has little bearing on flooding, but said people with policies against other kinds of damage may still want to file claims by Friday, just in case.