Texans like to brag that “everything’s bigger in Texas,” but sometimes that’s not something to be proud of. According to data recently released by State Farm, Texas led the nation in hail and wind insurance claims in 2015:
State Farm insurance agency paid out over $835 million in wind claims and $2 billion in hail across the USA and Texas. Texas had 52,500 of hail claims and 11,200 in wind claims for 2015.
Texas’ high number of hail and wind claims is partially due to the state’s weather patterns, which are more prone to severe weather than other states. But there is also increasing evidence that fraud is playing a role in inflating claims. In a recent article, two South Texas insurance principals summed up the situation this way:
Immediately after a storm, lawyers swoop into affected areas and do everything possible to whip up disputes, inflate claims and cajole, coerce or seduce homeowners into needless lawsuits in hopes of reaping windfall profits. Tens of thousands of Texans already have personal experience with intrusive knocks on the door from trial lawyers or their solicitors, promising “free” roofs and easy money if they agree to sue their insurance company.
How many lawsuits have been ginned up through these cynical tactics? A report published last year by Rio Grande Valley Citizens Against Lawsuit Abuse found that 5,740 lawsuits were filed in Hidalgo County following a pair of major hailstorms in 2012. As of April of this year, that number is closer to 11,000 in the Valley alone, and growing by the month. The dramatic increase in storm-related litigation is much higher than we’ve ever seen in Texas, and wildly out of proportion with other states. These techniques are not typical or harmless legal maneuvers. They’re cynical, industrial-scale methods that do real damage, and homeowners and businesses pay the price…
In Hidalgo County, three Texas insurance carriers have stopped offering coverage, leaving at least 10,000 families to find new insurance providers. Virtually all of these families are paying higher premiums. In fact, at a committee hearing this last legislative session, a local housing advocate reported that for some families, premiums have increased 100 percent, from $500 annually to more than $1,200.
Concern about a growing hail-litigation crisis has been growing for some time, and there have been attempts to address the problem before it spirals out of control. During last year’s legislative session, for example, S.B. 1628 would have tightened notice and other procedural requirements to make sure that parties to a lawsuit know what’s at stake and to prevent fraud by public adjusters. The bill also reduced the incentives for frivolous lawsuits by putting limits on the amount of attorneys’ fees and penalties that can be awarded in hail claims.
While S.B. 1628 fell just short of being enacted into law, these recent reports only underscore that Texas’ hail litigation crisis is not going away.
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