| Vote Recommendation | Economic Freedom | Property Rights | Personal Responsibility | Limited Government | Individual Liberty |
|---|---|---|---|---|---|
| Yes | Positive | Positive | Positive | Neutral | Neutral |
No fiscal implication to the State is anticipated.
HB 3787 would amend Chapter 2301 (Policy Forms) of the
Insurance Code by adding a new section. This new section would allow a property
insurer to include a contractual limitations period for filing a claim. However,
this required contractual limitations period could not end before two years
from the date the insurer accepts or rejects the claim. Likewise, the contractual
limitations period could not end before three years from the date of the
property damage.
Lastly, this legislation would allow an insurer to have a
policy that requires a policyholder to file a claim within one year following
the date of property damage.
Currently, property insurance in Texas is relatively high due
in part to litigation on claims made many years after the property damage
occurred. When claims are made years after the date a loss occurs on a property
it becomes increasingly difficult to prove whether a loss is attributed to the
purposes of the claim or some other unrelated cause.
To remedy this issue, the legislature passed a bill that
allowed the Texas Windstorm Insurance Association (TWIA) to set limitations on
the length of time that a claim must be filed and it set limitations on the
contractual limitations that TWIA has to a policyholder. Unfortunately, this
remedy was not provided to all property insurers throughout Texas.
This legislation would allow all property insurers to
establish filing and contractual limitations with a policyholder. We support HB
3787 because it has struck a good balance by protecting the property rights of
both the insurer and insured. The one year period for filing a claim gives the
policyholder a reasonable amount of time to file a claim for damages; likewise
the two to three year contractual limitations required of the insurer protects
the insurer from having to litigate on claims that were filed many years after a property loss. This provision alone should have a positive effect on
the free market in terms of lower property insurance rates because the costs
for litigating those types of claims could decrease since they would lie outside
the statute of limitations established by this bill.