SB 1628

84(R) - 2015
Senate Business & Commerce
Senate Business & Commerce
Business, Industry, & Commerce

Vote Recommendation

  • Neutral
  • Positive
  • Positive
  • Neutral
  • Positive


Larry Taylor

Bill Caption

Relating to insurance claims and certain prohibited acts and practices in or in relation to the business of insurance; amending provisions that are or may be subject to a criminal penalty.

Fiscal Notes

No significant fiscal implication to the State is anticipated.

Bill Analysis

SB 1628 would make multiple changes in the Insurance Code and Business & Commerce Code.

In Chapter 541 (Unfair Methods of Competition and Unfair or Deceptive Acts or Practices Prohibited), this legislation adds a new section that would prohibit a plaintiff from seeking damages against an employee, agent, representative, or adjuster performing acts on behalf of an insurer. This would only apply if the individual working for the insurer was not mentioned in the prior notice or the insurer absolves him or her of any liability.  

Another section added to Chapter 541 would implement prior notice requirements for filing a court case against an insurer for damages or loss of property that the individual alleges should have been covered under his or her policy. For example, this section would require an individual seeking damage to provide a written prior notice to the insurer no later than 61-days before filing the action.

Amendments to Chapter 541 would allow reasons for dismissing a case. For example, a judge may dismiss a case if the claimant fails to provide prior notice to the insurer.   

In Chapter 542 (Processing and Settlement of Claims), modifications are made to existing statute on when an insurer is liable under a claim. SB 1628 would add a new provision that an insurer is liable for a claim under an insurance policy if it “knowingly fails to act.” This means that the claimant must prove that the insurer was actually aware at the time of the act that it was failing to comply with a subchapter requirement. 

This legislation would add a new chapter, Chapter 1808 regarding claims for property damage. The chapter would require that a claim for property damages to be submitted to an insurer no later than two years after the damage occurred.  

Changes to Chapter 4102 (Public Insurance Adjusters) would prevent a licensed insurance adjuster from soliciting employment for an attorney or contracting with an insured individual just to refer that person to an attorney. In other words an adjuster would be prohibited from acting on behalf of an attorney. This is to prevent a conflict of interest.  Additionally, an insurer may not accept payment for referring services to a third-party or law firm.

Finally, changes to Chapter 27 (Fraud) in the Business & Commerce Code would amend and add new provisions that an insurance contractor, appraiser, estimator, and insurance restoration contractor may not knowingly commit an insurance code violation. Such a violation would be considered an offense.   

Vote Recommendation Notes

This legislation implements practical standards for genuine insurance disputes. Currently, in the event of a catastrophic weather-related event in Texas, property damage claims have become a massive money maker for attorneys to turn these claims into a tort. The author’s statement says that third-party contractors and adjusters will set up mutual agreements where the adjuster or contractor will refer business to the attorney in return for a fee, but they end up inflating actual damage assessments while skirting certain laws. Policyholders are inevitably left in the dark as to what is actually occurring.  

SB 1628 would implement certain changes that would require a policyholder to be notified if they are about to be entered into a lawsuit seeking damages. Additionally, it sets reasonable periods for when certain case filings must be submitted in such cases. Moreover, this legislation limits the exploitation of policyholders and insurers. For instance, in order for an insurer to be found liable for damages, this bill would require that the defendant’s attorney to prove that the insurer “knowingly” violated insurance code provisions. This is an important legal standard because it harkens back to the founding of our country: a person should be guilty or liable if their actions were purposefully negligent or harmful. Punishing a person or entity for an innocent mistake is not the same as committing the act intentionally or with negligence.

It is important to remember that this legislation does not undermine a person’s right to file a bona fide case with the court to dispute an insurer’s coverage. This bill would reign in those lawyers that are applying mass torts to property damage claims. For this reason, we support SB 1628 because it protects the private property and individual liberty of a person.  It protects a person’s property from being exploited by another while it also protects an individual’s liberty because it does not limit his or her access to the court system to file a bona fide claim.