HOUSTON (CN) – In the wake of Hurricane Harvey, Texans are tearing out drywall and carpet from their flooded homes and scrambling to file insurance claims before a new law takes effect Friday that will put a damper on what they can recover from slow-paying insurers.
Experts say damage from the record-breaking 51 inches of rain Harvey dumped on Greater Houston will be in the billions of dollars.
Homes are still flooding in the region as surface runoff drains into rivers that have jumped their banks and are running at historically high levels.
Homeowners associations, attorneys and public officials are urging Texans to file their home insurance claims before Sept. 1.
That’s when a new law, HB 1774, goes on the books that will reduce the penalty interest rate that insurers have to pay for late claim payments from 18 to 10 percent, and make it harder for attorneys representing homeowners to recover all their fees.
The bill would also protect insurance adjusters, who are flocking to Texas to assess damage from Harvey, from being sued if the homeowner believes they lowballed home damage.
Harvey’s impact on Houston is mind-boggling. It has destroyed an estimated 30,000 to 40,000 homes.
It’s left more than 40 people dead in the area as floodwaters forced people to retreat to their roofs and wave towels at passing helicopters and boats, and wade out of their neighborhoods through water lapping at their ears, making heroes of first responders and Good Samaritans who rescued flood victims around the clock while Harvey dumped his payload from Saturday through Tuesday, then moved off to the Texas-Louisiana border to cause more destruction.
It has forced more than 12,000 people to seek shelter in convention centers, churches, furniture stores and schools, where volunteers are busy sorting through piles of donations, and the insurance claims are rolling in.
Farmers Insurance has already received more than 22,000 claims for Harvey damage, its spokesman Luis Sahagun said.
He said Farmers deployed more than 200 adjusters to Texas to process home, auto and commercial claims, and mobile claims centers equipped with internet, phones, food and water.
Sahagun said people have been filing claims since Harvey made landfall as a Category 4 hurricane near Corpus Christi on Friday night, and “the new law has not changed that process.”
“Our main concern is with those who have been affected by this disaster. We have a large presence in Texas. There are nearly 2,200 Farmers agents and 2,000 Farmers employees. Approximately 17 percent of our overall business is in Texas,” he said.
Hundreds of Texas homeowners will likely take their insurers to court, unhappy with their settlement payments for their Harvey damage.
Supporters of HB 1774 testified before the Legislature that the number of weather-related lawsuits against property insurers has risen 1,400 percent since 2012, and the mass litigation that took off after Hurricane Ike ripped through Houston in 2008 has forced insurers to raise premiums to cover their expensive litigation costs.
They say the bill won’t hurt the right of policyholders, who will still be able to hold insurers liable in court for underpaying their claims, but it imposes penalties to enforce the 61-day notice that people must give insurers before suing them.
Critics counter that the 61-day presuit notice requirement is too strict, especially after extreme storms that can leave homes exposed to the elements.
Texans for Lawsuit Reform is a proponent of the bill, which Gov. Greg Abbott signed in May.
It decried the “misinformation” spreading on social media about the necessity to file claims to beat the deadline before HB 1774 takes effect.
The law won’t apply to many claims or lawsuits arising from Harvey because it caused widespread flood damage, the group’s spokeswoman Lucy Nashed said in a statement Monday, echoing what a Texas Department of Insurance employee told the Texas Tribune.
“Most homeowners’ policies in Texas don’t cover flooding. And for those that do, the policies are often with the National Flood Insurance Program through the Federal Emergency Management Agency, which aren’t subject to state regulations,” the agency’s spokeswoman said.
Lawsuits against the National Flood Insurance Program must be filed in federal court.
Nashed said in the statement the two main purposes of the bill are to “discourage the feeding frenzy by lawyers and contractors following natural events occurring in Texas” and “encourage out-of-state insurance adjusters to come work in Texas following a massive disaster like Harvey” because they are sorely needed.
Caroline Maida is an attorney with Houston-based Mostyn Law, the area’s go-to firm for lawsuits against property insurers. She said their phone lines are burning up with calls from homeowners.
“We’ve gotten a lot of calls, just people asking how to file a claim and I think their first thought is to turn to us. But really, nobody needs a lawyer right now and we tell them that,” she said in a phone interview Thursday.
“You don’t need us to file a claim. You just need to call your insurance company and make a claim for your damage. But I think people are just in that panic mode right now, and they pick up the phone and call us because they know we’ve handled the most cases in this area.”
Scott Hunziker is managing partner of the Voss Law Firm. Based in The Woodlands, a northern Houston suburb, Hunziker’s firm specializes in suing insurance companies.
He said the firm is against any legislation that, like HB 1774, can diminish the rights of policyholders, but he had an upbeat tone Thursday.
“We’re still going to use every weapon on behalf of the policyholder to get what they deserve,” he said.
Flooding concerns in the Houston area are not over. The Brazos River is expected to continue to rise and cause more flooding on Friday in Ford Bend and Brazoria Counties. Ford Bend County officials are continuing mandatory evacuations along the river.
E. coli levels in Harvey floodwaters were 125 times higher than what is recommended for swimming and 15 times higher than what is recommended for wading, according to a test by a Texas A&M professor. But Harris County officials told a local ABC affiliate that those results are “exactly as we would expect.”