The applicability of Texas House Bill 1774 to Hurricane Harvey claims has been a hot topic in the press and on social media. This legislation, which became effective on September 1st, will apply to all Hurricane Harvey lawsuits filed on or after that date. It will also apply to all hail and windstorm lawsuits filed after September 1st. The legislation changes nothing with respect to the work of adjusters handling Texas insurance claims. As always, adjusters should continue to adjust Hurricane Harvey claims promptly, fairly, and consistent with policy terms.
One provision of the bill, however, is particularly relevant to adjusters (both company and independent) from a litigation perspective. The legislation contains a provision (HB1774 Sec. 542A.06) intended to end lawsuits brought against Texas adjusters solely for plaintiffs’ lawyers to gain a tactical advantage in litigation. By suing a Texas adjuster handling a claim for an out-of-state insurance company, plaintiffs’ lawyers attempt to defeat the insurance company’s ability to remove the lawsuit to Federal Court. Plaintiffs’ lawyers prefer state court and routinely name adjusters as defendants solely to keep claims in state court.
Under HB1774, plaintiffs’ lawyers must now provide written notice of their intent to file a lawsuit against an insurance company. That notice must also list the names of any individuals they intend to sue, which may include the adjuster. The insurer then has an opportunity to accept responsibility for whatever liability the adjuster might have to the policyholder. When the insurer elects to assume such responsibility, the adjuster cannot be sued individually. But the insurance company remains responsible for the conduct of the adjuster handling the claim on its behalf. This ensures that the policyholder is in no way prejudiced.
The election to assume the adjuster’s liability could certainly be done on a case-by-case basis. And, as a practical matter, the adjuster is typically considered the agent of the insurer when acting in the course and scope of the adjuster’s work. Independent adjusting companies and their insurance clients may, however, wish to discuss this particular aspect of HB1774 in advance and craft language to address this issue before it arises.
