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Rep. Deshotel, Joe

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HOUSE BILL 1774  print page

by: Rep. Deshotel, Joe
05/18/2017

House Bill 1774, also known as the Blue Tarp Bill, is a deeply flawed piece of legislation that hurts small businesses and homeowners in Texas. The bill is a one-sided attempt to benefit insurance companies at the expense of honest property owners and businesses. Insurance companies do not need more special protections as they have multiple protections already enshrined in the Insurance Code and elsewhere. The strong penalties that have been in place for many years are responsible for big insurance companies paying claims on time. This bill would reduce interest penalties from 18% to 10% for insurers, which would increase the wrongful delay of claims payments -- that is, if the insurers decide to pay the claims at all. The revised penalties this bill proposes will incentivize insurers to wrongfully retain money that they are contractually obligated to pay to property owners.

This bill also allows insurers to assume liability of their "agents," which is a broad term used to include adjusters, employees, and representatives. By doing this, insurers may claim federal diversity jurisdiction on disputes over $75,000.00. This is a clear attempt to divest state courts of jurisdiction, and to deprive plaintiffs of the more favorable rules of civil procedure practiced in Texas state courts. Texans have a state constitutional right to a Texas jury trial, and this bill would infringe on those rights.

Before property owners have been able to fully understand the extent of the insurer’s wrongdoings, they are required to state the specific amount they believe is owed to them. This bill penalizes plaintiffs for stating an incorrect amount by taking away from their recovery of attorney fees. Experts may need to be used earlier in the process, which will increase the cost burden for the plaintiff.

H.B. 1774 will place more power in the hands of big insurance companies, and will give them an incentive to delay payments by burying their policyholders in paperwork or moving their cases to the federal courts. Insurance companies will have less accountability if they cheat homeowners and small businesses out of their rightful claims.

"I strongly oppose H.B. 1774, as I will always do what's best for our community and always act to protect established principles of federalism." -Representative Deshotel

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