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A BILL TO BE ENTITLED
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AN ACT
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relating to settlement and resolution of claims against the Texas |
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Windstorm Insurance Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2210.573(a) and (f), Insurance Code, are |
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amended to read as follows: |
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Sec. 2210.573. FILING OF CLAIM; CLAIM PROCESSING. (a) |
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Subject to Section 2210.205(b), an insured must file a claim under |
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an association policy not later than the first anniversary of the |
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date on which the damage to property that is the basis of the claim |
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occurs. For purposes of this Section, an insured is only required to |
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file one claim under an association policy per event. After a claim |
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has been filed, all losses under an association policy for the same |
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event shall be deemed claimed. |
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(f) In a notice described by Subsection (d)(2) or (3), the |
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association must provide [inform] the claimant with [of], as |
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applicable: |
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(1) a detailed explanation of the portion of the loss |
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for which the association accepts coverage and the amount of loss |
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the association will pay; |
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(2) a detailed explanation of the portion of the loss |
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for which the association denies coverage and a detailed summary of |
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the manner in which the association determined not to accept |
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coverage for that portion of the claim; and |
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(3) the time limit to: |
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(A) request appraisal under Section 2210.574 of |
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the portion of the loss for which the association accepts coverage; |
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and |
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(B) provide notice of intent to bring an action |
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as required by Section 2210.575. |
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SECTION 2. Section 2210.5731, Insurance Code, is amended by |
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adding Subsection (c) to read as follows: |
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(c) If the association fails to make payment within the |
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timeline established by Subsection (a), the association shall pay |
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an additional interest at a rate of 18 per cent per annum on the |
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amount of the claim that has not been paid. Interest shall begin to |
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accrue on the date after the payment became past due until the claim |
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has been paid. |
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SECTION 3. Section 2210.574, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.574. DISPUTES CONCERNING AMOUNT OF ACCEPTED |
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COVERAGE. (a) If the association accepts coverage for a claim in |
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full and a claimant disputes only the amount of loss the association |
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will pay for the claim, or if the association accepts coverage for a |
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claim in part and a claimant disputes the amount of loss the |
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association will pay for the accepted portion of the claim, the |
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association shall provide to the claimant [may request from the |
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association] a detailed summary of the manner in which the |
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association determined the amount of loss the association will pay |
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for each portion of the accepted claim. |
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(b) If a claimant disputes the amount of loss the |
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association will pay for a claim or a portion of a claim, the |
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claimant, not later than the 60th day after the date the claimant |
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receives the notice described by Section 2210.573(d)(1) or (2), may |
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demand appraisal in accordance with the terms of the association |
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policy. |
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(c) If a claimant, on a showing of good cause and not later |
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than the 15th day after the expiration of the 60-day period |
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described by Subsection (b), requests in writing that the 60-day |
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period be extended, the association may grant an additional 30-day |
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period in which the claimant may demand appraisal. |
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(d) If a claimant demands appraisal under this section: |
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(1) the appraisal must be conducted as provided by the |
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association policy; [and] |
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(2) the appraisal must be completed within a timeframe |
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agreed upon in writing by the appraisers of the parties, or as |
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ordered by an umpire, but may not exceed 180 days after the date an |
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appraisal is demanded; |
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(3) the association shall adequately detail the scope |
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of the appraisal, including, as applicable, a list of any portions |
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of the claim that have been accepted; and |
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(4) the claimant and the association are responsible |
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in equal shares for paying any costs incurred or charged in |
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connection with the appraisal, including a fee charged under |
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Subsection (e). |
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(e) If a claimant demands appraisal under this section and |
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the appraiser retained by the claimant and the appraiser retained |
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by the association are able to agree on an appraisal umpire to |
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participate in the resolution of the dispute, the appraisal umpire |
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is the umpire chosen by the two appraisers. If the appraiser |
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retained by the claimant and the appraiser retained by the |
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association are unable to agree on an appraisal umpire to |
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participate in the resolution of the dispute, the commissioner |
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shall select an appraisal umpire from a roster of qualified umpires |
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maintained by the department. The department may: |
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(1) require appraisers to register with the department |
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as a condition of being placed on the roster of umpires; and |
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(2) charge a reasonable registration fee to defray the |
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cost incurred by the department in maintaining the roster and the |
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commissioner in selecting an appraisal umpire under this |
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subsection. |
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(f) If the claimant and the association fail to reach a |
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settlement agreement within 180 days from the date of the |
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appraisal, interest shall begin to accrue at a rate of 10 per cent |
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per annum on the higher of the appraised values. Once a settlement |
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has been reached, the amount of accrued interest shall be added to |
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the settlement amount and paid by the association. |
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(g) Except as provided by Subsection (h) [(g)], the |
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appraisal decision is binding on the claimant and the association |
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as to the amount of loss the association will pay for a fully |
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accepted claim or the accepted portion of a partially accepted |
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claim and is not appealable or otherwise reviewable. The appraisal |
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decision becomes binding once it is signed by the umpire and the |
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appraiser for the claimant or the association. A claimant that does |
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not demand appraisal before the expiration of the periods described |
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by Subsections (b) and (c) waives the claimant's right to contest |
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the association's determination of the amount of loss the |
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association will pay with reference to a fully accepted claim or the |
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accepted portion of a partially accepted claim. |
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(h) [(g)] A claimant or the association may, not later than |
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the 30 days after [second anniversary of] the date of an appraisal |
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decision becomes binding, give notice that the claimant or |
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association will dispute the appraisal decision. Within 30 days |
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after such notice is provided, the claimant or association may file |
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an action in a district court in the county in which the loss that is |
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the subject of the appraisal occurred to modify the appraisal |
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decision, or to vacate the appraisal decision and begin a new |
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appraisal process only if: |
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(1) the appraisal decision was obtained by corruption, |
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fraud, or other undue means; |
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(2) the rights of the claimant or the association were |
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prejudiced by: |
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(A) evident partiality by an appraisal umpire; |
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(B) corruption in an appraiser or appraisal |
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umpire; or |
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(C) misconduct or wilful misbehavior of an |
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appraiser or appraisal umpire; or |
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(3) an appraiser or appraisal umpire: |
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(A) exceeded the appraiser's or appraisal |
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umpire's powers; |
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(B) refused to postpone the appraisal after a |
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showing of sufficient cause for the postponement; |
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(C) refused to consider evidence material to the |
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claim; or |
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(D) conducted the appraisal in a manner that |
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substantially prejudiced the rights of the claimant or the |
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association. |
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(i) [(h)] Except as provided by Subsection (h) [(g)], a |
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claimant may not bring an action against the association with |
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reference to a claim for which the association has accepted |
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coverage in full. |
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SECTION 4. Section 2210.5741, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.5741. REPLACEMENT COST COVERAGE CLAIM |
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PROCESSING. (a) After the association accepts coverage for a claim |
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in full or in part, a claimant whose association policy includes |
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replacement cost coverage for a [the] claim may request the |
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replacement cost payment [by submitting to the association |
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documentation of the cost and completion of the repairs related to |
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the claim not later than the 545th day after the date the claimant |
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receives a notification under Section 2210.573(d)(1) or (2)]. |
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(b) Not later than the 60th [30th] day after the date the |
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association receives a request [documentation] under Subsection |
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(a), the association shall provide the claimant, in writing, |
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notification of: |
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(1) the amount of the replacement cost payment the |
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association will make; and |
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(2) the deadline to request appraisal under this |
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section. |
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(c) The association shall pay the amount described by |
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Subsection (b)(1) not later than the 10th day after the date |
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notification is provided under Subsection (b). |
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(d) If a claimant has not demanded appraisal with respect to |
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a claim under Section 2210.574 and the claimant disputes the |
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replacement cost amount the association will pay with respect to |
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the claim, the claimant may demand appraisal of the replacement |
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cost amount not later than the 30th day after the date the claimant |
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receives the notification under Subsection (b). A claimant may |
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demand appraisal under this section without regard to whether [all] |
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repairs related to the claim have begun or are complete. |
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(e) Except with respect to the deadlines applicable to an |
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appraisal under this section, the appraisal under this section |
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shall be conducted in the same manner as an appraisal demanded under |
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Section 2210.574. |
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(f) If a claimant's association policy includes replacement |
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cost coverage, the written notification provided to the claimant |
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under Section 2210.573(d)(1) or (2) must notify the claimant of the |
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deadlines under this section for[: |
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(1) completing repairs and submitting documentation |
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under Subsection (a); and |
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(2)] demanding appraisal under this section. |
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SECTION 5. Section 2210.575(a), Insurance Code, is amended |
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to read as follows: |
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(a) If the association denies coverage for a claim in part |
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or in full and the claimant disputes that determination, the |
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claimant, not later than the expiration of the limitations period |
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described by Section 2210.577(a), but after the date the claimant |
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receives the notice described by Section 2210.573(d)(2) or (3), |
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must provide the association with notice that the claimant intends |
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to bring an action against the association concerning the partial |
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or full denial of the claim. The date the last notice by the |
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association under Section 2210.573(d)(2) or (3) is received shall |
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determine the deadline to provide a notice of intent to bring action |
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under this section. |
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SECTION 6. Section 2210.576, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.576. ISSUES BROUGHT TO SUIT; LIMITATIONS ON |
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RECOVERY. (a) In [The only issues a claimant may raise in] an |
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action brought against the association under Section 2210.575 a |
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claimant may raise [are]: |
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(1) whether the association's denial of coverage was |
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proper; and |
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(2) the amount of the damages described by Subsection |
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(b) to which the claimant is entitled, if any. |
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(b) Except as provided by Subsections (c) and (d), a |
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claimant who prevails in [that brings] an action against the |
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association under Section 2210.575 shall [may] recover [only]: |
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(1) the covered loss payable under the terms of the |
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association policy less, if applicable, the amount of loss already |
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paid by the association for any portion of a covered loss for which |
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the association accepted coverage; |
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(2) prejudgment interest beginning the 11th [from the |
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first] day after the date specified in Section 2210.573(d)[Section |
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2210.5731 by which the association was or would have been required |
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to pay an accepted claim or the accepted portion of a claim,] at the |
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prejudgment interest rate provided in Subchapter B, Chapter 304, |
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Finance Code; and |
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(3) court costs and reasonable and necessary |
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attorney's fees. |
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(c) Nothing in this chapter, including Subsection (b), may |
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be construed to limit the consequential damages, or the amount of |
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consequential damages, that a claimant may recover under common law |
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in an action against the association. |
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(d) A claimant that brings an action against the association |
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under Section 2210.575 may, in addition to the covered loss |
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described by Subsection (b)(1) and any consequential damages |
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recovered by the claimant under common law, recover damages in an |
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amount not to exceed the aggregated amount of the covered loss |
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described by Subsection (b)(1) and the consequential damages |
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recovered under common law if the claimant proves by clear and |
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convincing evidence that the association mishandled the claimant's |
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claim to the claimant's detriment by intentionally: |
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(1) failing to meet the deadlines or timelines |
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established under this subchapter without good cause, including the |
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applicable deadline established under Section 2210.5731 for |
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payment of an accepted claim or the accepted portion of a claim; |
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(2) disregarding applicable guidelines published by |
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the commissioner under Section 2210.578(f); |
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(3) failing to provide the notice required under |
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Section 2210.573(d); |
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(4) rejecting a claim without conducting a reasonable |
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investigation with respect to the claim; [or] |
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(5) denying coverage for a claim in part or in full if |
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the association's liability has become reasonably clear [as a |
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result of the association's investigation with respect to the |
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portion of the claim that was denied]; |
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(6) unreasonably delaying payment of a claim in part |
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or in full once the liability of the association has become |
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reasonably clear; or |
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(7) providing an amount of loss the association will |
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pay, in a notice under Section 2210.573, that is substantially less |
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than the amount awarded in an appraisal or as determined by a |
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factfinder in an action under this chapter. |
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(e) For purposes of Subsection (d), "intentionally" means |
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actual awareness of the facts surrounding the act or practice |
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listed in Subsection (d)(1), (2), (3), (4), or (5), coupled with the |
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specific intent that the claimant suffer harm or damages as a result |
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of the act or practice. Specific intent may be inferred from |
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objective manifestations that the association acted intentionally |
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or from facts that show that the association acted with flagrant |
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disregard of the duty to avoid the acts or practices listed in |
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Subsection (d)(1), (2), (3), (4), or (5). |
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SECTION 7. The Texas Windstorm Insurance Association shall |
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amend the association 's plan of operation to conform to the changes |
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in law made by this Act not later than the 60th day after the |
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effective date of this Act. |
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SECTION 8. This Act takes effect September 1, 2021. |