89R3560 SCL-F

By: Hayes H.B. No. 4020

A BILL TO BE ENTITLED

AN ACT

relating to presuit notice and inspection requirements associated with, and certain liability in connection with, certain insurance claims for property damage.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 542.060(c), Insurance Code, is amended to read as follows:

(c) In regard to a claim that is subject to [an action to which] Chapter 542A [applies], if an insurer that is liable for the [a] claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy, in addition to the amount of the claim, simple interest on the amount of the claim as damages each year at the rate determined on the date of judgment by adding five percent to the interest rate determined under Section 304.003, Finance Code, together with reasonable and necessary attorney's fees. Nothing in this subsection prevents the award of prejudgment interest on the amount of the claim, as provided by law. Interest awarded under this subsection as damages accrues beginning on the date the claim was required to be paid.

SECTION 2. Section 542A.003, Insurance Code, is amended by amending Subsections (b) and (g) and adding Subsections (b-1), (b-2), and (b-3) to read as follows:

(b) The notice required under this section must [provide]:

(1) reference this chapter [a statement of the acts or omissions giving rise to the claim];

(2) describe the damage to or loss of covered property for which payment is owed under the insurance policy in sufficient detail to give the insurer a fair opportunity to adjust the claim;

(3) state the claimant's legal and factual basis for believing the claim is covered by the insurance policy;

(4) provide a detailed, claimant- and claim-specific description of the acts or omissions by each insurer or agent that constitute a violation of a provision of the insurance policy, a statute, a provision of the Texas Administrative Code, or a common law standard of conduct;

(5) except as provided by Subsection (b-1), state the specific amount of money alleged to be owed by the insurer on the claim for the damage to or loss of covered property described by Subdivision (2);

(6) state [and

[(3)] the amount of reasonable and necessary attorney's fees incurred by the claimant to investigate the claim and prepare the notice required by this section, calculated by multiplying the number of hours actually worked by the claimant's attorney, as of the date the notice is given and as reflected in contemporaneously kept time records, by an hourly rate that is customary for similar legal services; and

(7) include the attorney's contemporaneously kept time records and all existing estimates, invoices, statements, receipts, engineer's or inspector's reports, or other items constituting proof of the alleged loss that are possessed by the claimant or subject to the claimant's control.

(b-1) Instead of stating the specific amount of money alleged to be owed as required by Subsection (b)(5), a claimant may state that the claimant needs additional time to evaluate and quantify the claim before the claimant states an amount the claimant will accept in full payment of the claim. By making this statement, the claimant temporarily postpones the claimant's obligation to comply with that subsection as provided by Section 542A.005.

(b-2) The purpose of the notice required by this section is to enable an insurer to adjust and, if the insurer chooses, satisfy a claimant's claim by paying the amount the claimant has alleged is owed on the claim. The amount alleged by the claimant to be owed on the claim must be an amount the claimant will accept in full payment of the claim.

(b-3) Notwithstanding Subsection (e), an insurer may pay the amount the claimant alleges is owed on the claim and pursue an action under Chapter 37, Civil Practice and Remedies Code, to determine the reasonableness or necessity of attorney's fees allegedly incurred by the claimant as stated in the claimant's notice.

(g) At the option of a person to whom notice was given, notice [Notice] given under this chapter is admissible in evidence in a civil action or alternative dispute resolution proceeding relating to the claim for which the notice is given.

SECTION 3. Section 542A.004, Insurance Code, is amended to read as follows:

Sec. 542A.004. INSPECTION. Not later than the 15th [30th] day after receiving a presuit notice given under Section 542A.003(a), a person to whom notice is given may send a written request to the claimant to inspect, photograph, or evaluate, in a reasonable manner and at a reasonable time, the property that is the subject of the claim. If reasonably possible, the inspection, photography, and evaluation must be completed not later than the 30th [60th] day after the date the person receives the presuit notice.

SECTION 4. Section 542A.005, Insurance Code, is amended by amending Subsections (a), (b), (c), (d), and (e) and adding Subsections (d-1), (g), and (h) to read as follows:

(a) In addition to taking any other act allowed by contract or by any other law, a person against whom an action to which this chapter applies is pending may file a plea in abatement not later than the 30th day after the date the person files an original answer in the court in which the action is pending if the person:

(1) did not receive a presuit notice fully complying with Section 542A.003; [or]

(2) received a presuit notice under Section 542A.003 stating that more time is needed for the claimant to state an amount the claimant will accept in full payment of the claim; or

(3) requested under Section 542A.004 but was not provided a reasonable opportunity to inspect, photograph, or evaluate the property that is the subject of the claim.

(b) The court shall abate the action if the court finds that the person filing the plea in abatement:

(1) did not, for any reason, receive a presuit notice fully complying with Section 542A.003; [or]

(2) received a presuit notice under Section 542A.003 stating that more time is needed for the claimant to state an amount the claimant will accept in full payment of the claim; or

(3) requested under Section 542A.004 but was not provided a reasonable opportunity to inspect, photograph, or evaluate the property that is the subject of the claim.

(c) An action is automatically abated without a court order beginning on the 11th day after the date a plea in abatement is filed if the plea:

(1) is verified and alleges that the person against whom the action is pending:

(A) did not receive a presuit notice fully complying with Section 542A.003; [or]

(B) received a presuit notice under Section 542A.003 stating that more time is needed for the claimant to state an amount the claimant will accept in full payment of the claim; or

(C) requested under Section 542A.004 but was not provided a reasonable opportunity to inspect, photograph, or evaluate the property that is the subject of the claim; and

(2) is not controverted by an affidavit filed by the claimant before the 11th day after the date the plea in abatement is filed.

(d) An affidavit described by Subsection (c)(2) controverting whether the person against whom the action is pending received a presuit notice fully complying with Section 542A.003 or stating that more time is needed for the claimant to state an amount the claimant will accept in full payment of the claim under Section 542A.003 must:

(1) include as an attachment a copy of the document the claimant sent to give notice of the claimant's action; and

(2) state the date on which the notice was given.

(d-1) If an affidavit described by Subsection (c)(2) is timely filed by a claimant, the court must enter an order abating the action unless the court finds that the claimant's controverting affidavit establishes that the claimant timely provided a presuit notice to the movant that fully complied with Section 542A.003, including the requirement that the notice state an amount the claimant will accept in full payment of the claim.

(e) An abatement under this section continues until the later of:

(1) the 60th day after the date a notice fully complying with Section 542A.003, including the requirement that the notice state an amount the claimant will accept in full payment of the claim, is given; or

(2) the 15th day after the date of the requested inspection, photographing, or evaluating of the property is completed.

(g) The filing of a plea in abatement stays all discovery in the action until an order overruling the plea is signed by the trial court or the abatement period provided by Subsection (e) has expired.

(h) Prejudgment interest, interest under Section 542.060, or interest that might be awarded under any other law does not accrue while an action is abated under this section.

SECTION 5. Section 542A.007(d), Insurance Code, is amended to read as follows:

(d) If a defendant in an action to which this chapter applies pleads and proves that the defendant was entitled to but was not given a presuit notice stating the specific amount alleged to be owed by the insurer under Section 542A.003(b)(2) at least 61 days before the date the action was filed by the claimant, the court may not award [to the claimant] any attorney's fees to the claimant under any law [incurred after the date the defendant files the pleading with the court]. A pleading under this subsection must be filed not later than the 30th day after the date the defendant files an original answer in the court in which the action is pending.

SECTION 6. (a) Section 542.060(c), Insurance Code, as amended by this Act, applies only to a claim, as defined by Section 542A.001, Insurance Code, made on or after the effective date of this Act. A claim made before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

(b) Chapter 542A, Insurance Code, as amended by this Act, applies only to an action that is filed on or after the effective date of this Act. An action filed before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 7. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2025.