On May 26, Gov. Greg Abbott signed into law House Bill 1774, a tort-reform bill that limits a policyholder’s ability to sue its insurer for mishandling property claims arising from natural disasters. Designed to curb the exploitation of storm victims and insurance companies by the plaintiff’s bar, the new law significantly undercuts incentives for insurers to act responsibly, while making it more difficult for policyholders to hold insurers accountable for improper delays and failing to pay claims.Although popularly referred to as a “hailstorm” bill, the law applies more broadly to any “first-party claim . . . made by an insured” under a property insurance policy that “arises from damage to or loss of covered property caused, wholly or partly, by forces of nature, including an earthquake or earth tremor, a wildfire, a flood, a tornado, lightning, a hurricane, hail, wind, a snowstorm, or a rainstorm.” Tex. Ins. Code § 542A.001(2).

Insurance policyholders should always read their policies, but a recent ruling out of Texas’ 14^th Court of Appeals may provide support to those who rely on insurance agents for information regarding their policies.

Insureds often misunderstand the terms of an insurance policy or argue that they have been misled by an insurer’s or an agent’s statements regarding a policy’s terms or coverage. In these disputes, defendants often raise as a defense the insured’s duty to read its policy. The court’s Oct 18 ruling in ruling in Wyly v. Integrity Insurance Solutions, No. 14-15-0042-CV, reiterated the rule under Texas law that this defense fails where an insured has alleged or shown that an insurance agent has made a specific, affirmative misrepresentation about the policy.