Insurance Water Claims Legislation Clears Senate Committee
AUSTIN -- Legislation authored by Senator Troy Fraser to speed insurance companies' response to water damage claims, limit the amount insurers can charge homeowners for previous water damage claims, and require the licensing of public insurance adjusters was approved today by the Senate Business and Commerce Committee.
"These three areas are all intended to help the policyholders," Fraser, R-Horseshoe Bay, said. "By addressing the problems associated with water damage and mold claims, we hope to decrease the losses of incurred by insurance companies. That, in turn, should lead to lower insurance rates."
The measure, a committee substitute for Senate Bill 127, combined the elements of three separate bills ( Senate Bills 126, 127 and 128 ) that Fraser pre-filed last November. The committee adopted the bill by a unanimous vote. It now goes to the full Senate for consideration.
Under the legislation, the state insurance commissioner is given the authority to set the procedures and time frames for insurers to respond to water damage claims, which, when left unchecked, compound the problem and contribute to the spread of mold. "My intent is to ensure a more timely response to water damage claims, and reduce the confusion, inconvenience and claims costs," Fraser said.
Another provision of the bill also limits the surcharge that insurance companies may charge on a homeowners policy to no more than 15 percent of the total premium.
"Over the past year, we've heard many people say they can't get affordable coverage -- sometimes no coverage at all -- because the home they are trying to buy has had a previous water claim," Fraser said. "This provision addresses the so-called stigmatization of properties."
The third component of the bill establishes a licensing and regulatory framework for public insurance adjusters, who, for a fee, act on behalf of homeowners in negotiating the settlement of a claim.
Under the bill, public adjusters' commissions may not exceed 10 percent of the settlement.
"The intent is to allow legitimate public adjusters to continue to operate at a reasonable profit, but to rid the system of bad actors who negotiate an artificially high or excessive claim just to get a bigger cut of the pie for themselves," Fraser said.
The testing and licensing procedure for applicants would be established by the Texas Department of Insurance. Applicants would be required to have experience and training, and to be able to demonstrate sufficient knowledge in the assessment of property values and damages.
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