Tide turning in hail-related lawsuits
Jun. 21, 2016
A south Texas hailstorm in 2012 was the start of an increase in lawsuits being filed after severe weather events, sometimes even after claims were paid and repairs were completed. Some insurers received notices of hundreds of lawsuits being filed at one time immediately or sometimes months after a storm. And oddly, despite this rush to the courthouse, data from the Texas Department of Insurance showed few complaints being filed during 2013-2015.
“Typically, only a small number of claims result in lawsuits, and many insurers were surprised by this sudden onslaught of lawsuits especially given that companies did not suddenly change how they resolved claims,” said Mark Hanna, a spokesman for the Insurance Council of Texas. “This meant unexpected and significant litigation costs for companies. After a few months of adjusting to this new litigation tactic, companies have started challenging many of the questionable lawsuits and are finding some success in the judicial process.”
For example, last month, a six-member jury in Houston didn’t fall for the story that a hail storm resulted in a woman’s leaky roof. The claim involved water damage from a leaking roof, and was supported by a roofing expert who claimed the leak was the result of hail damage. The homeowner was seeking $46,000 in damages. The insurer, the Texas FAIR Plan, countered by arguing that the leaking roof was the result of long-term poor maintenance. They also pointed out that the homeowner did not examine the roof until six months after the lawsuit was filed.
The jury deliberated for less than a minute before returning with their verdict. “I don’t think the jurors even sat down before making their decision,” said Lori Daves, of Jay Old and Associates, who defended the Texas FAIR plan in the case. “It was the quickest verdict I have ever been part of.”
In addition, many of these lawsuits have found their way into federal court where some suits have been dismissed after appraisal has been completed and a plaintiff’s firm was questioned by a federal judge about the validity of the lawsuits. In one case last month, a federal judge in McAllen admonished a plaintiff’s attorney, asking him why he shouldn’t be sanctioned for bringing factually unsupported hail claims against insurer.
“Texas has had a significant number of catastrophic weather events over the last couple of years, and this seems to have encouraged a large number of questionable lawsuits being filed across the state,” said Hanna. “Hopefully, as more of these types of questionable lawsuits are taken to trial, we will see decisions that will discourage attempts to profit from severe storms. In the end, all Texas consumers are harmed by unnecessary litigation.”