Last week Winter Storm Uri passed through the midsection of the U.S. and across the South, massively impacting Texas in particular. Governor Gregg Abbott issued a disaster declaration in response to the severe winter weather event, which resulted in state-wide power and water outages. Now, in the aftermath of the storm, the Texas Department of Insurance (TDI) issued three new bulletins regarding how insurers should address the widespread damage. It is particularly important for commercial policyholders to know what these bulletins entail so they can hold their insurers accountable for any potential wrongdoing when it comes to filing winter storm-related property damage claims.
Winter Storm Uri Pummels Texas
Winter Storm Uri’s freezing temperatures and record snowfall coupled with Texas’ independent power grid caused unprecedented interruptions to the electrical and water systems across the state. Millions were left without power and water for several days. The outages created an unsafe environment for thousands of business owners and residents as the state lacks cold-weather infrastructure, including the capability for snow and ice removal. Winter Storm Uri may be the costliest winter weather event in the history of Texas and is expected to generate billions in insured losses as hundreds of thousands insurance claims are anticipated to be filed as a result of the storm.
TDI Bulletins Issued
Commercial property claims for both interior and exterior damage are likely to be filed as a result of snow and ice on the exterior of buildings, as well as water damage caused by frozen and broken pipes. As business owners begin to fully assess the damage to their properties in the aftermath of Uri, TDI issued three new bulletins pertaining to how insurers should address the overall impact of the winter storm for their policyholders.
TDI Bulletin B0005-21
Many commercial policies contain limitations or exclusions on water and freezing claims when the property is deemed “vacant” or “unoccupied.” However, many businesses were forced to close due to the outages. Bulletin B0005-21 states insurers should suspend policy vacancy provisions for as long as reasonably necessary.,This Bulletin is intended to prevent insurers from relying on vacancy provisions to deny valid claims when the vacancy is due to displacement from the storm..
Additionally, the Bulletin states policyholders affected by Uri may need more time to pay premiums. Insurers are encouraged to work with policyholders to continue coverage by “minimizing penalties or charges for late payments or temporarily suspend payment or repayment plans.” This grace period does not suggest forgiveness of premium payments.
TDI Bulletin B0006-21
Bulletin B0006-21 provides a series of reminders about legal compliance. Insurers may utilize nonresident and emergency adjusters to handle disaster-related claims, but all public insurance adjusters must be licensed by TDI and must abide by the laws concerning advertising and soliciting clients during a disaster.
Most notably, this Bulletin reminds insurers that they must respect a policyholder’s choice of a contractor and may not force the insured to work with the insurers preferred vendor. The practice of utilizing ‘preferred vendors’ often results in using less qualified or unqualified vendors.
TDI Bulletin B0007-21
Bulletin B0007-21 reiterates that insurers are prohibited from non-renewing certain policies due to natural causes or considering certain claims history for water damage. Nonrenewal practices continue to be subject to restrictions against unfair discrimination.
The Bulletin also warns insurers against engaging in harsh underwriting practices. For example, if a commercial auto policyholder is helping with disaster relief efforts, its insurers should not “reclassify, rerate, cancel, nonrenew, or refuse to provide coverage solely because of that participation.” Furthermore, insurers should not engage in these practices or change a policyholder’s classification or premium solely because the insured is a victim of the winter storm disaster.
The Texas Prompt Payment of Claims Act provides deadlines by which insurers must make claims payments. Bulletin B0007-20 extended these deadlines by an additional 15 days in response to the COVID-19 outbreak. Similarly, TDI recognizes that insurers affected by this disaster may need additional time, so Bulletin B0007-21 allows the additional 15-day extension for the payment of claims related to Winter Storm Uri.
Texas Commercial Property Damage Claims
While these recent TDI bulletins provide insight for commercial policyholders as to what their insurance companies should be doing in the aftermath of Winter Storm Uri, it’s important to remember that insurers can still act with their own best interests at heart when it comes to insurance claims. At Raizner Law, our insurance coverage attorneys have a reputation for delivering successful results for our clients. Our attorneys have successfully handled large, complex insurance disputes against every major carrier. If your commercial property was damaged by Winter Storm Uri and your claim is being underpaid, wrongfully delayed, or denied, contact our office today to see how we can help.