Everything Is Bigger In Texas Including Burden Of Proof On Policyholders

Did you know policyholders in Texas carry the burden of proof in an insurance claim process?

Texas is known for a lot of things including BBQ, live music,  scorching summer temperatures and severe weather. As the second largest U.S. state by size, the popular saying “everything is bigger in Texas” is true – and especially true when it comes to hail damage.

In fact, Texas consistently ranks as the number one state with the most hail damage claims filed. While some of that can be attributed to the high population count in Texas’ major cities, the storms are also bigger in the Lone Star State – with many producing hail grapefruit size or bigger. Over the past 25 years, Texas has had twenty-nine $100 million dollar weather-related disasters caused by hailstorms.

While Texas policyholders are no stranger to massive hailstorms, the insurance claim process continues to be a challenge for those going through the recovery process and what they don’t know often impacts their claim outcome.

Burden Of Proof – Who’s Responsible?

If you’re like most people, you have insurance to protect your home if something outside of your control happens like a hail or windstorm and causes damage. You pay your monthly premium, and in exchange your insurance company covers the cost of repairs to your home and prevents you from having to pay for everything out of pocket (outside of your deductible). If you must file a claim, you call your insurance company to have them send out an expert to assess the damage and they cut a check to make your whole again. Sounds easy enough, right?

Not for policyholders in Texas.

In Texas, policyholders are technically the ones responsible for proving damage is covered under their own policy. This is illustrated in David Lewis Builders, Inc. v. Mid-Continent Cas. Co., No. 09-21, 2010 WL 1286544 (N.D. Tex. April 1, 2010) which states: “Texas law places the burden to prove the existence of insurance coverage under an insurance policy on the party claiming coverage.”

This means that the policyholder is required to provide proof that any damage is covered by the policy. If the insurance company says that damage is not covered due to an exclusion, the policyholder is required to provide proof and/or explanation that it is and should be.

Are Policyholders Qualified To Negotiate Claims?

Insurance contracts are notoriously difficult to understand. They are long, use archaic language and in some cases they require a PhD to understand.  To make matters worse, an estimated 50% of homeowners don’t even know what their policies cover.

Policyholders don’t lack the skills needed to properly negotiate a claim because they don’t know what they don’t know. It can take years for insurance adjusters to get properly trained, so how can anyone expect a policyholder to do that overnight?

That’s why placing the burden of proof on the policyholder seems unfair. That would be like paying to go to a doctor and being told to perform your own surgery. Without knowledge of the claims process, how can anyone know for sure that they are receiving a fair and honest payment?

To prove just how dangerous the burden of proof policy can be, take a look at this story from Texas. A school district suffered damages from a catastrophic weather event and had to hire their own experts to prove the damage was covered. If the school district had accepted the first offer the insurance company provided, they would have settled for 7x less than what they were actually owned.

How Is The American Adjuster Association Helping?

The American Adjuster Association was formed to not only shed light on the issues policyholders face in the claims process but also to advocate for a fair and balanced claims system.

We believe insurance companies should be held accountable for mistakes and required to honor the policies they sell to consumers. In addition, we believe insurance companies should be required to properly investigate and pay valid claims.

Interested in learning more? Review our draft legislation, learn about becoming a member and follow us on Facebook and LinkedIn for news and updates.