BACK TO BLOG November 18, 2016

Texas Farm Bureau Withdraws Proposal For Homeowners Insurance Claims Arbitration

The Texas Farm Bureau, the state’s largest farm organization, withdrew its proposal to offer discounts to policy holders who would waive their rights to their Seventh Amendment right to trial by jury for any disputes that arise in insurance claims. The proposal before the Texas Department of Insurance would have allowed Texas Farm Bureau, and subsequently other insurers, to offer discounts to customers in exchange for agreeing to binding arbitration in the event of a claims dispute.

How Arbitration in Homeowners Insurance Claims Works

Companies employ arbitration as a means to settle disputes with customers without involving the legal system. The parties select the arbitrators who listen to both sides of a dispute. In the case of binding arbitration, the parties must comply with the arbitrator’s findings and waive their right to file a lawsuit against the company. Many companies justify the use of arbitration as both a means to cut down on legal costs, and as a method to resolve customer disputes in a swift fashion. These purported justifications are highly debatable.

TFB: Proposal Would Cut Homeowners Insurance Claim Lawsuits

The Texas Farm Bureau proposal would have offered premium discounts to customers who would agree to arbitration in settling their homeowners insurance claim disputes. The discounts were as much as 25 percent, depending on the type of policy. TFB defended the proposal, telling the Department of Insurance that the arbitration clause would be placed in policies at the discretion of the customer, and that customers had the option to forgo the discounts and opt out of the arbitration process.

Critics: Proposal Limits Rights in Homeowners Insurance Claim Cases

Critics of the proposal pointed out that any agreements to binding arbitration would have effectively prevented customers from suing insurers over disputes in their homeowners insurance claims. The arbitration rulings are also not subject to appeal, unlike those rulings made within the legal system. Consumer advocates and trial attorney associations opposed the proposal, arguing that policy holders may not understand the rights that they would give up in exchange for the discount. Additionally, an insurance company will only agree to select arbitrators that provide favorable rulings, meaning the likelihood of impropriety and unfair rulings increases.

Texas Watch: Homeowners Insurance Claim Arbitration Proposal A “Flawed Process”

A consumer watchdog group called the TFB proposal on arbitration of homeowners insurance claims a “flawed process.” Ware Wendell, the executive director of Texas Watch, wrote in an email, “Texas homeowners will retain their constitutional rights and not fall prey to a flawed process that often rewards the powerful at the expense of justice.” These concerns largely stem from the fact that the arbitration process would favor the insurers, since the insurers select the arbitrators on a routine basis, and the arbitrators in turn rely on the insurers for their business.

Know Your Rights in a Homeowners Insurance Claim Lawsuit

To find out how we can help you with a homeowners insurance claim lawsuit, contact the Flowers Law Firm today at 903-965-2000. Our friendly staff will ask a few questions about your case and connect you to a homeowners insurance claim lawsuit attorney.
Sources: Texas TribuneLegal Reader
NOTE: This post is a news story and does not imply an endorsement of the Flowers Law Firm by any of the parties mentioned herein.