HOUSTON – Doris Knippa said she just wanted to get what she felt she was owed.
With tears streaming down her face, she described the yearslong fight she had had with her property insurance company.
It all amounted to about $10,000, needed to repair damages to her roof that were the byproduct of one of the worst hailstorms she’d ever seen hit her Alvin home.
But her insurance company underestimated the damages. After years in court, attorneys won Knippa a settlement and forced the company to pay the mountain of legal fees accrued.
Lawsuits against property insurance companies and the attorney fees surrounding them have been on the rise, and one company wants to avoid them altogether.
Texas Farm Bureau Insurance is requesting a policy update that would offer policyholders a discounted premium if they agree to settle any disputes through arbitration, and sign away their right to sue their insurance company.
Read: Texas Farm Bureau Arbitration Endorsement
The proposition caused citizen advocacy group Texas Watch to sound the alarm about the repercussions of such a policy.
“The concern that we have is that insurance companies across the state, if this gets approved, will come in right behind them and every homeowner in Texas will get forced into this broken secret process,” said Alex Winslow, the executive director for Texas Watch.
According to the Texas Department of Insurance, Texas Farm Bureau first filed their request in September.
A spokesperson for the agency said the commissioner has the authority to approve changes to insurance policy but this is the first time staff there can recall a company asking for a mandatory arbitration clause in a residential insurance policy.
Texas Watch began hearing rumors of the policy filing in the months after it hit the insurance commissioner’s desk and filed a very open-ended public records request to find out which company was involved, according to Winslow.
After discovering the requested change, Texas Watch wrote a letter to the commissioner, urging him not to allow Texas Farm Bureau to add the clause.
“This would force those customers out of the legal process and into a private kangaroo court, where the insurance company has picked the arbitrator. They've paid the arbitrator. They've decided where the arbitration is going to happen. They've set all of the rules to favor themselves over customers,” said Winslow.
Texas Farm Bureau said in a statement that it’s an optional change they are offering to clients who want a discounted premium.
The statement read in part:
“"We believe many of our members will appreciate this option. Again it is optional, our members will make their own decisions if they want to elect it.”
Read: Texas Farm Bureau Statement
But documents procured by Texas Watch and reviewed by Channel 2 Investigates reveal that the discount may just be a reversal of a previous rate hike.
In notes from a conference call between the company and TDI, a handwritten note reads, “Already raised rates in Hidalgo ... discount will be equivalent to that rate increase”.
Read: Internal Documents
Channel 2 Investigates asked the company via email if the discount was really just a rate reduction.
"Our rates reflect our loss experience. We filed this endorsement to give our policyholders an option for reducing their insurance costs," wrote Mike Gerik, executive vice president for Texas Farm Bureau, in an email reply.
There is no time frame for when the insurance commissioner has to make a decision on the clause.
In the meantime, the Texas Department of Insurance is holding a public meeting on July 6 to hear all sides of this debate.
“This is a significant change, and we appreciate the public’s input,” said Jerry Hagins, a spokesperson for the department.
Comments for the meeting can be submitted in writing by July 5 for anyone who cannot attend in person.
Click here to contact the Texas Department of Insurance.