Proposed Pre-dispute Binding Arbitration in Home Insurance Contracts is Withdrawn

A week ago today, Jeffrey Simon and Lin McCraw, respectively the President and President-Elect of the Texas Trial Lawyers Association (TTLA), made an announcement to the organization’s members that the insurance industry’s onerous proposed pre-dispute binding arbitration in home insurance contracts is withdrawn.

A week ago today, Jeffrey Simon and Lin McCraw, respectively the President and President-Elect of the Texas Trial Lawyers Association (TTLA), made an announcement to the organization’s members that the insurance industry’s onerous proposed pre-dispute binding arbitration in home insurance contracts is withdrawn.

The proposal would have given the industry the ability to include binding arbitration clauses in home insurance contracts, effectively taking away policyholders’ Constitutional rights to access to the legal system. The industry justified this proposal by offering potential insureds the option of substantial premium discounts in exchange for agreeing to the arbitration clauses. Anyone interested in selling their Constitutional rights for what amounts to a pittance? Sorry to disappoint, because for now, at least, the industry is not getting its way.

The TTLA announcement is reprinted below in its entirety (emphasis from the original):

“For months, TTLA and our allies have been fighting a dangerous insurance industry proposal to add pre-dispute binding arbitration to home insurance contracts. This unprecedented move would have been a windfall for insurance companies at the expense of Texas property owners.

Today we learned that the proposal pending before the Texas Department of Insurance has been withdrawn and will not move forward.

This is a huge win for our members and your clients.

Thank you to our members, staff, lobbyists, and allies who made this victory possible.

This fight is far from over, however. Insurance industry lobbyists and TLR lost this battle, but they are coming back strong when lawmakers convene in January. So, today we can celebrate our victory. Tomorrow we continue preparing for the coming fight.”

Texans, you’ve never backed away from a fight in your lives. Don’t start now. Stand with the TTLA for your rights to take dishonest insurance companies to court when they act in bad faith. Don’t allow the industry to buy your rights for a discount on your premium. Sure, in today’s economy, it might be tempting, but you stand to lose a lot more if you let it happen. The arbitrators are all chosen (hired & paid) by the insurers.

Certainly, said insurers aren’t going to continue hiring arbitrators who rule against them and arbitrators need to eat too, so they’re not likely to turn down such repeat business. In short, you may get a discount (as much as 25% or $500.00 on a $2,000.00 policy) but you’re bound to get screwed if you ever have a dispute with your insurer.

Amber Pang Parra, an attorney with Austin, Texas-based Justinian and Associates and a TTLA member, had this to say about the TTLA’s announcement:

“The withdrawal of the proposal requiring home insurance arbitration at the Texas Department of Insurance represents a win for consumers. The proliferation of forced arbitration clauses, often buried in contracts or terms of use agreements, has severely limited the ability of consumers to have their claims about contracts, products, or services addressed by courts and juries. Pre-dispute, forced, binding arbitration in home insurance contracts would have presented an incredible obstacle to consumers seeking adequate coverage under the home insurance policies they paid for. Texas trial lawyers and other consumer groups worked hard to bring light to the dangers of this proposal and to preserve the Constitutional rights of consumers.”

One concurs with her. Rights are precious and few (when one thinks about it). They should be protected, not sold. When the industry shows up again in January, armed with lobbyists and big checks, we need to show up, too. Armed with our voices and our votes; the latter being one thing any lawmaker likes more than the big checks.