The infamous “Hail Bill” will be celebrating its second birthday this September 1, 2019. Whether there will be any celebrations is another question. The “Hail Bill” – the Chapter 542A amendment to the Texas Insurance Code—covers first-party claims arising from “forces of nature.”1 Within that chapter, one notably section is 542A.006, which allows an insurer to elect to assume its agent’s civil liability for the agent’s conduct related to the handling of a claim. This section has been seeing a lot of litigation of late.
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“Federal courts are courts of limited subject matter jurisdiction,” is the mantra my Civil Procedure professor impressed upon me on the first day of class. In a nutshell, federal courts won’t hear every case, but only cases that they have jurisdiction to hear. One way to get into federal court is with diversity of citizenship. 28 USC § 1332 grants federal courts jurisdiction to hear cases between parties from different states as long as the amount in controversy exceeds $75,000. If a lawsuit is brought in state court against an out of state defendant, and the amount in controversy is over $75,000, the out of state defendant can have the case removed to federal court. If for some reason the removal was improper, the plaintiff can seek to have the case remanded back to the state court. Over the past few weeks, several hurricane related property insurance lawsuit decisions discussing removal have been published.


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Insurance disputes often are tried in federal court. The usual reason is that federal courts have jurisdiction over controversies where parties are from different states and there is a sufficient monetary amount in controversy. I have often questioned the logic of allowing insurance companies voluntarily licensed in a state to remove disputes from that state