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A BILL TO BE ENTITLED
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AN ACT
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relating to the cancellation and nonrenewal of certain liability |
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and commercial property insurance policies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Subchapter B, Chapter 551, |
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Insurance Code, is amended to read as follows: |
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SUBCHAPTER B. CANCELLATION AND NONRENEWAL OF CERTAIN LIABILITY AND |
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COMMERCIAL PROPERTY INSURANCE POLICIES |
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SECTION 2. Section 551.051, Insurance Code, is amended by |
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amending Subdivision (1) and adding Subdivision (1-a) to read as |
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follows: |
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(1) "Commercial property insurance" has the meaning |
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assigned by Section 2251.002. |
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(1-a) "Insurer" means an insurance company or other |
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entity admitted to engage in business and authorized to write |
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liability insurance or commercial property insurance in this state, |
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including a county mutual insurance company, a Lloyd's plan, and a |
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reciprocal or interinsurance exchange. The term does not include a |
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county mutual fire insurance company that writes exclusively |
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industrial fire insurance as described by Section 912.310 or a farm |
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mutual insurance company. |
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SECTION 3. Sections 551.052 and 551.053, Insurance Code, |
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are amended to read as follows: |
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Sec. 551.052. CANCELLATION PROHIBITED; EXCEPTIONS. (a) An |
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insurer may not cancel a liability insurance or commercial property |
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insurance policy that is a renewal or continuation policy. |
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(b) An insurer may not cancel a liability insurance policy |
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or commercial property insurance during the initial policy term |
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after the 60th day following the date on which the policy was |
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issued. |
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(c) Notwithstanding Subsections (a) and (b), an insurer may |
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cancel a liability insurance or commercial property insurance |
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policy at any time during the term of the policy for: |
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(1) fraud in obtaining coverage; |
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(2) failure to pay premiums when due; |
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(3) an increase in hazard within the control of the |
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insured that would produce a rate increase; or |
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(4) loss of the insurer's reinsurance covering all or |
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part of the risk covered by the policy. |
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(d) Notwithstanding Subsections (a) and (b), an insurer may |
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cancel a liability insurance or commercial property insurance |
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policy at any time during the term of the policy if the insurer is |
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placed in supervision, conservatorship, or receivership and the |
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cancellation or nonrenewal is approved or directed by the |
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supervisor, conservator, or receiver. |
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Sec. 551.053. WRITTEN NOTICE OF CANCELLATION REQUIRED. Not |
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later than the 10th day before the date on which the cancellation of |
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a liability insurance or commercial property insurance policy takes |
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effect, an insurer must deliver or mail written notice of the |
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cancellation to the first-named insured under the policy at the |
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address shown on the policy. |
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SECTION 4. Section 551.054(a), Insurance Code, is amended |
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to read as follows: |
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(a) An insurer may refuse to renew a liability insurance or |
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commercial property insurance policy if the insurer delivers or |
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mails written notice of the nonrenewal to the first-named insured |
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under the policy at the address shown on the policy. |
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SECTION 5. Subchapter B, Chapter 551, Insurance Code, is |
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amended by adding Section 551.056 to read as follows: |
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Sec. 551.056. CHANGES TO POLICY ON RENEWAL. (a) In this |
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section, "material change" means a change to a policy that, with |
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respect to a previous or existing policy: |
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(1) reduces coverage; |
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(2) changes conditions of coverage; or |
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(3) changes the duties of the insured. |
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(b) A change to a liability insurance or commercial property |
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insurance policy provision on renewal is not a nonrenewal or |
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cancellation under this subchapter if the insurer provides the |
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insured with written notice in accordance with this section of any |
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material change in each form of the policy offered to the insured on |
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renewal from the form of the policy held immediately before |
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renewal. |
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(c) Notice provided under Subsection (b) must: |
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(1) appear in a conspicuous place in the notice of |
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renewal; |
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(2) clearly indicate each material change to the |
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policy being made on renewal; |
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(3) be written in plain language; and |
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(4) be provided to the insured not later than the 30th |
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day before the renewal date. |
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(d) In addition to the notice to the insured provided under |
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Subsection (b), if an insurer elects to make a material change to a |
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policy form on renewal, not later than the 30th day before the |
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earliest renewal date on which the new policy form is used, the |
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insurer shall provide written notice to each agent of the insurer |
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that clearly indicates each material change being made to the |
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policy form. An insurer may provide the notice to the agents in a |
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single notice given to each agent of the insurer that summarizes |
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substantially similar material changes to more than one policy |
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form. |
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SECTION 6. The change in law made by this Act applies only |
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to an insurance policy delivered, issued for delivery, or renewed |
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on or after January 1, 2020. A policy delivered, issued for |
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delivery, or renewed before that date is governed by the law as it |
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existed immediately before the effective date of this Act, and that |
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law is continued in effect for that purpose. |
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SECTION 7. This Act takes effect September 1, 2019. |