BILL ANALYSIS

C.S.H.B. 1234

By: Thompson, Ed

Insurance

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Insureds may opt in to cosmetic metal roof coverage under an applicable residential property insurance policy. However, many insureds are surprised to learn that damages that leave their metal roof in need of significant repair are not covered if the roof is deemed functional by the insurer. Property owners who choose metal roofs do so not only for strength and durability, but also for curb appeal and value, and many are caught off guard when damages to their expensive metal roofs are not covered in a claim. Currently, the opt-in method of coverage places insurance agents in a precarious position to make sure they offer this coverage. When an insured's cosmetic claim is denied, the claimant may pursue action against the agent who did not advocate strongly enough for the added coverage. C.S.H.B. 1234 seeks to address this issue by requiring an insurer that offers cosmetic metal roof coverage under a residential property insurance policy under which the insured is given the option to reject coverage, as opposed to an opt-in option, to require an insured who rejects, declines, or refuses to accept the coverage to acknowledge in writing that the insured has done so. The bill does not require a residential property insurer to offer cosmetic metal roof coverage if it does not already do so.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 1234 amends the Insurance Code to require each insurer that offers cosmetic metal roof coverage in Texas under a residential property insurance policy for damage to a metal roof, regardless of whether the damage impedes the function of the roof, to require an insured who rejects, declines, or refuses to accept that coverage under the insured's policy to acknowledge in writing that the insured has rejected, declined, or refused to accept that coverage and that the insured's policy does not include cosmetic metal roof coverage. The bill expressly does not require an insurer to obtain the acknowledgment from an insured on a renewal or reinstatement of, or on the issuance of a supplement to, a residential property insurance policy for which the insurer has already obtained an acknowledgment. The bill applies only to a policy that is delivered, issued for delivery, or renewed on or after January 1, 2024, and specifies that the insurers to which the bill applies include a county mutual insurance company, farm mutual insurance company, Lloyd's plan, and reciprocal or interinsurance exchange.

EFFECTIVE DATE

September 1, 2023.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 1234 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

Whereas the introduced prohibited an insurer from issuing or renewing a residential property insurance policy unless, if applicable, the insurer provides coverage for damage to a metal roof, regardless of whether the damage impedes the roof's function, and authorized an insured to reject such coverage in writing, the substitute requires an insurer to require an insured who rejects, declines, or refuses to accept cosmetic metal roof coverage under the insured's policy to acknowledge in writing that the insured has done so and expressly does not require an insurer to obtain the acknowledgment from an insured on a renewal or reinstatement of, or on the issuance of a supplement to, a policy for which the insurer has already obtained the acknowledgement.

While both the introduced and substitute apply to an insurer that provides residential property insurance in Texas, the substitute includes a specification not in the introduced that the bill applies to an insurer that offers cosmetic metal roof coverage under a residential property insurance policy and includes a definition for "cosmetic metal roof coverage," which was not in the introduced.