BILL ANALYSIS



C.S.H.B. 2501
By: Averitt
04-19-95
Committee Report (Substituted)


BACKGROUND

     Article 5.43-2, Texas Insurance Code, Section 5B, provides
that a registered fire alarm firm shall carry a general liability
insurance policy that includes products and completed operations. 
The limits of the coverage are to be $100,000 combined single
limits per occurrence and $300,000 aggregate per year.  Such
insurance is required in most states and similar insurance is
required for other businesses in Texas.

     Most fire alarm contracts have historically included a
limitation on liability.  The alarm company frequently does not
know the uses of the property, the value or nature of the contents
nor have information about the people using the alarm.  It is not
in a position to evaluate the risks involved and does not charge a
fee that would cover those risks.  Prior to this year, no one has
ever raised the issue that the requirement for insurance and the
contract limitations of liability are in conflict.  There are no
reported cases in the United States where anyone has taken that
position.  The issue has, however, been raised in Texas this year
and this bill is designed to clearly state that the insurance
requirements are not in conflict with the liability limitations in
alarm contracts.

PURPOSE

     As substituted, H.B. 2501 will clarify the limitation of
liability in an alarm company contract is not in conflict with the
state requirement that the alarm company carry general liability
insurance.

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.

SECTION BY SECTION ANALYSIS

SECTION 1.

Amends Section 5B, Article 5.43-2, Insurance Code by adding
Subsection (g) as follows:

(g)  This section does not affect the rights of the insured to
negotiate or contract for     limitations of liability with a third
party, including a customer of the insured.

SECTION 2. Effective Date

SECTION 3.  Emergency Clause.


COMPARISON OF ORIGINAL TO SUBSTITUTE

     As substituted, H.B. 2501 is almost the identical document. 
Both documents contain the same amending language, however, the
substitute amends Subsection (g), Article 5.43-2, Insurance Code,
where the filed bill amends Subsection (a), Article 5.43-2,
Insurance Code.




SUMMARY OF COMMITTEE ACTION

     In accordance with House rules, H.B. 2501 was heard in a
public hearing on April 19, 1995.  The Chair laid out H.B. 2501 and
a substitute to H.B. 2501 and recognized Representative Averitt to 
explain the difference between the substitute to H.B. 2501 and the
filed bill. The Chair recognized the following persons to testify
in support of H.B. 2501: Bob Leonard, Jr.; Texas Burglar & Fire
Alarm Association; James Allen Moseley, Brinks Home Security Inc.
Malcolm R. Reed, Texas Burglar & Fire Alarm Association.

     The Chair recognized Representative Averitt who moved the
Committee adopt the substitute to H.B. 2501.  The Chair heard no
objections and the substitute to H.B. 2501 was adopted.  The Chair
recognized Representative Driver who moved the Committee report
H.B. 2501 as substituted to the full House with the recommendation
that it do pass, be printed, and sent to the Committee on Local and
Consent Calendars.  Representative Shields seconded the motion and
the motion prevailed by the following vote:  AYES (8); NAYES (0);
ABSENT (1); PNV (0).