By Rodriquez H.B. No. 480
74R2944 PB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a prohibition of the use of certain underwriting
1-3 guidelines in homeowners' insurance and to the guaranteed issue of
1-4 certain homeowners' insurance policies.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subchapter B, Chapter 21, Insurance Code, is
1-7 amended by adding Article 21.21-6 to read as follows:
1-8 Art. 21.21-6. PROHIBITION ON USE OF CERTAIN UNDERWRITING
1-9 GUIDELINES
1-10 Sec. 1. DEFINITIONS. In this article:
1-11 (1) "Insurer" means an insurer authorized to write
1-12 property and casualty insurance in this state, including:
1-13 (A) a county mutual insurance company;
1-14 (B) a Lloyd's plan company;
1-15 (C) a reciprocal or interinsurance exchange; and
1-16 (D) a farm mutual company.
1-17 (2) "Underwriting guideline" means a rule, standard,
1-18 marketing decision, or practice that is used by an insurer or an
1-19 agent of an insurer to examine, bind, accept, reject, cancel, or
1-20 limit insurance coverage to groups of consumers of insurance.
1-21 Sec. 2. APPLICATION. This article applies to:
1-22 (1) a homeowner's or farm or ranch owner's policy; and
1-23 (2) a standard fire policy insuring a one-family
1-24 dwelling, a duplex, or the contents of a one-family dwelling, a
2-1 duplex, or an apartment.
2-2 Sec. 3. PROHIBITION; EXEMPTION. An insurer may not use an
2-3 underwriting guideline that is based in whole or in part on:
2-4 (1) the occupation of the real property by the insured
2-5 or an applicant for insurance coverage;
2-6 (2) the age of the real property to be insured;
2-7 (3) the location of the real property to be insured;
2-8 or
2-9 (4) minimum coverage amounts.
2-10 Sec. 4. VIOLATION. An insurer who violates this article
2-11 commits an unfair practice in the business of insurance in
2-12 violation of Article 21.21 of this code and is subject to the
2-13 procedures and penalties imposed under that article.
2-14 SECTION 2. Section 2, Article 21.49-2B, Insurance Code, is
2-15 amended to read as follows:
2-16 Sec. 2. APPLICATION. Except as provided by Section 7 of
2-17 this article, this <This> article applies only to:
2-18 (1) a personal automobile insurance policy, other than
2-19 a policy written through the Texas Automobile Insurance Plan; and
2-20 (2) <a homeowners or farm or ranch owner's policy;>
2-21 <(3) a standard fire policy insuring a one-family
2-22 dwelling, a duplex, or the contents of a one-family dwelling, a
2-23 duplex, or an apartment; and>
2-24 <(4)> a policy providing property and casualty
2-25 coverage to a governmental unit, other than a fidelity, surety, or
2-26 guaranty bond.
2-27 SECTION 3. Subchapter E, Chapter 21, Insurance Code, is
3-1 amended by adding Article 21.49-2E to read as follows:
3-2 Art. 21.49-2E. GUARANTEED ISSUE OF CERTAIN PROPERTY AND
3-3 CASUALTY POLICIES
3-4 Sec. 1. DEFINITION. In this article, "insurer" means any
3-5 licensed insurer writing property and casualty insurance in this
3-6 state, including:
3-7 (1) a county mutual insurance company;
3-8 (2) a Lloyd's plan company;
3-9 (3) a reciprocal or interinsurance exchange; and
3-10 (4) a farm mutual company.
3-11 Sec. 2. APPLICATION. This article applies only to:
3-12 (1) a homeowner's or farm or ranch owner's policy; and
3-13 (2) a standard fire policy insuring a one-family
3-14 dwelling, a duplex, or the contents of a one-family dwelling, a
3-15 duplex, or an apartment.
3-16 Sec. 3. GUARANTEED ISSUE; EXCEPTION. (a) Except as
3-17 provided by Subsection (b) of this section, an insurer that
3-18 delivers or issues for delivery in this state a policy of insurance
3-19 to which this article applies may not deny a policy to an applicant
3-20 for insurance coverage or refuse to renew or cancel a policy issued
3-21 to an insured whose property:
3-22 (1) is located in an area covered by a building code
3-23 or other construction requirements adopted by the jurisdiction in
3-24 which the affected property is located; and
3-25 (2) on the date of the initial or renewal application
3-26 for insurance coverage meets the standards imposed under the
3-27 building code or other construction requirements.
4-1 (b) This article does not apply to the nonrenewal of an
4-2 insurance policy that is authorized under Section 7, Article
4-3 21.49-2B, of this code.
4-4 Sec. 4. CANCELLATION. For the purposes of this article, an
4-5 insurer cancels an insurance policy if the insurer, without the
4-6 consent of the insured:
4-7 (1) terminates coverage provided under a policy;
4-8 (2) refuses to provide additional coverage to which
4-9 the insured is entitled under the policy; or
4-10 (3) reduces or restricts coverage under a policy by
4-11 endorsement or other means.
4-12 Sec. 5. CANCELLATION OF POLICIES. (a) An insurer may
4-13 cancel an insurance policy covered by this article only as provided
4-14 by this section.
4-15 (b) An insurer may cancel a policy if:
4-16 (1) the named insured does not pay the premium or any
4-17 portion of the premium when due;
4-18 (2) the commissioner determines that continuation of
4-19 the policy would result in a violation of this code or any other
4-20 law governing the business of insurance in this state;
4-21 (3) the insured submits a fraudulent claim; or
4-22 (4) there is an increase in the hazard covered by the
4-23 policy that is within the control of the insured and that would
4-24 produce an increase in the premium rate of the policy.
4-25 (c) Cancellation of a policy under this section takes effect
4-26 on the 10th day after the date the insurer mails notice of the
4-27 cancellation to the insured.
5-1 (d) Unless the grounds for cancellation listed under this
5-2 section exist, an insurer may not use the 90-day cancellation
5-3 option granted under Section 4(i), Article 21.49-2B, of this code
5-4 in relation to a policy subject to this article.
5-5 Sec. 6. NONRENEWAL OF POLICIES; NOTICE REQUIRED. An insurer
5-6 shall renew a policy on its expiration, at the option of the
5-7 insured, unless the insurer:
5-8 (1) has grounds to cancel the policy under Section 5
5-9 of this article; and
5-10 (2) mails written notice of nonrenewal to the insured
5-11 not later than the 30th day before the date on which the policy
5-12 expires.
5-13 Sec. 7. RECORDS. An insurer shall maintain information
5-14 concerning denial, cancellation, or nonrenewal of policies in
5-15 accordance with the insurer's ordinary practices for maintaining
5-16 records of expired policies. The insurer shall make the
5-17 information available to the department on request.
5-18 Sec. 8. INSURER STATEMENT. An insurer shall, at the request
5-19 of an insured or an applicant for insurance, provide a written
5-20 statement of the reason for a cancellation or nonrenewal of or
5-21 determination not to issue a policy that is subject to this
5-22 article.
5-23 Sec. 9. EFFECT OF NONCOMPLIANCE. (a) A cancellation of a
5-24 policy in violation of this article has no effect.
5-25 (b) If an insurer fails to give notice of nonrenewal of a
5-26 policy as required by Section 6(2) of this article, the insurer
5-27 shall renew the policy at the request of the insured.
6-1 Sec. 10. RULES. The commissioner may adopt rules as
6-2 necessary to implement this article.
6-3 SECTION 4. This Act takes effect September 1, 1995, and
6-4 applies only to an insurance policy that is delivered, issued for
6-5 delivery, or renewed on or after January 1, 1996. A policy that is
6-6 delivered, issued for delivery, or renewed before January 1, 1996,
6-7 is governed by the law as it existed immediately before the
6-8 effective date of this Act, and that law is continued in effect for
6-9 that purpose.
6-10 SECTION 5. The importance of this legislation and the
6-11 crowded condition of the calendars in both houses create an
6-12 emergency and an imperative public necessity that the
6-13 constitutional rule requiring bills to be read on three several
6-14 days in each house be suspended, and this rule is hereby suspended.