74R11816 E
By Hunter of Nueces H.B. No. 2676
Substitute the following for H.B. No. 2676:
By Counts C.S.H.B. No. 2676
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the operation of the Texas Catastrophe Property
1-3 Insurance Association and adjustment of liability limits for
1-4 insurance coverage.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 8D, Texas Catastrophe Property Insurance
1-7 Pool Act (Article 21.49, Insurance Code), is amended to read as
1-8 follows:
1-9 Sec. 8D. Liability limits. (a) The maximum limits of
1-10 liability under a <A> policy of windstorm and hail insurance issued
1-11 by the Association under this Act shall be determined by the board
1-12 of directors of the Association and included in the plan of
1-13 operation. In no event shall the board of directors provide for
1-14 maximum limits less than <coverage for any one insurable property
1-15 in amounts equal to>:
1-16 (1) $250,000 for a dwelling and the corporeal movable
1-17 property located in the dwelling, as the term "dwelling" is defined
1-18 in the special dwelling, homeowners, or farm and ranch property
1-19 owners schedules of the Texas Personal Lines Manual <General Basis
1-20 Schedule>;
1-21 (2) $2 million for a building and the corporeal
1-22 movable property located in the building that is owned by, and at
1-23 least 75 percent of which is occupied by, a governmental entity, or
2-1 that is not owned by, but is wholly and exclusively occupied by, a
2-2 governmental entity;
2-3 (3) $750,000 per building for an apartment,
2-4 condominium, or townhouse defined as a risk under the apartment
2-5 house rating schedule, residential condominium rating schedule, or
2-6 townhouse unit rating schedule of the Texas Commercial Lines Manual
2-7 <General Basis Schedule> and the corporeal movable property of the
2-8 owner of the structure in which the apartment, condominium, or
2-9 townhouse is located;
2-10 (4) $100,000 for individually owned corporeal movable
2-11 property located in an apartment, condominium, or townhouse unit
2-12 that is occupied by the owner of that property; and
2-13 (5) $1 million for a structure other than a dwelling
2-14 or a public building and the corporeal movable property located in
2-15 that structure.
2-16 (b) Liability limits for insurable property that is not
2-17 covered under Subsection (a) of this section shall be established
2-18 by the plan of operation.
2-19 (c)(1) The board of directors of the Association, not later
2-20 than September 1 of each year, <Board, as part of the annual rate
2-21 hearings conducted by the Board,> shall adjust to the nearest
2-22 $1,000 in round numbers the liability limits for inflation,
2-23 including the limits set by Subsection (a) of this section, at a
2-24 rate that reflects any change in the BOECKH <BOECK> Index. If the
2-25 BOECKH Index ceases to exist, the board of directors shall adjust
3-1 the liability limits for inflation based on any <or> other index
3-2 that reflects <may accurately reflect> changes in the cost of
3-3 construction or residential values in the catastrophe area. An
3-4 adjustment in liability limits applies to all policies of windstorm
3-5 and hail insurance with an effective date on or after January 1 of
3-6 the year following the board of director's adjustment to the
3-7 liability limits. The indexing of the limits of liability shall
3-8 apply as determined <by the Board> on and after January 1, 1992.
3-9 (2) The board of directors of the Association may make
3-10 additional increases in the limits of liability as it deems
3-11 necessary for the purposes of this Act. Adjustments of liability
3-12 limits under this subsection shall be included in the plan of
3-13 operation.
3-14 (d) Within 10 days following the adjustment of liability
3-15 limits under Subsection (c) of this section, the Association shall
3-16 make a written filing with the Texas Department of Insurance which
3-17 shall include a statement of the adjusted liability limits, a
3-18 statement of liability limits in effect immediately preceding such
3-19 adjustment, a brief summary of the changes to the BOECKH Index on
3-20 which the adjustments are based, and a brief summary of the
3-21 calculations used for making the adjustments. The Texas Department
3-22 of Insurance shall make this filing available for public
3-23 inspection. The filing of the Association shall be deemed approved
3-24 unless disapproved by the Commissioner within 30 days after receipt
3-25 of the filing.
4-1 (e) Notwithstanding Subsections (b) and (c) of this section,
4-2 the board of directors <Board> may not adjust liability limits to
4-3 amounts lower than the amounts adopted under Subsection (a) of this
4-4 section.
4-5 (f) <(e)> A policyholder who is insured on September 1,
4-6 1991, for an amount higher than the liability limits prescribed by
4-7 Subsection (a) of this section may not be required to reduce the
4-8 insurance coverage to an amount lower than the amount in effect on
4-9 September 1, 1991.
4-10 SECTION 2. Section 3(h), Article 21.49, Insurance Code, is
4-11 amended to read as follows:
4-12 (h) "Catastrophe Area" means a city in whole or in part or
4-13 county in whole or in part in which it may be determined by the
4-14 Commissioner <Board>, after notice of not less than 10 days and a
4-15 hearing, that windstorm and hail insurance is not reasonably
4-16 available to a substantial number of owners of insurable property
4-17 within such city or portion thereof or county or portion thereof,
4-18 due to such insurable property being located within a city or
4-19 portion thereof or county or portion thereof subject to unusually
4-20 frequent and severe damage resulting from windstorms and/or
4-21 hailstorms. Such designation shall be revoked by the Commissioner
4-22 <Board> if it is determined <determines>, after notice of not less
4-23 than 10 days and a hearing, that windstorm and hail insurance in
4-24 such catastrophe area is no longer reasonably unavailable to a
4-25 substantial number of owners of insurable property within such
5-1 designated city or portion thereof or county or portion thereof.
5-2 If the Association shall determine that windstorm and hail
5-3 insurance is no longer reasonably unavailable to a substantial
5-4 number of owners of insurable property in any designated
5-5 catastrophe area or areas, then the Association may request in
5-6 writing that the Commissioner <Board> revoke the designation of any
5-7 or all such catastrophe areas and, after notice of not less than 10
5-8 days and a hearing, but within 30 days of such hearing, the
5-9 Commissioner <Board> shall either approve or reject the
5-10 Association's request and shall, if such request be approved,
5-11 revoke such designation or designations.
5-12 SECTION 3. Section 8A, Article 21.49, Insurance Code, is
5-13 amended to read as follows:
5-14 Sec. 8A. Replacement cost coverage. (a) A policy of
5-15 windstorm and hail insurance issued by the Association may include
5-16 replacement cost coverage for one and two-family dwellings
5-17 including other structures, as those terms are <that term is>
5-18 defined in the Texas Personal Lines Manual <General Basis
5-19 Schedule>, subject to any applicable deductibles and the limits for
5-20 the coverage purchased by the insured. The Commissioner shall
5-21 promulgate applicable forms for use by the Association consistent
5-22 with forms promulgated by the Commissioner for residential property
5-23 insurers. <The replacement cost coverage does not apply to outdoor
5-24 antennas, aerials, carpeting, awnings, appliances, or other outdoor
5-25 equipment, whether or not attached to the insured dwelling.>
6-1 (b) If, at the time of loss, the total amount of insurance
6-2 applicable to the dwelling is equal to 80 percent or more of the
6-3 full replacement cost of the dwelling or equal to the maximum
6-4 amount of insurance otherwise available through the Association,
6-5 coverage applicable to the dwelling under the policy is extended to
6-6 include the full cost of repair or replacement, without a deduction
6-7 for depreciation. If, at the time of loss, the total amount of
6-8 insurance applicable to the dwelling is equal to less than 80
6-9 percent of the full replacement cost of the dwelling and less than
6-10 the maximum amount of insurance available through the Association,
6-11 liability for loss under the policy may not exceed the replacement
6-12 cost of that part of the dwelling damaged or destroyed, less
6-13 depreciation.
6-14 (c) The Board may promulgate such rules and regulations as
6-15 necessary to implement this section.
6-16 SECTION 4. This Act takes effect on September 1, 1995.
6-17 SECTION 5. The importance of this legislation and the
6-18 crowded condition of the calendars in both houses create an
6-19 emergency and an imperative public necessity that the
6-20 constitutional rule requiring bills to be read on three several
6-21 days in each house be suspended, and this rule is hereby suspended,
6-22 and that this Act take effect and be in force according to its
6-23 terms, and it is so enacted.