By:  Truan                                             S.B. No. 702
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to residential fire protection sprinkler systems and to an
    1-2  insurance premium discount for the use of such a system.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Subsection (a), Section 3, Article 5.43-3,
    1-5  Insurance Code, is amended to read as follows:
    1-6        (a)  The board shall administer this article and may issue
    1-7  rules necessary to its administration through the State Fire
    1-8  Marshal.  Under rules adopted under this subsection, the board may
    1-9  create a specialized licensing or registration program for fire
   1-10  protection sprinkler system contractors.
   1-11        SECTION 2.  Subchapter C, Chapter 5, Insurance Code, is
   1-12  amended by adding Article 5.33B to read as follows:
   1-13        Art. 5.33B.  REDUCTION IN HOMEOWNERS INSURANCE PREMIUMS FOR
   1-14  APPROVED SPRINKLER SYSTEMS
   1-15        Sec. 1.  DEFINITIONS.  In this article:
   1-16              (1)  "Commission" means the Texas Commission on Fire
   1-17  Protection.
   1-18              (2)  "Commissioner" means the commissioner of
   1-19  insurance.
   1-20              (3)  "Fire protection sprinkler system" has the meaning
   1-21  assigned by Section 1(9), Article 5.43-3, of this code.
   1-22              (4)  "Homeowners insurance" means insurance coverage
   1-23  written by a company authorized to engage in the business of fire
   1-24  and residential allied lines insurance in this state, including a
    2-1  business entity regulated under Chapter 6, 16, 17, 18, or 19 of
    2-2  this code.
    2-3              (5)  "Inspector" means a person certified by the
    2-4  commission to be a fire protection sprinkler system contractor
    2-5  under Article 5.43-3 of this code.
    2-6        Sec. 2.  ELIGIBILITY FOR PREMIUM REDUCTION.  A policyholder
    2-7  of a one-family or two-family dwelling is entitled to a premium
    2-8  reduction for homeowners insurance coverage if the policyholder has
    2-9  installed on the covered property a fire protection sprinkler
   2-10  system that is approved under this article by an inspector.
   2-11        Sec. 3.  APPROVAL PROCEDURE.  (a)  A person who has a fire
   2-12  protection sprinkler system in the person's residence may contract
   2-13  with an inspector for a premium reduction certification inspection.
   2-14        (b)  The inspector shall inspect the property and shall file
   2-15  a written report in the form prescribed by the department with the
   2-16  department stating the inspector's findings and whether or not the
   2-17  fire protection sprinkler system meets applicable standards and
   2-18  qualifies the applicant's property for a premium reduction.
   2-19        (c)  For purposes of this section, "applicable standards"
   2-20  means the standards for a fire protection sprinkler system that are
   2-21  adopted by rule by the commission, which may include standards
   2-22  proposed by the National Fire Protection Association.
   2-23        Sec. 4.  PREMIUM REDUCTION CERTIFICATE.  (a)  If the
   2-24  inspector's report states that the applicant's property qualifies
   2-25  for a premium reduction, the department shall issue to the
   2-26  applicant a premium reduction certificate entitling the applicant
   2-27  to a premium reduction on the homeowners insurance.
    3-1        (b)  The policyholder is entitled to the premium reduction on
    3-2  presentation of the certificate to the insurer issuing the policy
    3-3  or the insurer's agent.
    3-4        Sec. 5.  AMOUNT OF PREMIUM REDUCTION.  The commissioner shall
    3-5  establish by rule the amount of a premium reduction applicable
    3-6  under this article to a homeowners insurance policy.
    3-7        SECTION 3.  (a)  This Act takes effect September 1, 1995.
    3-8        (b)  Article 5.33B, Insurance Code, as added by Section 2 of
    3-9  this Act, applies only to an insurance policy that is delivered,
   3-10  issued for delivery, or renewed on or after January 1, 1996.  A
   3-11  policy that is delivered, issued for delivery, or renewed before
   3-12  January 1, 1996, is governed by the law as it existed immediately
   3-13  before the effective date of this Act, and that law is continued in
   3-14  effect for that purpose.
   3-15        SECTION 4.  The importance of this legislation and the
   3-16  crowded condition of the calendars in both houses create an
   3-17  emergency and an imperative public necessity that the
   3-18  constitutional rule requiring bills to be read on three several
   3-19  days in each house be suspended, and this rule is hereby suspended.