By Truan                                               S.B. No. 702
       74R4752 PB-D
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to residential fire protection sprinkler systems and to an
    1-3  insurance premium discount for the use of such a system.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 3(a), Article 5.43-3, Insurance Code, is
    1-6  amended to read as follows:
    1-7        (a)  The board shall administer this article and may issue
    1-8  rules necessary to its administration through the State Fire
    1-9  Marshal.  Under rules adopted under this subsection, the board may
   1-10  create a specialized licensing or registration program for fire
   1-11  protection sprinkler system contractors.
   1-12        SECTION 2.  Subchapter C, Chapter 5, Insurance Code, is
   1-13  amended by adding Article 5.33B to read as follows:
   1-14        Art. 5.33B.  REDUCTION IN HOMEOWNERS INSURANCE PREMIUMS FOR
   1-15  APPROVED SPRINKLER SYSTEMS
   1-16        Sec. 1.  DEFINITIONS.  In this article:
   1-17              (1)  "Commission" means the Texas Commission on Fire
   1-18  Protection.
   1-19              (2)  "Commissioner" means the commissioner of
   1-20  insurance.
   1-21              (3)  "Fire protection sprinkler system" has the meaning
   1-22  assigned by Section 1(9), Article 5.43-3, of this code.
   1-23              (4)  "Homeowners insurance" means insurance coverage
   1-24  written by a company authorized to engage in the business of fire
    2-1  and residential allied lines insurance in this state, including a
    2-2  business entity regulated under Chapter 6, 16, 17, 18, or 19 of
    2-3  this code.
    2-4              (5)  "Inspector" means a person certified by the
    2-5  commission to be a fire protection sprinkler system contractor
    2-6  under Article 5.43-3 of this code.
    2-7        Sec. 2.  ELIGIBILITY FOR PREMIUM REDUCTION.  A policyholder
    2-8  is entitled to a premium reduction for homeowners insurance
    2-9  coverage if the policyholder has installed on the covered property
   2-10  a fire protection sprinkler system that is approved under this
   2-11  article by an inspector.
   2-12        Sec. 3.  APPROVAL PROCEDURE.  (a)  A person who has a fire
   2-13  protection sprinkler system in the person's residence may contract
   2-14  with an inspector for a premium reduction certification inspection.
   2-15  An inspector who conducts an inspection under this section may
   2-16  charge the fee for the inspection that is set by the commission.
   2-17        (b)  The inspector shall inspect the property and shall file
   2-18  a written report in the form prescribed by the department with the
   2-19  department stating the inspector's findings and whether or not the
   2-20  fire protection sprinkler system meets applicable standards and
   2-21  qualifies the applicant's property for a premium reduction.
   2-22        (c)  For purposes of this section, "applicable standards"
   2-23  means the standards for a fire protection sprinkler system that are
   2-24  adopted by rule by the commission, which may include standards
   2-25  proposed by the National Fire Protection Association.
   2-26        Sec. 4.  PREMIUM REDUCTION CERTIFICATE.  (a)  If the
   2-27  inspector's report states that the applicant's property qualifies
    3-1  for a premium reduction, the department shall issue to the
    3-2  applicant a premium reduction certificate entitling the applicant
    3-3  to a premium reduction on the homeowners insurance.
    3-4        (b)  The policyholder is entitled to the premium reduction on
    3-5  presentation of the certificate to the insurer issuing the policy
    3-6  or the insurer's agent.
    3-7        Sec. 5.  AMOUNT OF PREMIUM REDUCTION.  The commissioner shall
    3-8  establish by rule the amount of a premium reduction applicable
    3-9  under this article to a homeowners insurance policy.
   3-10        SECTION 3.  (a)  This Act takes effect September 1, 1995.
   3-11        (b)  Article 5.33B, Insurance Code, as added by Section 2 of
   3-12  this Act, applies only to an insurance policy that is delivered,
   3-13  issued for delivery, or renewed on or after January 1, 1996.  A
   3-14  policy that is delivered, issued for delivery, or renewed before
   3-15  January 1, 1996, is governed by the law as it existed immediately
   3-16  before the effective date of this Act, and that law is continued in
   3-17  effect for that purpose.
   3-18        SECTION 4.  The importance of this legislation and the
   3-19  crowded condition of the calendars in both houses create an
   3-20  emergency and an imperative public necessity that the
   3-21  constitutional rule requiring bills to be read on three several
   3-22  days in each house be suspended, and this rule is hereby suspended.