RS S.B. 1387 75(R)    BILL ANALYSIS


INSURANCE
S.B. 1387
By: Patterson, Jerry (Eiland)
5-16-97
Committee Report (Unamended)


BACKGROUND 

Currently, coverage applicable to a dwelling under a policy issued by the
Texas Catastrophe Property Insurance Association (association) is extended
to include full cost of repair or replacement of a dwelling at the time of
loss.  Roof damage is a common loss and the association will often pay
full replacement cost for a roof that was already damaged or in disrepair
at the time of loss.  This bill would authorize the association, under
rules developed by the commissioner of insurance, to provide actual cash
value coverage instead of replacement cost coverage on the roof covering
of a building insured by the association.   
  
PURPOSE

As proposed, S.B. 1387 authorizes the Texas Catastrophe Property
Association to provide actual cash value coverage instead of replacement
cost coverage on the roof covering a building insured by the association.

RULEMAKING AUTHORITY

Rulemaking authority is granted to the commissioner of insurance in
SECTION 1 (Section 8A(b), Article 21.49, Insurance Code) of this bill.  

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 8A, Article 21.49, Insurance Code (Texas
Catastrophe Insurance Pool Act), by amending Subsection (b) and by adding
Subsections (d) and (e), as follows:  

(b)  Authorizes the commissioner of insurance (commissioner),
notwithstanding any other provisions of this Act or other law, after
notice and hearing, to adopt rules to authorize the Texas Catastrophe
Property Insurance Association (association) to provide actual cash value
coverage instead of replacement cost coverage on the roof covering of a
building insured by the association; and to determine the conditions under
which the association may provide that actual cash value coverage, the
appropriate premium reductions when coverage for the roof covering is
provided on an actual cash value basis, and the disclosure that must be
provided to the policyholder, prominently displayed on the face of the
windstorm and hail insurance policy.  

(d)  Requires a hearing under Subsection (b), nowithstanding Article
1.33B, to be held before the commissioner or the commissioner's designee.  

(e)  Defines "roof covering" for purposes of this section. 

SECTION 2. Makes application of this Act prospective to January 1, 1998. 

SECTION 3. Effective date: September 1, 1997.

SECTION 4. Emergency clause.