SRC-JFA S.B. 1387 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 1387
By: Patterson
Economic Development
4-11-97
As Filed


DIGEST 

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, after
prior approval and a hearing by the commissioner of insurance, to
implement underwriting guidelines to insure roofs based on actual cash
value. 
  
PURPOSE

As proposed, S.B. 1387 authorizes the Texas Catastrophe Property
Association to issue policies paying actual cash value benefits instead of
replacement cost benefits for damages to roofs.   

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 Article 21.49, Insurance Code (Texas Catastrophe
Property Insurance Pool Act), as follows: 

Sec. 8A(b).  Authorizes coverage applicable to a dwelling under a policy,
if, at the time of loss, the total amount of insurance applicable to the
dwelling is equal to 80 percent or more of the full replacement cost of
the dwelling or equal to the maximum amount of insurance otherwise
available through the Texas Catastrophe Property Insurance Association
(association), to be extended to include the full cost of repair or
replacement, without a deduction for depreciation.  Prohibits liability
for the loss under the policy, if, at the time of loss, the total amount
of insurance applicable to the dwelling is equal to less than 80 percent
of the full replacement cost of the dwelling and less than the maximum
amount of insurance available through the association, from exceeding the
replacement cost of that part of the dwelling damaged or destroyed, less
depreciation.  Authorizes the association, subject to the prior approval
and conditions of the commissioner of insurance after a public hearing, to
implement underwriting guidelines allowing it to insure roofs of a
building covered by an association policy based on actual cash value
instead of replacement cost. 

SECTION 2. Effective date: September 1, 1997.

SECTION 3. Emergency clause.