SRC-CTC H.B. 1891 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 1891
77R6394 AJA-DBy: Lewis, Glenn (Van de Putte)
Business & Commerce
4/23/2001
Engrossed


DIGEST AND PURPOSE 

Currently, state law authorizes an insurance company to reduce coverage on
a personal lines property insurance policy with an endorsement approved by
the Department of Insurance.  However, the law does not require an
insurance company to notify a policyholder of the change.  This lack of a
notification requirement has resulted in confusion as to what constitutes
proper notice.  H.B. 1891 requires that a written explanation be provided
to a policyholder if an endorsement is used to reduce coverage under an
insurance policy. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 5C, Insurance Code, by adding Article 5.36, as
follows: 

Art. 5.36.  WRITTEN EXPLANATION OF CERTAIN ENDORSEMENTS REQUIRED. Prohibits
an insurer from using an endorsement to a policy form to which Article 5.35
of this code applies that reduces the amount of coverage that would
otherwise be provided under the policy unless the insurer provides the
policyholder with a written explanation of the change made by the
endorsement before the effective date of the change. 

SECTION 2.  Effective date: September 1, 2001.
  Makes application of this Act prospective to January 1, 2002.