SRC-MKV, CTC C.S.H.B. 1891 77(R)BILL ANALYSIS


Senate Research CenterC.S.H.B. 1891
By: Lewis, Glenn (Van De Putte)
Business & Commerce
5/1/2001
Committee Report (Substituted)


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.  C.S.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, unless requested
by the insured, 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.

SUMMARY OF COMMITTEE CHANGES

Differs from original by adding phrase "unless requested by the insured" to
SECTION 1 (Article 5.36, Insurance Code.)