C.S.H.B. 1706 78(R)    BILL ANALYSIS


C.S.H.B. 1706
By: Taylor
Insurance
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Currently, a driver involved in an accident has a right to subrogation
against the at-fault driver and the insurer of the at-fault driver, if the
driver or the insurer of the driver who was not at-fault paid for the
repair of damages. This situation often arises when dispute on fault
exists or when the at-fault driver was uninsured.    

However, the insurer of a driver who was not at-fault does not currently
have the right of subrogation against the at-fault party to recover the
money paid to the not-at-fault driver under a Personal Injury Protection
(PIP) coverage.  This situation results in higher claims costs for PIP
coverage and thus higher premiums for consumers.  C.S.H.B. 1706 provides
that an insurer paying benefits under personal injury protection coverage
shall have the right of subrogation and a claim against an at-fault driver
under certain conditions. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

C.S.H.B. 1706 amends the Insurance Code to provide that an insurer paying
benefits, including a county mutual insurance company, under personal
injury protection coverage shall have a right of subrogation and a claim
against a person causing or contributing to an accident, if on the date of
loss, financial responsibility has not been established for the motor
vehicle involved in the accident or if the motor vehicle was insured by an
insurer not authorized to engage in business in this state.   

The bill entitles an insurer that brings an action against a responsible
third party or that party's insurer for a loss covered under a private
passenger automobile insurance policy to recover the costs of bringing the
action, including reasonable attorney's fees and court costs, in addition
to payments made by the insurer or insured.  The bill specifies the
insurers to whom the provisions of the Act relating to recovery of costs
from a third party apply. 

EFFECTIVE DATE

September 1, 2003.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 1706 modifies the original by clarifying that county mutual
insurance companies have the right of subrogation.