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A BILL TO BE ENTITLED
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AN ACT
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relating to dispute resolution and insurance policies or other |
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coverage agreements. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle C, Title 5, Insurance Code, is amended |
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by adding Chapter 565 to read as follows: |
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CHAPTER 565. PROHIBITED PRACTICES RELATED TO DISPUTE RESOLUTION |
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Sec. 565.001. APPLICABILITY OF CHAPTER. This chapter |
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applies to an insurance policy or other coverage agreement acquired |
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by the covered person for personal, family, or household purposes |
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issued by a company regulated by the commissioner, including: |
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(1) a domestic or foreign, stock or mutual, life, |
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health, or accident insurance company; |
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(2) a domestic or foreign, stock or mutual, fire or |
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casualty insurance company; |
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(3) a Mexican casualty company; |
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(4) a domestic or foreign Lloyd's plan; |
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(5) a domestic or foreign reciprocal or interinsurance |
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exchange; |
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(6) a domestic or foreign fraternal benefit society; |
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(7) a domestic or foreign title insurance company; |
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(8) an attorney's title insurance company; |
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(9) a stipulated premium company; |
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(10) a nonprofit legal service corporation; |
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(11) a health maintenance organization; |
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(12) a statewide mutual assessment company; |
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(13) a local mutual aid association; |
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(14) a local mutual burial association; |
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(15) an association exempt under Section 887.102; |
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(16) a nonprofit hospital, medical, or dental service |
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corporation, including a company subject to Chapter 842; |
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(17) a county mutual insurance company; and |
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(18) a farm mutual insurance company. |
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Sec. 565.002. PROVISION REQUIRING ARBITRATION PROHIBITED. |
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(a) An insurance policy or other coverage agreement may not require |
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the covered person to submit to arbitration a dispute related to the |
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coverage that arises after the agreement is entered into. |
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(b) If a written agreement that involves the provision of |
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insurance and other services, goods, property, or credit includes a |
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provision that requires a dispute under the agreement to be |
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submitted to arbitration, the agreement must include a clear and |
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conspicuous disclosure that the mandatory arbitration provision |
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does not apply to any insurance-related dispute under the |
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agreement. |
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(c) A provision in an insurance policy or other coverage |
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agreement that violates this section is void and unenforceable. |
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Sec. 565.003. LIABILITY. (a) A person described by Section |
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565.001 that issues a coverage agreement that violates this section |
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is liable to the covered person for: |
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(1) the covered person's actual damages sustained as a |
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result of the violation; |
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(2) $100, regardless of whether actual damages are |
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sustained; and |
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(3) the covered person's attorney's fees and costs to |
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recover under this subsection. |
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(b) A contract provision that requires an action to enforce |
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this section to be submitted to arbitration is void and |
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unenforceable. |
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SECTION 2. Chapter 565, Insurance Code, as added by this |
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Act, applies only to an insurance policy or other coverage |
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agreement delivered, issued for delivery, or renewed on or after |
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January 1, 2008. An insurance policy or coverage agreement |
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delivered, issued for delivery, or renewed before January 1, 2008, |
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is governed by the law as it existed immediately before the |
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effective date of this Act, and that law is continued for that |
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purpose. |
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SECTION 3. This Act takes effect September 1, 2007. |