AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
C.S.S.B. 112 requires that residential property insurers disclose to consumers deductible amounts in dollars. At present, some insurers only list percentage deductibles, which is confusing for consumers.
Consumers often assume that the deductible percentage is applied to the amount of the loss. It is not; it applies to the insured value of the home. Deductibles on health plans are calculated as a percentage of the claim, and consumers utilize their health plans on a more regular basis than their homeowners insurance so this misunderstanding is natural.
Listing the dollar amounts of all deductibles on the declarations page would help eliminate this confusion and educate the consumer about the value he or she is receiving for the premium paid. Many large companies already state deductibles in terms of dollar amounts. This requirement would address an issue that is more common amongst small insurers that are not utilizing time-tested forms.
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 Subchapter B, Chapter 2301, Insurance Code, by adding Section 2301.056, as follows:
Sec. 2301.056. REQUIREMENT FOR FORMS; DECLARATIONS PAGE REQUIREMENT. (a) Requires that a residential property insurance policy form include a declarations page that lists and explains each type of deductible under the residential property insurance policy and states the exact dollar amount of each deductible under the residential property insurance policy.
(b) Requires that the declarations page include a written disclosure that clearly identifies the provision and explains how the new amount is determined if a residential property insurance policy or an endorsement attached to the policy contains a provision that may cause the exact dollar amount of a deductible under the policy to change.
SECTION 2. Makes application of this Act prospective to January 1, 2014.
SECTION 3. Effective date: September 1, 2013.