BILL ANALYSIS

S.B. 442

By: Hancock

Insurance

Committee Report (Unamended)

BACKGROUND AND PURPOSE

It has been reported that Hurricane Harvey revealed a widespread absence of full insurance coverage for property owners in Texas. While reports indicate that many Texans decided to buy residential and commercial insurance after the unprecedented disaster, data continues to show that many remain underinsured because of an assumption that their policy provides flood insurance when it in fact does not. S.B. 442 seeks to ensure that property insurance policyholders will be warned if their policy does not cover flood damage so they may better prepare for future natural disasters.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

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

S.B. 442 amends the Insurance Code to require an insurer that issues or renews a commercial or residential property insurance policy that does not provide coverage against loss caused by flooding to include with the policy documents provided to the policyholder at the time the policy is issued or renewed a specified statement relating to the person's potential need to consider flood insurance as the policy does not include coverage for damages resulting from a flood and suggesting the person discuss the issue with the person's agent or insurance company or visit a certain website. The bill requires the statement to be conspicuous, as defined by the Uniform Commercial Code--General Provisions, and establishes that an insurer's failure to comply with the bill's provisions does not invalidate any exclusion, including a flood exclusion, in an insurance policy subject to the bill's provisions.

S.B. 442 provides for the meaning of "commercial property insurance" and "residential property insurance" and establishes the applicability of its provisions. The bill applies only to an insurance policy delivered, issued for delivery, or renewed on or after January 1, 2020.

EFFECTIVE DATE

September 1, 2019.