BILL ANALYSIS

C.S.H.B. 287

By: Johnson, Julie

Insurance

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Many property insurance policies require a policyholder whose property is lost or damaged to make a portion of the replacements or repairs before receiving any reimbursement from the insurer. This puts the onus on the policyholder to front the cost and wait for reimbursement, and discourages low- to middle-income homeowners from utilizing their insurance because they cannot afford the cost for repairs. C.S.H.B. 287 seeks to help homeowners who have property insurance receive the repair or replacement value of their covered damaged home or personal property up front to make repairs in a timely fashion by requiring a homeowner's, renter's, or condominium owner's property insurance policy that includes replacement cost coverage to provide initial payment on a valid claim for loss of or damage to insured property of not less than 80 percent of the estimated cost to repair or replace the lost or damaged dwelling or personal property minus the applicable deductible.

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

C.S.H.B. 287 amends the Insurance Code to require a homeowner's, renter's, or condominium owner's insurance policy that includes replacement cost coverage to provide that in a valid claim for loss of or damage to insured property, the insurer must make a minimum initial payment of 80 percent of the estimated cost to repair or replace the lost or damaged dwelling or personal property minus the applicable deductible. The bill requires the insurer to make the remaining payment due on the claim upon receiving the policyholder's payment of the applicable deductible and documentation that the repair or replacement is completed. An insurer is not required to pay more than the total cost to replace the lost or damaged dwelling or personal property with property of a like kind and quality.

C.S.H.B. 287 clarifies that these provisions apply to each insurer authorized to engage in the business of residential property insurance in Texas, including a county mutual insurance company, Lloyd's plan, and reciprocal or interinsurance exchange. The bill applies only to an insurance policy delivered, issued for delivery, or renewed on or after January 1, 2024.

EFFECTIVE DATE

September 1, 2023.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 287 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

Both the introduced and the substitute require an applicable insurer to make the initial payment in a valid claim for damage to insured property, but the substitute also includes in the scope of this requirement a valid claim for loss of insured property, which was not included in the introduced.

Both the introduced and the substitute establish that an insurer is not required to pay more than the total cost to replace the lost or damaged personal property with property of a like kind and quality, but the substitute also includes in the scope of this provision the total cost to replace the lost or damaged dwelling, which was not included in the introduced.