BILL ANALYSIS

C.S.H.B. 1039

By: Thompson, Ed

Insurance

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Insured Texans are not consistently being awarded claims for additional living expenses (ALE) when their home is made uninhabitable after a disaster, catastrophe, or other claim. ALE coverage reimburses insureds for expenses incurred when they cannot safely remain in their home. However, there is some confusion over what is considered "uninhabitable." While it is abundantly clear that a tree falling into someone's bedroom would render a home uninhabitable, not all insurers agree that an extended loss of utilities also makes a home uninhabitable. This inconsistency creates a confusing marketplace for those seeking reliable coverage. C.S.H.B. 1039 seeks to address this issue by including in statute specific criteria for ALE coverage with regard to electricity, water, sewer, or gas service being disrupted for longer than 24 hours as a result of a covered loss while retaining current state law regarding the requirement to offer ALE coverage.

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 rulemaking authority is expressly granted to the commissioner of insurance in SECTION 1 of this bill.

ANALYSIS

C.S.H.B. 1039 amends the Insurance Code to require a residential property insurance policy that includes coverage for additional living expenses to cover the additional living expenses incurred by an insured if the insured property is uninhabitable, including a stoppage of water, electricity, sewer, or natural gas service caused by a covered loss on the insured's property, for a period of at least 24 hours. This coverage must begin not later than 24 hours after the stoppage of service. The coverage requirement applies to an insurance policy delivered, issued for delivery, or renewed on or after January 1, 2024, by any insurer authorized to engage in the business of residential property insurance in Texas. The bill authorizes the commissioner of insurance to adopt rules to implement these provisions.

EFFECTIVE DATE

September 1, 2023.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 1039 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.

While both the introduced and substitute require coverage for additional living expenses resulting from certain stoppages of certain utility services, the substitute clarifies that the stoppage must be caused by a covered loss on the insured's property and establishes that the definition of "uninhabitable" is not exclusive.