BILL ANALYSIS

H.B. 1656

By: Capriglione

Insurance

Committee Report (Unamended)

BACKGROUND AND PURPOSE

In 2019, the legislature passed H.B. 2102, requiring the mandatory disclosure of the requirement to pay a property or casualty insurance deductible and creating an offense for a person who, without the insurer's consent, pays, waives, absorbs, or otherwise declines to charge or collect the insured's deductible. While contractors would claim they were waiving or absorbing an insurance deductible, consumers still paid either by the contractor providing lesser work than the agreed amount or through higher premiums, which may cost insurance carriers untold amounts of money. While the legislation was a step in the right direction, it only addressed one segment of the insurance market. Auto body shops waiving a deductible could lead to increased insurance fraud and violates the spirit of the policy. H.B. 1656 seeks to expand the prohibition of rebating or waiving deductibles to automobile insurance policies. 

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

H.B. 1656 amends the Business & Commerce Code to make provisions establishing that it is a Class B misdemeanor offense for a person who sells goods or services to engage in the following conduct with respect to property insurance policies also applicable to automobile insurance policies:

· advertising or promising to provide a good or service to an insured under an insurance policy in a transaction in which the good or service will be paid for by the insured from the proceeds of an insurance claim and the person selling the good or service will, without the insurer's consent, assist the insured in avoiding monetary payment of the required insurance deductible; or

· providing a good or service to an insured under an insurance policy knowing that the insured will pay for the good or service with the proceeds of a claim under the policy and, without the insurer's consent, assisting the insured in avoiding monetary payment of the required insurance deductible.

The bill applies only to an offense committed on or after the bill's effective date. The bill provides for the continuation of the law in effect before the bill's effective date for purposes of an offense, or any element thereof, that occurred before that date.

H.B. 1656 also makes applicable to automobile insurance policies the related requirement for a contract to provide a good or service that is reasonably expected to be paid wholly or partly from the proceeds of a claim under a property insurance policy and that has a contract price of $1,000 or more to contain a specified notice regarding the payment of deductibles. This provision applies only to a contract entered into on or after the bill's effective date.

For purposes of the bill's provisions, an "automobile insurance policy" means an insurance policy issued by an insurer, including a county mutual insurance company, Lloyd's plan, or reciprocal or interinsurance exchange, that provides first-party coverage for loss of or damage to an automobile.

EFFECTIVE DATE

September 1, 2023.