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A BILL TO BE ENTITLED
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AN ACT
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relating to prohibiting oral releases for automobile insurance |
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claims. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle C, Title 10, Insurance Code, is amended |
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by adding Chapter 1955 to read as follows: |
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CHAPTER 1955. ORAL RELEASES FOR AUTOMOBILE INSURANCE CLAIMS |
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Sec. 1955.001. DEFINITIONS. In this chapter: |
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(1) "Claimant" means: |
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(A) an insured making a first-party claim; or |
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(B) an individual who has a claim for property |
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damage or an injury against another individual or an entity. |
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(2) "Injury" means a bodily or psychological injury. |
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(3) "Oral release" means an oral contract under which |
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a claimant releases, wholly or partly, one or more of the claimant's |
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claims arising out of property damage or an injury for which an |
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insurer may be liable under an automobile insurance policy in |
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exchange for money or other consideration paid. |
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Sec. 1955.002. APPLICABILITY OF CHAPTER. This chapter |
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applies to an insurer writing personal or commercial automobile |
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insurance in this state, including an insurance company, |
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corporation, reciprocal or interinsurance exchange, mutual |
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insurance company, county mutual insurance company, association, |
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Lloyd's plan, or other insurer. |
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Sec. 1955.003. ORAL RELEASE OF CLAIMS PROHIBITED. |
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Notwithstanding Section 26.01, Business & Commerce Code, a claimant |
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and an insurer or another individual or entity may not enter into an |
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oral release for claims arising out of property damage or an injury |
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for which an insurer may be liable under an automobile insurance |
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policy. A release made in exchange for money or other consideration |
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paid for the claimant's claim arising out of property damage or an |
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injury for which an insurer may be liable under an automobile |
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insurance policy is not enforceable unless the contract is a |
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separate written agreement. |
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SECTION 2. The changes in law made by this Act apply only to |
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a contract entered into on or after January 1, 2026. A contract |
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entered into before January 1, 2026, is governed by the law as it |
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existed immediately before the effective date of this Act, and that |
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law is continued in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2025. |