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A BILL TO BE ENTITLED
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AN ACT
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relating to auto insurance regulation, including the creation of |
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the Texas Automobile Insurance Public Option. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 1952, Insurance Code, is amended by |
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adding Subchapter I to read as follows: |
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SUBCHAPTER I. Texas Automobile Insurance Public Option |
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Sec. 1952.401. SHORT TITLE. This Act may be cited as the |
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"Texas Automobile Insurance Public Option Act." |
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Sec. 1952.402. PURPOSE. The purpose of this Act is to |
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establish a publicly administered auto insurance option in Texas to |
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ensure affordability, accessibility, and competition in the auto |
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insurance market while maintaining financial stability and |
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consumer protections. |
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Sec.1952.403. ESTABLISHMENT OF PUBLIC AUTO INSURANCE OPTION. |
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(a) The Texas Department of Insurance, in consultation with the |
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Texas Comptroller and the Texas Transportation Commission, shall |
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establish and administer a public auto insurance option |
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(hereinafter referred to as "Texas Public Auto Option") to provide |
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mandatory liability coverage and optional comprehensive and |
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collision coverage to eligible drivers. |
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(b) The Texas Public Auto Option shall be administered |
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through the Texas Department of Insurance, subject to state |
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guidelines and funding support. |
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Sec. 1952.404. ELIGIBILITY AND ENROLLMENT. (a) All |
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individuals required by Texas law to carry auto insurance shall be |
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eligible to enroll in the Texas Public Auto Option, provided they |
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meet residency and vehicle registration requirements. |
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(b) The Commissioner shall establish an annual enrollment |
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period, with special enrollment periods for qualifying life events |
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such as vehicle purchase, change of residence, or loss of private |
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coverage. |
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Sec. 1952.405. COVERAGE AND PREMIUMS.(a) The Texas Public |
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Auto Option shall provide coverage at levels meeting or exceeding |
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Texas minimum liability requirements and offer additional coverage |
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options, including uninsured/underinsured motorist coverage and |
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personal injury protection. |
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(b) Premiums shall be set using actuarial principles to |
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ensure fiscal solvency, affordability, and market competitiveness. |
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The Texas Department of Insurance shall implement a sliding scale |
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for low-income policyholders and explore risk-based adjustments. |
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Sec. 1952.406. FUNDING AND FINANCIAL MANAGEMENT.(a) The |
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Texas Public Auto Option shall be funded through policyholder |
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premiums, supplemented by state funding to ensure affordability and |
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solvency. |
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(b) State grants shall be available to assist in launching |
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and administering the Texas Public Auto Option. |
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(c) A reserve fund shall be established to ensure long-term |
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financial sustainability and claims-paying capacity. |
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Sec. 1952.407. CONSUMER PROTECTIONS AND FRAUD PREVENTION. |
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(a) The Texas Public Auto Option shall establish transparent |
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claims handling processes and an independent appeals system for |
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disputed claims. |
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(b) The Texas Department of Insurance shall implement fraud |
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detection and prevention programs, including data analytics and |
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interagency coordination. |
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Sec. 1952.408. COMPETITION AND MARKET EFFECTS. (a) The |
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Texas Public Auto Option shall operate alongside private insurers |
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to foster competition, stabilize rates, and provide consumer |
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choice. |
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(b) A biennial study shall assess the impact of the Texas |
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Public Auto Option on the auto insurance market, premium rates, |
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consumer satisfaction, and uninsured motorist rates. |
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Sec. 1952.409. RULEMAKING AUTHORITY. The Texas Department |
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of Insurance, in coordination with relevant state agencies, shall |
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issue regulations necessary to implement this Act. |
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SECTION 2. The change in law made by this Act applies only |
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to an insurance policy that is delivered, issued for delivery, or |
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renewed on or after January 1, 2026. |
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SECTION 3. This Act takes effect September 1, 2025. |