HBA-TYH H.B. 2905 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2905 By: Seaman Insurance 4/9/1999 Introduced BACKGROUND AND PURPOSE Currently, uninsured or underinsured motorist coverage (UM/UIM) covers bodily injury and property damage arising from an accident caused by a hit and run driver or an uninsured or underinsured driver up to the policy limits of the coverage. The bodily injury coverage includes damages for economic damages, such as medical bills and lost income, and for noneconomic damages, including pain and suffering, disfigurement, and permanent or partial disability. UM/UIM is not currently required by state law. In 1998, the Senate Interim Committee on Civil Justice issued a report on Uninsured Motorists and Tort Reform Savings. The report recommended that Texas drivers have the option of purchasing UM/UIM coverage that excludes coverage for noneconomic damages. This should lower the premium for this type of coverage. H.B. 2905 allows individuals to waive coverage for noneconomic damages and requires insurance companies that provide this waiver to apply a premium discount to individuals who choose this option. This bill also requires the insurance company to provide specific notice to the consumer that coverage may be waived. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in SECTION 1 (Article 5.06-1, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 5.06-1, Insurance Code, as follows: (a) Makes reference to automobile liability insurance issued through the Texas Automobile Insurance Plan, rather than issued pursuant to an Assigned Risk Plan established under authority of the Texas Motor Vehicle Safety Responsibility Act. Deletes references to the State Board of Insurance of Texas and replaces with the commissioner of insurance (commissioner). Deletes text referencing Texas Motor Vehicle Safety Responsibility Act. Redesignated from Subsection (1). (b) Defines "exemplary damages" and "noneconomic damages." Makes nonsubstantive changes. (c) Makes a conforming change. (d) Makes no change. (e) Deletes reference to Texas Motor Vehicle Safety Responsibility Act and replaces with Chapter 601 (Motor Vehicle Safety Responsibility Act), Transportation Code. Redesignated from Subsection (3). (f) Authorizes the named insured to elect to waive coverage under this article for recovery of noneconomic and exemplary damages resulting from bodily injury, sickness, or disease, including death. Provides that if an insured elects to waive coverage under this subsection, Subsection (e) of this article does not apply to the limits of liability that are applicable to the coverage provided under the policy issued to the named insured for damages resulting from bodily injury, sickness, or disease, including death. Authorizes the commissioner, by rule, to adopt minimum limits of liability applicable to those damages. (g) Requires an insurer, including a county mutual insurer, to apply a premium discount, in an amount prescribed by the commissioner, to an automobile liability insurance policy with respect to which a waiver of coverage under Subsection (f) of this article has been made. Authorizes the commissioner to adopt rules as necessary to ensure the compliance of county mutual insurers with this subsection and require a county mutual insurer to provide any information regarding the rates or rating manual used by the insurer necessary to verify the insurer's compliance with this subsection. (h) Requires an insurer, including a county mutual insurer, to provide notice in the form prescribed by the commissioner that coverage may be waived under Subsection (f) of this article to each applicant for coverage and each named insured. (i) Provides that waiver of coverage under Subsection (f) of this article does not affect the insured's right to bring an action for noneconomic and exemplary damages against a responsible party. (j) Redesignated from Subsection (4)(a). Makes a conforming change. (k) Redesignated from Subsection (b). (l)-(n) Redesignated from Subsections (5)-(7). Makes nonsubstantive and conforming changes. (o) Redesignated from Subsection (8). Redesignates Subdivisions (a)-(b) to Subdivisions (1)-(2). SECTION 2. Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 3. Emergency clause.