HBA-CBW H.B. 185 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 185 By: Burnam Insurance 2/9/2001 Introduced BACKGROUND AND PURPOSE Insurance agents usually issue a binder to provide initial coverage for insurance applicants, which is in effect for 60 days for auto insurance and 90 days for homeowners insurance. Under current law, during this time period the insurance company may cancel the insurance policy for any reason, deny coverage or place the applicant into a higher-priced plan. Once the policy has been in effect beyond the binder period, policyholders are generally protected from cancellation as long as they pay their premiums, maintain their driver's license and auto registration, do not commit fraud, and do not increase their degree of risk. House Bill 185 prohibits an insurer from canceling a new policy based on the filing of a claim or based on an accident or other incident unless the policyholder was charged with an alcohol-related offense while operating a motor vehicle. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 185 amends the Insurance Code to prohibit an insurer from canceling a personal automobile insurance policy that has been in effect less than 60 days or any other policy that has been in effect less than 90 days if the reason for cancellation is based on a claim brought under the policy that arose on or after the first day that the policy takes effect or an accident or other incident that occurred on or after the first day that the policy takes effect. The bill prohibits an insurer from making such a cancellation regardless of whether the policyholder files a claim under the policy, unless the policy is a personal automobile insurance policy and the operator of the motor vehicle involved in the accident is charged with consumption or possession of an alcoholic beverage in a motor vehicle, an intoxication assault, intoxication manslaughter, or driving while intoxicated. EFFECTIVE DATE September 1, 2001, and applies only to an insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2002.