HBA-CBW, CMT C.S.H.B. 185 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 185 By: Burnam Insurance 3/23/2001 Committee Report (Substituted) 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. C.S.H.B. 185 prohibits an insurer from canceling a new policy based on the filing of a claim or based on an accident or other incident except for certain specified accidents or offenses. 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 C.S.H.B. 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 an accident or loss under the policy that occurred on or after the first day that the policy was in effect unless: _the accident results in or the loss is damages to property or for bodily injury in an amount that exceeds $1,000 and the policyholder is 50 percent or more at fault for the accident or loss; _the accident results in death; _the policyholder is charged with consumption or possession of an alcoholic beverage in a motor vehicle, intoxication assault, intoxication manslaughter, or driving while intoxicated. EFFECTIVE DATE September 1, 2001. The Act applies only to an insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2002. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B 185 modifies the original to add to the exceptions that allow an insurer to cancel a personal automobile insurance policy that has been in effect less than 60 days to include an accident that results in or the loss is damages to property or for bodily injury in an amount that exceeds $1,000 and the policyholder is 50 percent or more at fault, or the accident results in death.