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.