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AN ACT
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relating to notice to policyholders and agents of certain changes |
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to property and casualty insurance policies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 551.103, Insurance Code, is amended to |
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read as follows: |
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Sec. 551.103. CANCELLATION. For the purposes of this |
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subchapter, an insurer has canceled an insurance policy if the |
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insurer, without the consent of the insured: |
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(1) terminates coverage provided under the policy; |
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(2) refuses to provide additional coverage to which |
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the insured is entitled under the policy; or |
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(3) except as provided by Section 551.1055, reduces or |
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restricts coverage under the policy by endorsement or other means. |
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SECTION 2. Subchapter C, Chapter 551, Insurance Code, is |
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amended by adding Section 551.1055 to read as follows: |
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Sec. 551.1055. CHANGES TO POLICY ON RENEWAL. (a) In this |
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section, "material change" means a change to a policy that, with |
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respect to a prior or existing policy: |
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(1) reduces coverage; |
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(2) changes conditions of coverage; or |
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(3) changes the duties of the insured. |
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(b) Notwithstanding Section 551.103, a change to a policy |
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provision on renewal is not a nonrenewal or cancellation under this |
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subchapter if the insurer provides the insured with written notice |
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in accordance with this section of any material change in each form |
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of the policy offered to the insured on renewal from the form of the |
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policy held immediately before renewal. |
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(c) Notice provided under Subsection (b) must: |
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(1) appear in a conspicuous place in the notice of |
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renewal; |
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(2) clearly indicate each material change to the |
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policy being made on renewal; |
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(3) be written in plain language; and |
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(4) be provided to the insured not later than the 30th |
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day before the renewal date. |
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(d) In addition to the notice to the insured provided under |
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Subsection (b), if an insurer elects to make a material change to a |
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policy form on renewal, not later than the 30th day before the |
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earliest renewal date on which the new policy form is used, the |
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insurer shall provide written notice to each agent of the insurer |
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that clearly indicates each material change being made to the |
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policy form. An insurer may provide the notice to the agents in a |
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single notice given to each agent of the insurer that summarizes |
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substantially similar material changes to more than one policy |
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form. |
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(e) Notwithstanding this section, for a personal automobile |
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insurance policy, an insurer must comply with Sections 551.105 and |
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551.106(b). |
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SECTION 3. Section 551.110, Insurance Code, is amended to |
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read as follows: |
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Sec. 551.110. LIABILITY FOR DISCLOSURE. An insurer or |
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agent or an employee of an insurer or agent is not liable for a |
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notice, statement, or disclosure made in good faith under this |
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subchapter unless the notice, statement, or disclosure was: |
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(1) known to be false; or |
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(2) made with malice or wilful intent to injure any |
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person. |
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SECTION 4. Section 2002.001, Insurance Code, is amended to |
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read as follows: |
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Sec. 2002.001. POLICY FORM OR ENDORSEMENT MAKING MATERIAL |
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CHANGE TO POLICY [ENDORSEMENTS REDUCING AMOUNT OF COVERAGE]. |
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(a) In this section, "material change" means a change to a policy |
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that, with respect to a prior or existing policy: |
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(1) reduces coverage; |
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(2) changes conditions of coverage; or |
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(3) changes the duties of the insured. |
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(b) An insurer may not use a policy form or [an] endorsement |
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to a policy form to which Article 5.35, Subchapter B of this |
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chapter, or Subchapter B, Chapter 2301, applies that makes a |
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material change to [reduces coverage that would otherwise be
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provided under] the policy unless: |
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(1) the insured requests the material change |
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[endorsement]; or |
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(2) the insurer provides the policyholder in a written |
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notice an [with a written] explanation of [the change made by] the |
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material change that: |
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(A) appears in a conspicuous place on the notice |
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of the material change; |
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(B) clearly indicates each material change to the |
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policy; |
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(C) is written in plain language; and |
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(D) is provided to the policyholder |
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[endorsement] not later than the 30th day before the date on which |
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the policy expires. |
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(c) Notice required by Subsection (b) may be provided to the |
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policyholder in a notice of renewal. |
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(d) In addition to the notice to the policyholder provided |
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under Subsection (b), if an insurer elects to make a material change |
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to a policy form or use an endorsement to make a material change to a |
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policy form, not later than the 30th day before the earliest date on |
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which the new policy form or endorsement is used, the insurer shall |
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provide written notice to each agent of the insurer that clearly |
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indicates each material change being made to the policy form. An |
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insurer may provide the notice to the agents in a single notice |
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given to each agent of the insurer that summarizes substantially |
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similar material changes to more than one policy form. |
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SECTION 5. The heading to Subchapter C, Chapter 2002, |
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Insurance Code, is amended to read as follows: |
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SUBCHAPTER C. ITEMS PROVIDED [TO POLICYHOLDER] IN CONNECTION WITH |
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INSURANCE POLICY |
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SECTION 6. Section 2002.102, Insurance Code, is amended to |
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read as follows: |
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Sec. 2002.102. NOTICE OF RENEWAL. (a) In this section, |
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"material change" means a change to a policy that, with respect to a |
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prior or existing policy: |
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(1) reduces coverage; |
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(2) changes conditions of coverage; or |
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(3) changes the duties of the policyholder. |
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(b) An insurer, including a farm mutual insurance company, |
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county mutual insurance company, Lloyd's plan, or reciprocal or |
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interinsurance exchange, that renews a homeowners insurance |
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policy, fire and residential allied lines insurance policy, farm |
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and ranch owners insurance policy, or farm and ranch insurance |
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policy must provide the policyholder with written notice in |
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accordance with this section of any material change in [difference
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between] each form of the policy offered to the policyholder on |
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renewal from [and] the form of the policy held immediately before |
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renewal. |
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(c) [(b)] A notice provided under this section must: |
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(1) appear in a conspicuous place in the notice of |
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renewal; |
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(2) clearly indicate each material change to the |
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policy being made on renewal; |
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(3) be written in plain language; and |
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(4) be provided to the policyholder not later than the |
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30th day before the renewal date. |
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(d) In addition to the notice to the policyholder provided |
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under this section, if an insurer elects to make a material change |
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to a policy form on renewal, not later than the 30th day before the |
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earliest renewal date on which the new policy form is used, the |
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insurer shall provide written notice to each agent of the insurer |
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that clearly indicates each material change being made to the |
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policy form. An insurer may provide the notice to the agents in a |
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single notice given to each agent of the insurer that summarizes |
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substantially similar material changes to more than one policy |
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form. |
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(e) [(c)] The commissioner may adopt rules as necessary to |
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implement this section. |
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SECTION 7. The change in law made by this Act applies only |
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to an insurance policy delivered, issued for delivery, or renewed |
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on or after January 1, 2018. A policy delivered, issued for |
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delivery, or renewed before that date is governed by the law as it |
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existed immediately before the effective date of this Act, and that |
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law is continued in effect for that purpose. |
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SECTION 8. This Act takes effect September 1, 2017. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I hereby certify that S.B. No. 417 passed the Senate on |
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April 19, 2017, by the following vote: Yeas 31, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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I hereby certify that S.B. No. 417 passed the House on |
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May 9, 2017, by the following vote: Yeas 143, Nays 2, two present |
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not voting. |
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______________________________ |
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Chief Clerk of the House |
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Approved: |
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______________________________ |
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Date |
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______________________________ |
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Governor |