Texas House Bill HB1327

Texas 2009 - 81st Regular

Caption

Relating to a mile-based rating plan for personal automobile insurance.

Impact

The implications of this policy shift can be significant for both consumers and insurance companies. For consumers, the opportunity to have their premiums reflect their actual driving habits may lead to lower costs for those who drive less. Additionally, it fosters a sense of fairness, particularly for those who may have previously been overcharged based on generalized rating plans. However, the bill's passage could also compel insurers to reevaluate their pricing strategies, which may cause fluctuations in premium rates within the existing market framework.

Summary

House Bill 1327 proposes the establishment of a mile-based rating plan for personal automobile insurance in the state of Texas. This bill amends the Insurance Code to introduce a new subchapter that specifically defines mile-based automobile insurance and sets forth the regulations surrounding it. Under this new system, insurance rates will be calculated based on miles driven by the insured, shifting the traditional mileage rating system that typically uses factors such as vehicle age and driver experience. The intent is to create a more equitable pricing structure that reflects actual usage of the vehicle.

Contention

The adoption of a mile-based rating plan may also stir up discussions among stakeholders. Advocates for more tailored insurance solutions argue that it promotes responsible driving behaviors and can potentially reduce accidents. Conversely, critics may voice concerns about privacy, specifically regarding how insurers will monitor and collect mileage data. There is also potential worry about the administrative burden this plan places on insurance companies, as they will need to develop new systems and processes to manage these ratings effectively.