By: Carona S.B. No. 19
(In the Senate - Filed February 26, 2013; March 5, 2013,
read first time and referred to Committee on Business and Commerce;
March 25, 2013, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 9, Nays 0; March 25, 2013,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 19 By: Carona
A BILL TO BE ENTITLED
AN ACT
relating to certain residential and other structures and mitigation
of loss to those structures resulting from natural catastrophes;
providing a criminal penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle C, Title 2, Insurance Code, is amended
by adding Chapter 152 to read as follows:
CHAPTER 152. LOSS MITIGATION PROGRAMS
Sec. 152.001. DEFINITIONS. In this chapter:
(1) "Construction" includes alteration,
rehabilitation, remodeling, enlargement, or repair of, or an
addition to, a structure.
(2) "Loss mitigation measure" means an improvement to
or feature of a structure that reduces the risk or amount of loss
from a covered loss under a residential property insurance policy.
(3) "Qualified inspector" includes:
(A) an inspector certified by:
(i) the International Code Council;
(ii) the Building Officials and Code
Administrators International, Inc.;
(iii) the International Conference of
Building Officials; or
(iv) the Southern Building Code Congress
International, Inc.;
(B) a licensed professional engineer whose name
appears on the roster described by Section 1001.652, Occupations
Code; or
(C) a person who meets the requirements for
appointment to conduct windstorm inspections as specified by the
commissioner by rule.
(4) "Seacoast territory" has the meaning assigned by
Section 2210.003.
(5) "Trade association" means a nonprofit,
cooperative, and voluntarily joined association of business or
professional competitors designed to assist its members and its
industry or profession in dealing with mutual business or
professional problems and in promoting their common interest.
Sec. 152.002. ESTABLISHMENT OF PROGRAMS; PURPOSE. (a) The
commissioner in consultation with the office of public insurance
counsel shall develop and implement statewide loss mitigation
programs designed to reduce potential insured residential property
losses in this state.
(b) The programs may:
(1) reduce property loss with respect to windstorm,
hail, wildfire, and other natural catastrophes;
(2) reduce the risk and amount of potential insured
residential property losses arising from windstorm, hail,
wildfire, and other natural catastrophes;
(3) provide grants for loss mitigation measures; and
(4) promote public education about loss mitigation
related to windstorm, hail, wildfire, and other natural
catastrophes.
(c) The department and the office of public insurance
counsel may enter into an interagency contract or other agreements
with each other as appropriate to implement this chapter. The
department or the office of public insurance counsel, jointly or
severally, may enter into agreements with any individual or entity,
including a political subdivision, a state or federal agency, a
trade association, a university, or a nonprofit entity or other
private entity as appropriate to implement this chapter.
Sec. 152.003. FUNDING FOR LOSS MITIGATION GRANT PROGRAM.
(a) The department in cooperation with the office of public
insurance counsel shall use its best efforts to obtain funding for
loss mitigation grants available under Section 152.004, including
obtaining:
(1) grants from any individual or entity, including a
political subdivision, a state or federal agency, a trade
association, a university, or a nonprofit entity or other private
entity; or
(2) gifts or grants of money or in kind.
(b) The department may enter into interagency agreements
and other agreements as necessary to seek funding.
Sec. 152.004. LOSS MITIGATION GRANT OR LOAN PROGRAM.
(a) The commissioner in consultation with the office of public
insurance counsel may establish and administer a statewide grant or
loan program to fund the implementation, addition, or installation
of loss mitigation measures for residential property.
(b) Subject to eligibility requirements established by the
commissioner by rule, grants or loans under this section may be made
available to residential property owners in areas susceptible to
windstorm, hail, wildfire, and other natural catastrophes as
determined by the commissioner by rule.
(c) Grants or loans may be made available for
implementation, addition, or installation of loss mitigation
measures, including:
(1) roof deck attachments;
(2) secondary water barriers;
(3) roof coverings;
(4) brace gable ends;
(5) roof-to-wall connection reinforcements;
(6) exterior opening protections;
(7) exterior doors, including garage doors;
(8) tie-down systems;
(9) reinforcements of trusses, studs, or other
structural components; or
(10) other loss mitigation measures approved by the
commissioner by rule.
(d) In establishing eligibility requirements for the
program, the commissioner shall consider factors the commissioner
considers reasonable, including whether the residential property
is:
(1) owner occupied;
(2) built before June 2009; and
(3) located in:
(A) an area designated as underserved under
Chapter 2004 or 2211; or
(B) a region of the state in which insurers
report high average loss ratios for residential property insurance.
(e) The commissioner shall prioritize the distribution of
grants or loans under the program based on the following criteria in
the following order of importance:
(1) close proximity to the coast;
(2) relative susceptibility to wind damage;
(3) replacement cost value;
(4) owner occupancy; and
(5) the anticipated effect of a loss mitigation
measure on the insurance premium rate charged for residential
property insurance covering the property.
(f) The proceeds of a grant or loan under this section must
be paid to the contractor or other person who has entered into a
contract to implement, add, or install a loss mitigation measure
for the residential property owner.
(g) Before payment of the proceeds of a grant or loan under
this section, the commissioner may require inspection of the
applicable property or, after implementation, addition, or
installation, the loss mitigation measure the implementation,
addition, or installation of which is funded by the grant or loan.
(h) The commissioner by rule may adopt quality standards for
the loss mitigation measures described by Subsection (c).
Sec. 152.005. FRAUD; PENALTIES. (a) A person commits an
offense if the person knowingly or intentionally:
(1) submits to the department in connection with the
program established under Section 152.004 false or misleading
information or documents; or
(2) diverts proceeds of a grant or a loan to a purpose
other than implementing, adding, or installing loss mitigation
measures in accordance with the application for the grant or loan.
(b) An offense under Subsection (a) is a fraudulent
insurance act under Chapter 701 and a Class C misdemeanor.
Sec. 152.006. LOSS MITIGATION CREDIT AND SURCHARGE
INFORMATION COLLECTION. (a) The commissioner by rule may require
a residential property insurer to provide with a rate filing under
Chapter 2251 supplementary rating information, including
information relating to:
(1) credits and surcharges or absence of credits and
surcharges related to implementation, addition, or installation of
loss mitigation measures specified by the commissioner by rule; and
(2) variances in premium resulting from the
implementation, addition, or installation of loss mitigation
measures identified by the commissioner by rule.
(b) The Texas Windstorm Insurance Association and FAIR Plan
Association shall provide the information described by Subsection
(a) to the department with rate filings made by each association.
Sec. 152.007. PUBLIC AVAILABILITY OF INFORMATION. (a) The
department may collect information relating to premium credits,
surcharges, and discounts:
(1) related to loss mitigation generally; or
(2) authorized under Section 152.006.
(b) The information collected under Subsection (a) may
include:
(1) the name of a credit or surcharge;
(2) the amount of a credit or surcharge;
(3) loss mitigation measures eligible for a credit;
(4) building code standards that must be met to avoid a
surcharge; and
(5) other information the commissioner in
consultation with the office of public insurance counsel reasonably
believes promotes the purpose of this chapter.
(c) The information collected under this section may be used
in connection with the public education program established under
Section 152.009.
(d) The information collected under this section must be:
(1) made available to the public;
(2) posted on the department's Internet website; and
(3) posted on the Internet website of the office of
public insurance counsel.
(e) The department and the office of public insurance
counsel shall take all reasonable precautions to prevent disclosure
or use of personal information obtained in the collection of
information under this section.
Sec. 152.008. FUNDING FOR PUBLIC EDUCATION PROGRAM. The
department in cooperation with the office of public insurance
counsel shall use its best efforts to obtain funding for the public
education program established under Section 152.009, including
obtaining:
(1) grants from any individual or entity, including a
political subdivision, a state or federal agency, a trade
association, a university, or a nonprofit entity or other private
entity; or
(2) gifts or grants of money or in kind.
Sec. 152.009. PUBLIC EDUCATION PROGRAM. (a) The
commissioner in cooperation with the office of public insurance
counsel may create a public education program to educate and inform
the public about:
(1) the programs established under this chapter;
(2) the appropriateness and benefits of particular
loss mitigation measures in certain circumstances;
(3) the availability of credits described by this
chapter; and
(4) the imposition of surcharges described by this
chapter.
(b) To develop and implement the public education program,
the department may coordinate or collaborate with any individual or
entity, including a political subdivision, a state or federal
agency, a trade association, a university, or a nonprofit entity or
other private entity.
SECTION 2. Subsection (a), Section 233.151, Local
Government Code, is amended to read as follows:
(a) In this subchapter, "new residential construction"
includes:
(1) residential construction of a single-family house
or duplex on a vacant lot; and
(2) construction of an addition to an existing
single-family house or duplex[, if the addition will increase the
square footage or value of the existing residential building by
more than 50 percent].
SECTION 3. Section 233.152, Local Government Code, is
amended to read as follows:
Sec. 233.152. APPLICABILITY. (a) Subject to Subsection
(b), this [This] subchapter applies only to a county that has
adopted a resolution or order requiring the application of the
provisions of this subchapter [and that:
[(1) is located within 50 miles of an international
border; or
[(2) has a population of more than 100].
(b) This subchapter does not apply to nonresidential
structures or appurtenances located on land used for agriculture as
defined by Section 397A.051.
SECTION 4. Subsection (f), Section 233.153, Local
Government Code, is amended to read as follows:
(f) Except as provided by Section 233.1546, a [A] county may
not charge a fee to a person subject to standards under this
subchapter to defray the costs of enforcing the standards.
SECTION 5. Subchapter F, Chapter 233, Local Government
Code, is amended by adding Sections 233.1545 and 233.1546 to read as
follows:
Sec. 233.1545. CERTIFICATION OF COMPLIANCE; CONNECTION OF
UTILITIES. (a) A county to which this subchapter applies shall
require the issuance of a certificate of compliance as a
precondition to obtaining utility services as provided by this
section.
(b) Not later than the fifth business day after the date a
notice of inspection described by Section 233.154(c) stating that
the inspection showed compliance with building code standards
described by Section 233.153 adopted under this subchapter is
received, the county shall issue the party submitting the notice a
written certificate of compliance.
(c) An electric, gas, water, or sewer service utility may
not permanently serve or connect new residential construction of a
single-family house or duplex as described by Section 233.151(a)(1)
with electricity, gas, water, sewer, or other utility service
unless the utility receives a certificate issued by the county
under Subsection (b).
(d) Subsection (c) does not prevent the temporary use or
connection of utilities necessary to complete new residential
construction, including temporary use or connection of utilities to
pass an inspection under this subchapter.
Sec. 233.1546. FEES. A county may charge a reasonable fee
not to exceed $25 to issue a certificate of compliance under Section
233.1545. The fees, aggregated annually, may not exceed the annual
cost of issuing the certificates under Section 233.1545.
SECTION 6. The changes in law made by this Act apply only to
new residential construction that commences on or after the
effective date of this Act, except that if the county requires
notice under Subsection (b), Section 233.154, Local Government
Code, this Act applies only to new residential construction for
which notice was given on or after the effective date of this Act.
SECTION 7. This Act takes effect September 1, 2013.
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