Texas 2019 - 86th Regular

Texas Senate Bill SB590 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 590
	1	+	By: Watson S.B. No. 590
	2	+	(Lucio III)
2	3
3	4
	5	+	A BILL TO BE ENTITLED
4	6		AN ACT
5	7		relating to the cancellation and nonrenewal of certain liability
6	8		and commercial property insurance policies.
7	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	10		SECTION 1. The heading to Subchapter B, Chapter 551,
9	11		Insurance Code, is amended to read as follows:
10	12		SUBCHAPTER B. CANCELLATION AND NONRENEWAL OF CERTAIN LIABILITY AND
11	13		COMMERCIAL PROPERTY INSURANCE POLICIES
12	14		SECTION 2. Section 551.051, Insurance Code, is amended by
13	15		amending Subdivision (1) and adding Subdivision (1-a) to read as
14	16		follows:
15	17		(1) "Commercial property insurance" has the meaning
16	18		assigned by Section 2251.002.
17	19		(1-a) "Insurer" means an insurance company or other
18	20		entity admitted to engage in business and authorized to write
19	21		liability insurance or commercial property insurance in this state,
20	22		including a county mutual insurance company, a Lloyd's plan, and a
21	23		reciprocal or interinsurance exchange. The term does not include a
22	24		county mutual fire insurance company that writes exclusively
23	25		industrial fire insurance as described by Section 912.310 or a farm
24	26		mutual insurance company.
25	27		SECTION 3. Sections 551.052 and 551.053, Insurance Code,
26	28		are amended to read as follows:
27	29		Sec. 551.052. CANCELLATION PROHIBITED; EXCEPTIONS.
28	30		(a) An insurer may not cancel a liability insurance or commercial
29	31		property insurance policy that is a renewal or continuation policy.
30	32		(b) An insurer may not cancel a liability insurance or
31	33		commercial property insurance policy during the initial policy term
32	34		after the 60th day following the date on which the policy was
33	35		issued.
34	36		(c) Notwithstanding Subsections (a) and (b), an insurer may
35	37		cancel a liability insurance or commercial property insurance
36	38		policy at any time during the term of the policy for:
37	39		(1) fraud in obtaining coverage;
38	40		(2) failure to pay premiums when due;
39	41		(3) an increase in hazard within the control of the
40	42		insured that would produce a rate increase; or
41	43		(4) loss of the insurer's reinsurance covering all or
42	44		part of the risk covered by the policy.
43	45		(d) Notwithstanding Subsections (a) and (b), an insurer may
44	46		cancel a liability insurance or commercial property insurance
45	47		policy at any time during the term of the policy if the insurer is
46	48		placed in supervision, conservatorship, or receivership and the
47	49		cancellation or nonrenewal is approved or directed by the
48	50		supervisor, conservator, or receiver.
49	51		Sec. 551.053. WRITTEN NOTICE OF CANCELLATION REQUIRED. Not
50	52		later than the 10th day before the date on which the cancellation of
51	53		a liability insurance or commercial property insurance policy takes
52	54		effect, an insurer must deliver or mail written notice of the
53	55		cancellation to the first-named insured under the policy at the
54	56		address shown on the policy.
55	57		SECTION 4. Section 551.054(a), Insurance Code, is amended
56	58		to read as follows:
57	59		(a) An insurer may refuse to renew a liability insurance or
58	60		commercial property insurance policy if the insurer delivers or
59	61		mails written notice of the nonrenewal to the first-named insured
60	62		under the policy at the address shown on the policy.
61	63		SECTION 5. Subchapter B, Chapter 551, Insurance Code, is
62	64		amended by adding Section 551.056 to read as follows:
63	65		Sec. 551.056. CHANGES TO POLICY ON RENEWAL. (a) In this
64	66		section, "material change" means a change to a policy that, with
65	67		respect to a previous or existing policy:
66	68		(1) reduces coverage;
67	69		(2) changes conditions of coverage; or
68	70		(3) changes the duties of the insured.
69	71		(b) A change to a liability insurance or commercial property
70	72		insurance policy provision on renewal is not a nonrenewal or
71	73		cancellation under this subchapter if the insurer provides the
72	74		insured with written notice in accordance with this section of any
73	75		material change in each form of the policy offered to the insured on
74	76		renewal from the form of the policy held immediately before
75	77		renewal.
76	78		(c) Notice provided under Subsection (b) must:
77	79		(1) appear in a conspicuous place in the notice of
78	80		renewal;
79	81		(2) clearly indicate each material change to the
80	82		policy being made on renewal;
81	83		(3) be written in plain language; and
82	84		(4) be provided to the insured not later than the 30th
83	85		day before the renewal date.
84	86		(d) In addition to the notice to the insured provided under
85	87		Subsection (b), if an insurer elects to make a material change to a
86	88		policy form on renewal, not later than the 30th day before the
87	89		earliest renewal date on which the new policy form is used, the
88	90		insurer shall provide written notice to each agent of the insurer
89	91		that clearly indicates each material change being made to the
90	92		policy form. An insurer may provide the notice to the agents in a
91	93		single notice given to each agent of the insurer that summarizes
92	94		substantially similar material changes to more than one policy
93	95		form.
94	96		(e) This section does not apply if:
95	97		(1) the policy form meets at least one of the
96	98		conditions in Section 2301.004 both before and after renewal of the
97	99		policy; or
98	100		(2) before the renewal date:
99	101		(A) the insured requests the change; or
100	102		(B) the insured and the insurer agree to the
101	103		change.
102	104		SECTION 6. The change in law made by this Act applies only
103	105		to an insurance policy delivered, issued for delivery, or renewed
104	106		on or after January 1, 2020. A policy delivered, issued for
105	107		delivery, or renewed before that date is governed by the law as it
106	108		existed immediately before the effective date of this Act, and that
107	109		law is continued in effect for that purpose.
108	110		SECTION 7. This Act takes effect September 1, 2019.
109		-	______________________________ ______________________________
110		-	President of the Senate Speaker of the House
111		-	I hereby certify that S.B. No. 590 passed the Senate on
112		-	April 11, 2019, by the following vote: Yeas 31, Nays 0.
113		-	______________________________
114		-	Secretary of the Senate
115		-	I hereby certify that S.B. No. 590 passed the House on
116		-	May 3, 2019, by the following vote: Yeas 135, Nays 5, two present
117		-	not voting.
118		-	______________________________
119		-	Chief Clerk of the House
120		-	Approved:
121		-	______________________________
122		-	Date
123		-	______________________________
124		-	Governor