By: Johnson S.B. No. 1756
A BILL TO BE ENTITLED
AN ACT
relating to the payment of insurance deductibles and release of
insurance proceeds to contractors for property insurance claims.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 27.02, Business & Commerce Code, is
amended by amending Subsection (c) to read as follows:
(c) A person who sells goods or services commits an offense
if the person:
(1) advertises or promises to provide a good or service
to an insured under a property insurance policy in a transaction in
which:
(A) the good or service will be paid for by the
insured from the proceeds of a property insurance claim; and
(B) the person selling the good or service will[,
without the insurer's consent]:
(i) pay, waive, absorb, or otherwise decline
to charge or collect the amount of the insured's deductible;
(ii) provide a rebate or credit in
connection with the sale of the good or service that will offset all
or part of the amount paid by the insured as a deductible; or
(iii) in any other manner assist the insured
in avoiding monetary payment of the required insurance deductible;
or
(2) provides a good or service to an insured under a
property insurance policy knowing that the insured will pay for the
good or service with the proceeds of a claim under the policy and[,
without the insurer's consent]:
(A) pays, waives, absorbs, or otherwise declines
to charge or collect the amount of the insured's deductible;
(B) provides a rebate or credit in connection
with the sale of the good or service that offsets all or part of the
amount paid by the insured as a deductible; or
(C) in any other manner assists the insured in
avoiding monetary payment of the required insurance deductible.
SECTION 2. Section 707.004, Insurance Code, is amended to
read as follows:
Sec. 707.004. [REASONABLE PROOF OF] PAYMENT OF DEDUCTIBLE;
RELEASE OF PROCEEDS TO CONTRACTOR. (a) An insurer that issues a
property insurance policy with replacement cost coverage shall
[may] refuse to pay a claim for withheld recoverable depreciation
or a replacement cost holdback under the policy until the insurer
receives reasonable proof of payment by the policyholder of any
deductible applicable to the claim. Reasonable proof of payment
includes a canceled check, money order receipt, credit card
statement, or copy of an executed installment plan contract or
other financing arrangement that requires full payment of the
deductible over time.
(b) An insurer may not waive a deductible owed by a
policyholder under a property insurance policy in exchange for the
policyholder's use of the insurer's preferred or recommended
contractor for the claim subject to the deductible.
SECTION 3. Section 707.004, Insurance Code, as amended by
this Act, applies only to an insurance policy delivered, issued for
delivery, or renewed on or after the effective date of this Act. A
policy delivered, issued for delivery, or renewed before the
effective date of this Act is governed by the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
SECTION 4. This Act takes effect September 1, 2021.