Morgan Bill Voids Forced Arbitration In Home And Car Policies

The text as introduced · 506 words

90R2451 SCR-F

By: Morgan
H.B. No. 1117

A BILL TO BE ENTITLED

AN ACT

relating to binding arbitration provisions under a property and

casualty insurance contract.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle A, Title 10, Insurance Code, is amended

by adding Chapter 1815 to read as follows:

CHAPTER 1815. BINDING ARBITRATION PROVISIONS

Sec. 1815.001. DEFINITION. In this chapter, "insurance

contract" means a policy, binder, endorsement, application, or

agreement relating to property and casualty insurance. The term

includes an insurance agreement between a person and:

(1) an insurer;

(2) an insurance agency;

(3) a broker;

(4) a managing general agent;

(5) a third-party administrator; or

(6) an affiliated claims or underwriting entity.

Sec. 1815.002. APPLICABILITY OF CHAPTER. This chapter

applies to an insurer writing property and casualty insurance in

this state, including an insurance company, corporation,

reciprocal or interinsurance exchange, mutual insurance company,

capital stock company, county mutual insurance company,

association, Lloyd's plan, or other insurer.

Sec. 1815.003. CERTAIN ARBITRATION REQUIREMENTS AND

LIMITATIONS ON CERTAIN REMEDIES PROHIBITED. A binding arbitration

provision in an insurance contract is void and unenforceable if the

provision:

(1) requires an insured to submit a dispute to binding

arbitration before the insured may seek judicial or other remedies,

including a provision that:

(A) allows an insurer, agency, broker, or

affiliated entity to resolve a dispute through judicial remedies

without submitting the dispute to binding arbitration and requires

an insured to submit the dispute to binding arbitration before the

insured may seek judicial or other remedies; or

(B) preserves judicial remedies exclusively for

the insurer, agency, broker, or affiliated entity without a

comparable provision preserving judicial remedies for the other

parties to the insurance contract;

(2) waives or limits an insured's right to seek other

remedies available under the laws of this state, including rights,

damages, attorney's fees, or statutory remedies otherwise

available under:

(A) Chapter 541 or 542;

(B) Chapter 17, Business & Commerce Code;

(C) common law; or

(D) any other consumer protection law of this

state;

(3) shortens a limitations period established under

the laws of this state;

(4) requires binding arbitration of a dispute

involving an insured that is a resident of this state to occur

outside of this state; or

(5) imposes a fee for binding arbitration that is

substantially greater than the filing fee imposed by a district

court if the insured sought a judicial remedy to resolve the

dispute.

Sec. 1815.004. REQUIREMENTS FOR AGREEMENT TO ARBITRATE

INSURANCE DISPUTE. An agreement to resolve a dispute under an

insurance contract through binding arbitration is enforceable only

if the agreement:

(1) is entered into after the dispute arises;

(2) is separately signed by all parties to the

insurance contract; and

(3) provides equal rights, procedures, and remedies to

all parties of the insurance contract.

SECTION 2. Chapter 1815, Insurance Code, as added by this

Act, applies only to an insurance contract delivered, issued for

delivery, or renewed on or after January 1, 2028.

SECTION 3. This Act takes effect September 1, 2027.