bill to end handshake settlements on car insurance claims

The text as introduced · 362 words

90R4122 SCL-F

By: Garcia Hernandez
H.B. No. 431

A BILL TO BE ENTITLED

AN ACT

relating to prohibiting oral releases for automobile insurance

claims.

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

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

by adding Chapter 1955 to read as follows:

CHAPTER 1955. ORAL RELEASES FOR AUTOMOBILE INSURANCE CLAIMS

Sec. 1955.001. DEFINITIONS. In this chapter:

(1) "Claimant" means:

(A) an insured making a first-party claim; or

(B) an individual who has a claim for property

damage or an injury against another individual or an entity.

(2) "Injury" means a bodily or psychological injury.

(3) "Oral release" means an oral contract under which

a claimant releases, wholly or partly, one or more of the claimant's

claims arising out of property damage or an injury for which an

insurer may be liable under an automobile insurance policy in

exchange for money or other consideration paid.

Sec. 1955.002. APPLICABILITY OF CHAPTER. This chapter

applies to an insurer writing personal or commercial automobile

insurance in this state, including an insurance company,

corporation, reciprocal or interinsurance exchange, mutual

insurance company, county mutual insurance company, association,

Lloyd's plan, or other insurer.

Sec. 1955.003. ORAL RELEASE OF CLAIMS PROHIBITED.

Notwithstanding Section 26.01, Business & Commerce Code, a claimant

and an insurer or another individual or entity may not enter into an

oral release for claims arising out of property damage or an injury

for which an insurer may be liable under an automobile insurance

policy. A release made in exchange for money or other consideration

paid for the claimant's claim arising out of property damage or an

injury for which an insurer may be liable under an automobile

insurance policy is not enforceable unless the contract is a

separate written agreement.

SECTION 2. The changes in law made by this Act apply only to

a contract entered into on or after January 1, 2028. A contract

entered into before January 1, 2028, 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 3. This Act takes effect September 1, 2027.