Bill Caption

Relating to building code requirements for residential property insured by the Texas Windstorm Insurance Association.

Fiscal Notes

No significant fiscal implication to the State is anticipated.

Bill Analysis

SB 498 would make changes to Chapter 2210 of the Insurance Code concerning regulations of the Texas Windstorm Insurance Association (TWIA).   

First this legislation would remove the expiration date for when the TWIA may issue and renew insurance coverage for residential buildings. Secondly, it would repeal Section 2210.2581, which concerns mandatory compliance for building standards. This particular section prohibits TWIA from issuing or renewing insurance coverage for buildings that do not meet building code standards.

By repealing Section 2210.2581, it would allow TWIA to insure a residential home that does not comply with any building code or standards. 

Vote Recommendation Notes

Insurance committee did not make any changes to the bill from the first chamber. 

First chamber analysis below:

Although we do not agree that the government should mandate building standards, we do agree it is necessary if a person is going to receive subsidized insurance from the government. TWIA is a government run insurance program that provides coverage for people in 14 coastal counties in Texas.

Currently, the law states that a person must bring their home up to code before TWIA may offer coverage to that person; however different laws have been continually expanding and extending an exemption from these requirements for older homes. We understand that bringing older homes up to code is expensive for home owners, but Texas taxpayers should not be responsible for offering coverage for a home that its homeowner will not take responsibility to bring up to code.

Homes along the coast are frequently exposed to strong weather storms. A building that is not up to code will be more susceptible to extensive damage done by these storms, which means tax payers will have to cover that damage.   

Additionally, while the private insurance market may not require a residence to meet certain building code standards, it is the prerogative of that private insurer to make that decision. TWIA is not a private insurer it is a public entity, which means taxpayers are funding this program to provide coverage for others. TWIA should be an insurer of last resort and should not be treated otherwise.

We oppose SB 498 because it undermines personal responsibility of certain homeowners and socializes that responsibility by pushing it onto taxpayers. Additionally, this goes against our limited government principle because it indefinitely extends the exemption program for older homes, which means it increases the risk incurred by the taxpayers.