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Relating to named driver
insurance policies and certain related exclusions.
No significant fiscal implication to the State is anticipated.
A named driver policy provides coverage only for the drivers
specifically named on the policy and does not cover individuals that live in
the same household as that policyholder. HB 335 would prohibit auto insurance
companies from issuing or renewing named driver policies. However, this
legislation would allow insurers to use a named driver exclusion if that policy
specifically names each driver that would not be covered.
In the 83rd legislative session, the legislature
attempted to prohibit named driver policies or at least amend the statutes by
adding more regulation over this type of insurance policy. Although we opposed
SB 1567 in the 83rd session, it passed and became law. That legislation
increased regulations to address issues and concerns with named driver
policies.
We oppose HB 335 because it would represent a clear
overregulation of the insurance industry by prohibiting named driver policies.
Even if a named driver exclusion is used, which involves a plan that
specifically names those drivers that are excluded from the policy, it would
basically address the same concerns that have already been resolved in the 83rd
session with SB 1567.
Ultimately, the unintended consequences of this legislation would
prevent poorer people from being able to afford car insurance because named
driver policies are generally the cheaper option. This means that there would
be an estimated increase of 1.5 million of non-insured motorists in Texas.
For these reasons above, this legislation would violate our
free market principle since it would limit auto insurance options for consumers
and increase the number of non-insured drivers because of it.
The concerns regarding named driver policies in the 83rd
session have unnecessarily carried over into the 84th session
because legislation in the 83rd has already addressed those issues. Moreover, people with these concerns forget that
a person who is involved in an accident with a non-insured driver is protected
through collision coverage, non-insured motorist coverage, as well as personal
injury protection (PIP) coverage. In other words, an insured driver is typically covered
regardless if the other driver is non-insured.