HB 1306 Proposes Diligent Effort Exclusion for Flood Coverage

Following nationwide flood disasters, there has been a push to expand private flood insurance. A new bill could demonstrate that the surplus lines market is healthy and able to take on additional flood risk.

Rep. John Frullo filed HB 1306 in the Texas House of Representatives on February 1, 2019. The bill would carve out a diligent effort exclusion for those purchasing flood coverage under a surplus lines insurance policy.

Currently, Sec. 981.004 of the Texas Insurance Code holds that an eligible surplus lines insurer may only provide surplus lines insurance if the full amount of insurance required cannot be obtained from an admitted insurer in the state. Further, the coverage provided may only be in the amount that exceeds the coverage obtained from an admitted insurer.

This bill states that these two requirements do not apply to flood coverage under an insurance policy issued by an eligible surplus lines insurer. If the bill is passed by the Legislature, it would apply to all new and renewal insurance policies effective on or after January 1, 2020.