New legislation introduced in Texas by Senator Mayes Middleton mandates insurers issue payments on auto policies even if policyholders have been unresponsive.

The Coalition Against Insurance Fraud sounded the alarm on the new legislation last week, stating that the bill could create a loophole for insurance fraud.

According to the legislation SB 1791, an added section is recommended to the insurance code to read as follows:

Sec. 1952.061. REQUIRED PROVISION: UNRESPONSIVE INSUREDS.
(a) This section applies to an insurer authorized to write
automobile insurance in this state, including an insurance company,
reciprocal or interinsurance exchange, mutual insurance company,
capital stock company, county mutual insurance company, Lloyd’s
plan, or other entity.
(b) A personal automobile insurance policy must contain a
provision requiring the insurer to:
(1) attempt to communicate with the named insured at
least five times or until the insured responds during the 45-day
period following the date a liability claim is made against the
insured by a third party; and
(2) if the insurer is unable to communicate with the
named insured during that period:
(A) pay the claim to the third-party claimant in
accordance with the policy; and
(B) decline to renew the policy.
SECTION 2. Section 1952.061, Insurance Code, as added by
this Act, applies only to an insurance policy delivered, issued for
delivery, or renewed on or after January 1, 2026.
SECTION 3. This Act takes effect September 1, 2025.

As written, the bill requires insurers attempt contact with the insured on a personal automobile policy five times within 45 days after receiving a liability claim against the insured. Even if there is no response from the policyholder to the insurer’s request for contact and information relating to the claim made against them, the insurer must then automatically pay liability claims and decline to renew the policy.

The Coalition, a national alliance of insurers, government agencies, consumer advocates, and law enforcement dedicated to fighting insurance fraud, drafted a letter to the Texas Senate that described how the law could lead to insurance fraud.

First, without a full investigation of the claim, a third party could fabricate a claim or stage an accident without any corroborating evidence.

There is also a concern that unduly penalizing an unresponsive insured who might otherwise be incapacitated could unfairly penalize consumers.

Lastly, an increase in premiums for all insurance consumers could result if insurers are left paying for claims that might not be the result of their insurer’s actions.

The bill is set to be discussed in the Senate today.