77th Texas Legislature Actions Affecting Surety Bonds - House Bill 409 and House Bill 548

Home Bulletins bullet02 B-0065-02 November 12, 2002 To:   ALL COMPANIES WRITING SURETY BONDS Re:   77th Texas Legislature Actions Affecting Surety Bonds - House Bill 409 and House Bill 548 House Bill 409 was effective September 1, 2001 and it amended Chapter 2253 of the Government Code and Chapter 53 of the Property Code. A bond required or furnished pursuant to Chapter 2253 must clearly and prominently display on the bond or on an attachment: (1) the name, mailing address, physical address, and telephone number, including the area code, of the surety company to which any notice of claim should be sent; or (2) the toll-free number maintained by the Texas Department of Insurance under Article 1.35D, of the Insurance Code and a statement that the address of the surety company to which any notice of claim should be sent may be obtained from the Texas Department of Insurance by calling the toll-free telephone number (800-252-3439). Chapter 2253 was further amended to include subsection (c) that states that a person satisfies the requirements of this subchapter relating to providing notice to the surety if the person mails the notice by certified or registered mail to the surety at the address stated on the bond or on an attachment to the bond, or at the address on file with the Texas Department of Insurance, or at any other address allowed by law. Companies writing bonds pursuant to Chapter 2253 must include the necessary information on these bonds, or on an attachment to these bonds, for bonds issued on or after September 1, 2001. House Bill 548, also effective September 1, 2001, applies only to a claim made under a construction payment bond that is delivered, issued for delivery, or renewed on or after January 1, 2002. House Bill 548 added to the Insurance Code, Article 7.20 - Construction Payment Bond of Surety Company; Prompt Payment. Article 7.20 sets forth time periods by which a surety company must abide in acknowledging and beginning investigation of a claim, accepting or rejecting a claim, and paying a claim. Article 7.20 further allows the commissioner to adopt rules enforcing this article in cases in which a surety company violates this article as a general business practice. Questions regarding this bulletin may be addressed to: Texas Department of Insurance Irwin Thomas Commercial Property/Casualty Section P O Box 149104 MC 104-PC Austin, TX 78714-9104 512-322-3475 Irwin.Thomas@tdi.state.tx.us Sincerely, Marilyn Hamilton, Associate Commissioner Property & Casualty Program MC 104-PC For more information, contact: ChiefClerk@tdi.texas.gov