SB 1246

relating to auto insurance regulation, including the creation of
the Texas Automobile Insurance Public Option.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Chapter 1952, Insurance Code, is amended by
adding Subchapter I to read as follows:
SUBCHAPTER I.  Texas Automobile Insurance Public Option
Sec. 1952.401.  SHORT TITLE.  This Act may be cited as the
"Texas Automobile Insurance Public Option Act."
Sec. 1952.402.  PURPOSE.  The purpose of this Act is to
establish a publicly administered auto insurance option in Texas to
ensure affordability, accessibility, and competition in the auto
insurance market while maintaining financial stability and
Sec.1952.403. ESTABLISHMENT OF PUBLIC AUTO INSURANCE OPTION.
(a) The Texas Department of Insurance, in consultation with the
Texas Comptroller and the Texas Transportation Commission, shall
establish and administer a public auto insurance option
(hereinafter referred to as "Texas Public Auto Option") to provide
mandatory liability coverage and optional comprehensive and
collision coverage to eligible drivers.
(b)  The Texas Public Auto Option shall be administered
through the Texas Department of Insurance, subject to state
guidelines and funding support.
Sec. 1952.404.  ELIGIBILITY AND ENROLLMENT.  (a) All
individuals required by Texas law to carry auto insurance shall be
eligible to enroll in the Texas Public Auto Option, provided they
meet residency and vehicle registration requirements.
(b)  The Commissioner shall establish an annual enrollment
period, with special enrollment periods for qualifying life events
such as vehicle purchase, change of residence, or loss of private
Sec. 1952.405.  COVERAGE AND PREMIUMS.(a) The Texas Public
Auto Option shall provide coverage at levels meeting or exceeding
Texas minimum liability requirements and offer additional coverage
options, including uninsured/underinsured motorist coverage and
(b)  Premiums shall be set using actuarial principles to
ensure fiscal solvency, affordability, and market competitiveness.
The Texas Department of Insurance shall implement a sliding scale
for low-income policyholders and explore risk-based adjustments.
Sec. 1952.406.  FUNDING AND FINANCIAL MANAGEMENT.(a) The
Texas Public Auto Option shall be funded through policyholder
premiums, supplemented by state funding to ensure affordability and
(b)  State grants shall be available to assist in launching
and administering the Texas Public Auto Option.
(c)  A reserve fund shall be established to ensure long-term
financial sustainability and claims-paying capacity.
Sec. 1952.407.  CONSUMER PROTECTIONS AND FRAUD PREVENTION.
(a)  The Texas Public Auto Option shall establish transparent
claims handling processes and an independent appeals system for
(b)  The Texas Department of Insurance shall implement fraud
detection and prevention programs, including data analytics and
Sec. 1952.408.  COMPETITION AND MARKET EFFECTS.  (a) The
Texas Public Auto Option shall operate alongside private insurers
to foster competition, stabilize rates, and provide consumer
(b)  A biennial study shall assess the impact of the Texas
Public Auto Option on the auto insurance market, premium rates,
consumer satisfaction, and uninsured motorist rates.
Sec. 1952.409.  RULEMAKING AUTHORITY.  The Texas Department
of Insurance, in coordination with relevant state agencies, shall
issue regulations necessary to implement this Act.
SECTION 2.  The change in law made by this Act applies only
to an insurance policy that is delivered, issued for delivery, or
renewed on or after January 1, 2026.
SECTION 3.  This Act takes effect September 1, 2025.