The bill, H.B. No. 4268, introduces a new provision to the Texas Insurance Code regarding recoverable depreciation for property damage claims under insurance policies. Specifically, it mandates that insurance policies covering property damage must allow insured individuals to recover any depreciation that has been withheld from a claim for a covered loss. This recovery is permitted until the second anniversary of the date the insurer issues a claim payment. Additionally, the bill stipulates that the recoverable depreciation cannot be classified as part of the insurer's defense costs or deducted from any defense coverage limits.

The new section, 2301.011, will apply only to insurance policies that are delivered, issued for delivery, or renewed on or after January 1, 2026. The bill is set to take effect on September 1, 2025, providing a timeline for insurers to adjust their policies in accordance with the new requirements.

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