TX HB3960

Amends Chapter 705 of the Texas Insurance Code to clarify how misrepresentations by policyholders or applicants affect insurance policies, establishing that statutory provisions control over conflicting common law

Allows insurers to rescind or terminate life insurance policies within the first two years of issuance based on material misrepresentations that affect risk, without requiring proof of fraud or intent, provided premiums are refunded

Requires insurers to provide notice of rescission or termination within 90 days after discovering a misrepresentation and notifying the insured or beneficiaries

After two years from policy issuance, misrepresentation defenses are only valid if the insurer notified the insured/beneficiaries of intent to rescind, or if the misrepresentation was both material to risk and intentionally made

Applies only to insurance policies delivered, issued, or renewed on or after January 1, 2026; takes effect September 1, 2025