By:  Harris of Tarrant                                 S.B. No. 417
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to creditor-required or creditor-arranged insurance on
    1-2  certain loans and credit transactions.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Chapter 2, Title 79, Revised Statutes (Article
    1-5  5069-2.01 et seq., Vernon's Texas Civil Statutes), is amended by
    1-6  adding Article 2.09 to read as follows:
    1-7        Art. 2.09.  COLLATERAL PROTECTION INSURANCE.  (1)  In this
    1-8  article:
    1-9              (a)  "Creditor" means a lender or other person
   1-10  extending or collecting a loan or other credit transaction for
   1-11  personal, family, or household use.
   1-12              (b)  "Collateral protection insurance" means any
   1-13  insurance required and arranged by or for a creditor in connection
   1-14  with and subsequent to the inception of a loan or other credit
   1-15  transaction for personal, family, or household use.
   1-16        (2)  Any creditor who causes the initiation of collateral
   1-17  protection insurance must comply with this article as well as other
   1-18  applicable law.
   1-19        (3)  This article shall apply only to insurance for which the
   1-20  premium is required to be paid by the debtor, either directly or
   1-21  indirectly.
   1-22        (4)  When collateral protection insurance is procured, the
   1-23  creditor arranging such transaction shall give written notice to
   1-24  the debtor at the debtor's last known address that:
    2-1              (a)  describes the type of insurance procured, the
    2-2  extent of coverage, and whom it is designed to protect;
    2-3              (b)  defines the policy period by beginning and ending
    2-4  dates;
    2-5              (c)  discloses the total cost to the borrower of the
    2-6  policy;
    2-7              (d)  discloses the annual rate of interest to be
    2-8  charged on the insurance premium if different from the rate charged
    2-9  in the related loan or credit transaction;
   2-10              (e)  discloses the manner in which the premium and
   2-11  interest or other financing charge is to be paid; and
   2-12              (f)  at the option of the creditor, notifies the debtor
   2-13  of other repayment options to which the debtor may agree or has
   2-14  previously agreed to in the original loan or credit transaction
   2-15  agreement.
   2-16        (5)  The creditor may collect the premium and any authorized
   2-17  interest or other financing charge during the policy period in
   2-18  addition to and simultaneously with any scheduled payment or
   2-19  payments of principal or charges or in such other manner as may be
   2-20  provided for in the loan or credit transaction agreement.  If there
   2-21  are no payments scheduled on the debt during the policy period,
   2-22  then collection shall be in substantially equal successive monthly
   2-23  installments.
   2-24        (6)  A creditor is authorized to charge the debtor the actual
   2-25  postage and fees paid to the United States Postal Service for
   2-26  mailing the required notice.  If the notice is returned to the
   2-27  creditor undelivered, the creditor shall use its normal procedures
    3-1  for locating debtors and mail a second notice when the debtor is
    3-2  located.
    3-3        SECTION 2.  Article 2.09, Title 79, Revised Statutes (Article
    3-4  5069-2.09, Vernon's Texas Civil Statutes), as added by this Act, is
    3-5  cumulative of and in addition to any other statutory provisions,
    3-6  and in case of any conflict or inconsistency with any provision
    3-7  less favorable to a debtor, Article 2.09, Title 79, Revised
    3-8  Statutes (Article 5069-2.09, Vernon's Texas Civil Statutes), as
    3-9  added by this Act shall prevail and control.  Notwithstanding
   3-10  Article 1.10, Title 79, Revised Statutes (Article 5069-1.10,
   3-11  Vernon's Texas Civil Statutes), or other law, a credit union is
   3-12  subject to Article 2.09, Title 79, Revised Statutes (Article
   3-13  5069-2.09, Vernon's Texas Civil Statutes), as added by this Act.
   3-14        SECTION 3.  This Act takes effect September 1, 1993.
   3-15        SECTION 4.  The importance of this legislation and the
   3-16  crowded condition of the calendars in both houses create an
   3-17  emergency and an imperative public necessity that the
   3-18  constitutional rule requiring bills to be read on three several
   3-19  days in each house be suspended, and this rule is hereby suspended.