1-1 By: Harris of Tarrant S.B. No. 417
1-2 (In the Senate - Filed February 19, 1993; February 22, 1993,
1-3 read first time and referred to Committee on Economic Development;
1-4 May 5, 1993, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 10, Nays 0; May 5, 1993,
1-6 sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Parker x
1-10 Lucio x
1-11 Ellis x
1-12 Haley x
1-13 Harris of Dallas x
1-14 Harris of Tarrant x
1-15 Leedom x
1-16 Madla x
1-17 Rosson x
1-18 Shapiro x
1-19 Wentworth x
1-20 COMMITTEE SUBSTITUTE FOR S.B. No. 417 By: Harris of Tarrant
1-21 A BILL TO BE ENTITLED
1-22 AN ACT
1-23 relating to creditor-required or creditor-arranged insurance on
1-24 certain loans and credit transactions.
1-25 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-26 SECTION 1. Chapter 2, Title 79, Revised Statutes (Article
1-27 5069-2.01 et seq., Vernon's Texas Civil Statutes), is amended by
1-28 adding Article 2.09 to read as follows:
1-29 Art. 2.09. COLLATERAL PROTECTION INSURANCE. (1) In this
1-30 article:
1-31 (a) "Creditor" means a lender or other person
1-32 extending or collecting a loan or other credit transaction for
1-33 personal, family, or household use.
1-34 (b) "Collateral protection insurance" means any
1-35 insurance required and arranged by or for a creditor in connection
1-36 with and subsequent to the inception of a loan or other credit
1-37 transaction for personal, family, or household use.
1-38 (2) Any creditor who causes the initiation of collateral
1-39 protection insurance must comply with this article as well as other
1-40 applicable law.
1-41 (3) This article shall apply only to insurance for which the
1-42 premium is required to be paid by the debtor, either directly or
1-43 indirectly.
1-44 (4) When collateral protection insurance is procured, the
1-45 creditor arranging such transaction shall give written notice to
1-46 the debtor at the debtor's last known address that:
1-47 (a) describes the type of insurance procured, the
1-48 extent of coverage, and whom it is designed to protect;
1-49 (b) defines the policy period by beginning and ending
1-50 dates;
1-51 (c) discloses the total cost to the borrower of the
1-52 policy;
1-53 (d) discloses the annual rate of interest to be
1-54 charged on the insurance premium if different from the rate charged
1-55 in the related loan or credit transaction;
1-56 (e) discloses the manner in which the premium and
1-57 interest or other financing charge is to be paid; and
1-58 (f) at the option of the creditor, notifies the debtor
1-59 of other repayment options to which the debtor may agree or has
1-60 previously agreed to in the original loan or credit transaction
1-61 agreement.
1-62 (5) The creditor may collect the premium and any authorized
1-63 interest or other financing charge during the policy period in
1-64 addition to and simultaneously with any scheduled payment or
1-65 payments of principal or charges or in such other manner as may be
1-66 provided for in the loan or credit transaction agreement. If there
1-67 are no payments scheduled on the debt during the policy period,
1-68 then collection shall be in substantially equal successive monthly
2-1 installments.
2-2 (6) A creditor is authorized to charge the debtor the actual
2-3 postage and fees paid to the United States Postal Service for
2-4 mailing the required notice. If the notice is returned to the
2-5 creditor undelivered, the creditor shall use its normal procedures
2-6 for locating debtors and mail a second notice when the debtor is
2-7 located.
2-8 SECTION 2. Article 2.09, Title 79, Revised Statutes (Article
2-9 5069-2.09, Vernon's Texas Civil Statutes), as added by this Act, is
2-10 cumulative of and in addition to any other statutory provisions,
2-11 and in case of any conflict or inconsistency with any provision
2-12 less favorable to a debtor, Article 2.09, Title 79, Revised
2-13 Statutes (Article 5069-2.09, Vernon's Texas Civil Statutes), as
2-14 added by this Act shall prevail and control. Notwithstanding
2-15 Article 1.10, Title 79, Revised Statutes (Article 5069-1.10,
2-16 Vernon's Texas Civil Statutes), or other law, a credit union is
2-17 subject to Article 2.09, Title 79, Revised Statutes (Article
2-18 5069-2.09, Vernon's Texas Civil Statutes), as added by this Act.
2-19 SECTION 3. This Act takes effect September 1, 1993.
2-20 SECTION 4. The importance of this legislation and the
2-21 crowded condition of the calendars in both houses create an
2-22 emergency and an imperative public necessity that the
2-23 constitutional rule requiring bills to be read on three several
2-24 days in each house be suspended, and this rule is hereby suspended.
2-25 * * * * *
2-26 Austin,
2-27 Texas
2-28 May 5, 1993
2-29 Hon. Bob Bullock
2-30 President of the Senate
2-31 Sir:
2-32 We, your Committee on Economic Development to which was referred
2-33 S.B. No. 417, have had the same under consideration, and I am
2-34 instructed to report it back to the Senate with the recommendation
2-35 that it do not pass, but that the Committee Substitute adopted in
2-36 lieu thereof do pass and be printed.
2-37 Parker,
2-38 Chairman
2-39 * * * * *
2-40 WITNESSES
2-41 FOR AGAINST ON
2-42 ___________________________________________________________________
2-43 Name: Karen Neeley x
2-44 Representing: Ind. Bankers Assn. of Texas
2-45 City: Austin
2-46 -------------------------------------------------------------------
2-47 Name: Pamela Brown x
2-48 Representing: Consumers Union
2-49 City: Austin
2-50 -------------------------------------------------------------------
2-51 Name: David Durden x
2-52 Representing: Texas Dept. of Insurance
2-53 City: Austin
2-54 -------------------------------------------------------------------
2-55 Name: Larry M. Strong x
2-56 Representing:
2-57 City: Austin
2-58 -------------------------------------------------------------------
2-59 Name: James E. Phelan x
2-60 Representing: Southwest Business Corp.
2-61 City: Spring Branch
2-62 -------------------------------------------------------------------
2-63 FOR AGAINST ON
2-64 ___________________________________________________________________
2-65 Name: Burnie Burner x
2-66 Representing: Southwest Business Corp.
2-67 City: Austin
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