BILL ANALYSIS
S.B. 1232
By: Armbrister (Stiles)
05-11-95
Committee Report (Amended)
BACKGROUND
Volunteer fire departments (VFDs) serve rural and suburban
areas of Texas. Since few government programs exist to help them,
most remain underfunded. Their precarious financial position makes
it difficult to acquire and maintain equipment and deters potential
members reluctant to spend the time necessary to raise money.
In addition to fire trucks, hoses, and helmets, VFDs must buy
liability insurance, at the very minimum for their vehicles,
required by Texas law for all cars and trucks. VFD liability
insurance, however, seems to be overpriced. A survey of 519 VFDs in
Texas found that they had paid around $4.5 million in premiums over
a three-year period in the early 1990s but had claims for only
$264,000. Since fire trucks rarely leave the station unless they
are on their way to a fire, there are few opportunities for
accidents. Oklahoma has found, in fact, that most of the claims
against VFDs come from their own volunteers whose cars get bumped
by fire trucks at the scene of the fire. Market competition alone
will not lower prices for liability insurance, since only two
companies write most of the VFD insurance in Texas.
PURPOSE
S.B. 1232 provides a motor vehicle self-insurance program for
volunteer fire departments.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is
granted to the director of the Texas Forest Service under SECTION
1 (Sec. 3(b), Art. 21.61, Insurance Code) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter 21E, Insurance Code, by adding Article
21.61, as follows:
Art. 21.61. VOLUNTEER FIRE DEPARTMENT MOTOR VEHICLE SELF-INSURANCE PROGRAM
Sec. 1. DEFINITIONS. Defines "fund," "program," "service," and
"volunteer fire department."
Sec. 2. ADMINISTRATION OF PROGRAM. Requires the Texas Forest
Service to administer the volunteer fire department motor
vehicle self-insurance program (program) established under
this article. Authorizes the service to employ staff to
administer the program.
Sec. 3. SELF-INSURANCE PROGRAM. (a) Sets forth provisions for
which the service shall establish the program.
(b) Authorizes the director of the service to adopt rules to
implement and administer the program.
Sec. 4. SELF-INSURANCE COVERAGE. (a) Requires the program to
establish a self-insurance pool to provide coverage for motor
vehicles used for fire fighting by a volunteer fire
department.
(b) Authorizes the coverage to indemnify an official,
employee, member, or volunteer of a volunteer fire
department for liability arising from the use of a covered
motor vehicle in the performance of the fire fighting duties
of the official, employee, member, or volunteer. Requires
the coverage to be subject to a maximum limit of $100,000
for damages for bodily injury, death, or property damage
arising out of a single occurrence.
(c) Authorizes the director of the service to establish
eligibility requirements for participation in coverage and
equipment and safety standards for the motor vehicle to be
covered under this section.
(d) Requires a volunteer fire department, to participate in
coverage provided under this section, to submit a written
request to the program. Requires the director of the program
to approve the request if each motor vehicle to be covered
meets the eligibility requirements and equipment and safety
standards established under Subsection (c) of this section.
Sec. 5. FUND. (a) Provides that the volunteer fire department
self-insurance fund is an account in the general revenue fund.
(b) Provides that the fund is composed of money collected
under Section 6 of this article and interest accruing on
money in the fund.
(c) Authorizes money in the fund to be expended in
accordance with legislative appropriation only for
administration of this article, including the salaries and
expenses of staff for the program and the fund; or funding
self-insurance under the program.
(d) Authorizes self-insurance coverage provided under
Section 4 of this article to be funded only from money
available from the fund.
(e) Requires coverage limits of self-insurance provided
under Section 4 of this article to be based on the liquidity
of the fund after deduction of the cost of administration of
this article.
(f) Provides that the state's liability for a loss covered
by self-insurance provided under this article is limited to
the assets of the fund, and the state is not otherwise
liable for that loss.
Sec. 6. SELF-INSURANCE FEE. (a) Authorizes the service to levy
and collect a fee from participating volunteer fire
departments to provide self-insurance coverage under this
article. Requires the service, in establishing the amount of
the fee, to consider the amount that could be charged to the
volunteer fire department for similar insurance coverage
provided to the department in accordance with this code.
(b) Requires fees collected under this section to be
deposited to the credit of the fund.
Sec. 7. REPRESENTATION OF INSURED. (a) Authorizes the service
to employ an attorney to represent a volunteer fire department
or an official, employee, member, or volunteer of a volunteer
fire department in a liability action for which insurance
coverage is provided under this article.
(b) Prohibits the attorney general from providing the
services described by Subsection (a) of this section.
SECTION 2. (a) Effective date: September 1, 1995.
(b) Prohibits the volunteer fire department motor vehicle
self-insurance program established under Section 3, Article
21.61, Insurance Code, from providing insurance coverage under
Section 4 of that article before January 1, 1996.
(c) Authorizes the volunteer fire department self-insurance
fund created under Section 5, Article 21.61, Insurance Code,
to include amounts appropriated to the fund until August 31,
1997. Requires the initial self-insurance fee set under
Section 6, Article 21.61, to be established in an amount
sufficient to refund to the general revenue fund any
appropriation made to the volunteer fire department self-insurance fund. Requires the refund contemplated by this
subsection to be made no later than August 31, 1997.
SECTION 3. Emergency clause.
EXPLANATION OF AMENDMENTS
The amendment to S.B. 1232 substitutes August 31, 1997 as the
date in which the volunteer fire department self-insurance fund
established under Section 5, Article 21.61, Insurance Code may
include amounts appropriated to the fund and requires the refund
contemplated by this subsection to be made no later than August 31,
1997.
SUMMARY OF COMMITTEE ACTION
Pursuant to an announcement filed with the Journal Clerk and
read by the Reading Clerk, in accordance with House Rules, the
House Committee on Insurance met in a formal meeting on May 11,
1995 at desk #24 on the House Floor and was called to order by the
Chair, Representative John Smithee.
The Chair laid out S.B. 1232 and an amendment by
Representative Duncan. The Chair recognized Representative Duncan
to explain the bill and amendment. The Chair recognized
Representative Duncan who moved the Committee adopt the amendment
to S.B. 1232. The Chair heard no objections and the amendment was
adopted.
The Chair recognized Representative Duncan who moved the
Committee report S.B. 1232 as amended to the full House with the
recommendation that it do pass, be printed, and be sent to the
Calendars Committee. Representative De La Garza seconded the
motion and the motion prevailed by the following vote: AYES: (6);
NAYES: (0); PNV: (0); ABSENT: (3).