SRC-JFA S.B. 1290 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 1290
By: Cain
Economic Development
4-15-97
As Filed


DIGEST 

Currently, the Consumer Credit Code allows for the sale of collateral
insurance to cover any difference, or "gap," between an outstanding auto
loan balance and the actual cash value of a car that is totaled in an
accident.  The approval of "Group II" agents, licensed under Article
21.07, Insurance Code, to sell this "gap" insurance would most likely
increase the availability of this product.  This bill would allow agents
licensed under Article 21.07, Insurance Code, to sell "gap" insurance.   

PURPOSE

As proposed, S.B. 1290 allows insurance agents licensed under Article
21.07, Insurance Code, to sell collateral insurance that covers any
difference, or "gap," between an outstanding auto loan balance and the
actual cash value of a car that is totaled in an accident.   

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 15, Article 21.07, Insurance Code, as follows: 

Sec. 15.  New heading:  AUTHORITY OF AGENT.  Authorizes a person who is
licensed as an agent under this article to sell or offer for sale a policy
of insurance covering the difference between the actual market value of a
motor vehicle that is the security for a loan or lease contract, and the
outstanding loan or lease balance owed against the motor vehicle if, and
when, the vehicle is rendered an actual or constructive total loss while
the debt for which the motor vehicle serves as security exceeds the actual
market value of the vehicle. Makes a conforming change.   

SECTION 2. Amendes Section 18(b), Article 21.07, Insurance Code, to
authorize an employee, officer, director, or shareholder of a dealer who
holds a valid dealer's general distinguishing number issued by the
Department of Transportation, who is licensed as an agent under this
article and who enters into a contract with an insurer to act as the
insurer's agent in soliciting or writing policies or certificates of
credit life insurance, credit accident and health insurance, or both, or
policies or certificates written as provided by Section 21.07(b),
Insurance Code, to assign and transfer to the dealer or any affiliate of
the dealer, any commissions, fees, or other compensation to be paid to the
agent under the agent's contract with the insurer.  Makes a standard
recodification change.   

SECTION 3. Effective date: September 1, 1997.

SECTION 4. Emergency clause.