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


Senate Research CenterC.S.S.B. 1290
By: Cain
Economic Development
4-18-97
Committee Report (Substituted)


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, C.S.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 Article 21.07, Insurance Code, by adding Section 6A, as
follows:  

Sec. 6A.  COVERAGE FOR VEHICLE USED AS SECURITY.  Authorizes a person
licensed as an agent under this article to be appointed to act as an agent
for an authorized insurer selling and offering for sale an insurance
policy that covers the difference between the actual cash value of a motor
vehicle used as security for a loan or lease and the outstanding balance
of the loan or lease in the event of loss or damage in which the vehicle
is rendered an actual or constructive total loss while the debt for which
the vehicle serves as security exceeds the actual cash value of the
vehicle.   

SECTION 2. Effective date: September 1, 1997.

SECTION 3. Emergency clause.  

SUMMARY OF COMMITTEE CHANGES

Revises proposed relating clause. 

SECTION 1. 

Amends Article 21.07, Insurance Code, to add proposed Section 6A.  Omits
proposed changes to Section 15, Article 21.07, Insurance Code, relating to
the authority of an agent. Proposed Section 6A is substantially similar to
proposed Section 15(b).   

SECTION 2.  

Omits revisions to Section 18(b), Article 21.07, Insurance Code.  Sets
forth the effective date previously in SECTION 3.  Redesignates the
emergency clause from SECTION 4 to SECTION 3, accordingly.