By Burnam                                       H.B. No. 2959

      75R3663 PB-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to required procedures for certain third-party claims

 1-3     under motor vehicle liability insurance policies; providing an

 1-4     administrative penalty.

 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-6           SECTION 1.  Subchapter E, Chapter 21, Insurance Code, is

 1-7     amended by adding Article 21.56A to read as follows:

 1-8           Art. 21.56A.  THIRD-PARTY CLAIMS PROCEDURES UNDER MOTOR

 1-9     VEHICLE INSURANCE COVERAGE

1-10           Sec. 1.  DEFINITIONS.  In this article:

1-11                 (1)  "Claimant" means a third-party claimant under a

1-12     motor vehicle insurance policy.

1-13                 (2)  "Insurer" means a person who delivers, issues for

1-14     delivery, or renews a motor vehicle liability insurance policy in

1-15     this state.  The term includes an interinsurance exchange, a mutual

1-16     insurance company, a reciprocal exchange, an association, or a

1-17     Lloyd's plan.

1-18                 (3)  "Motor vehicle" means a private passenger or

1-19     commercial motor vehicle, including a motorcycle.

1-20           Sec. 2.  INSURER RESPONSE TO NOTICE OF CLAIM.  (a) On

1-21     notification by a claimant to an insurer of a claim against a

1-22     policyholder of the insurer involving damage to the claimant's

1-23     motor vehicle, the insurer shall respond to the claimant as

1-24     provided by this article.   Except as provided by Subsection (c) of

 2-1     this section, not later than the 10th business day after the date

 2-2     on which the insurer is notified of the claim by the claimant, the

 2-3     insurer must respond to the claimant in writing and must state:

 2-4                 (1)  whether the insurer admits or denies liability for

 2-5     the claim or why the insurer cannot admit or deny liability for the

 2-6     claim; and

 2-7                 (2)  if the insurer does admit liability for the claim,

 2-8     the percentage share of liability that the insurer does admit.

 2-9           (b)  If the insurer denies all or a percentage of liability

2-10     for the claim, the insurer shall state in writing the factual bases

2-11     under which it denies liability.

2-12           (c)  On notification in writing to a claimant of the specific

2-13     reason for the delay, an insurer may extend the 10-day period

2-14     imposed under Subsection (a) of this section for an additional

2-15     period not to exceed 15 days.

2-16           Sec. 3.  APPRAISAL OF DAMAGE.  (a) The insurer shall provide

2-17     for an appraisal of the damage to the claimant's motor vehicle.

2-18     Unless the claimant requests a delay in writing, the appraisal

2-19     required under this subsection must be completed not later than the

2-20     seventh business day after the date on which the insurer is

2-21     notified of the claim.

2-22           (b)  An appraisal provided under this section must specify

2-23     the amount necessary to repair the damage to the vehicle.

2-24           Sec. 4.  STATEMENT OF RIGHTS.  (a)  On receipt of

2-25     notification of a claim by a claimant, the insurer shall send the

2-26     claimant a written statement of the claimant's rights under this

2-27     article.  The insurer must send the statement not later than the

 3-1     seventh business day after the date on which the insurer is

 3-2     notified by the claimant.

 3-3           (b)  The commissioner by rule shall specify the form of the

 3-4     statement required under this section.

 3-5           Sec. 5.  VIOLATION; ADMINISTRATIVE PENALTY.  (a)  An insurer

 3-6     commits a violation of this code if the insurer fails or refuses to

 3-7     comply with the requirements imposed under this article.

 3-8           (b)  The commissioner may impose an administrative penalty

 3-9     under Article 1.10E of this code for a violation under this

3-10     section.

3-11           Sec. 6.  CIVIL ACTION; DAMAGES.  (a)  A claimant may bring an

3-12     action for a violation of this article if the insurer:

3-13                 (1)  fails to comply with the requirements imposed

3-14     under Section 2 or 3 of this article;

3-15                 (2)  denies all or a percentage of liability for the

3-16     claim without a reasonable basis for the denial of liability; or

3-17                 (3)  appraises the damage to the motor vehicle in an

3-18     amount insufficient to repair that damage without a reasonable

3-19     basis for the amount of the appraisal.

3-20           (b)  A claimant who prevails in a cause of action brought

3-21     under this section is entitled to recover:

3-22                 (1)  the amount necessary to repair the damage to the

3-23     motor vehicle without regard to whether the insurer would otherwise

3-24     be obligated to pay the claim;

3-25                 (2)  a penalty equal to 12 percent of the amount

3-26     recovered under Subdivision (1) of this subsection; and

3-27                 (3)  reasonable attorney's fees.

 4-1           SECTION 2.  Article 21.56A, Insurance Code, as added by this

 4-2     Act, applies only to a claim brought under a motor vehicle

 4-3     insurance policy that is delivered, issued for delivery, or renewed

 4-4     on or after January 1, 1998.  A claim brought under a policy that

 4-5     is delivered, issued for delivery, or renewed before January 1,

 4-6     1998, is governed by the law as it existed immediately before the

 4-7     effective date of this Act, and that law is continued in effect for

 4-8     this purpose.

 4-9           SECTION 3.  This Act takes effect September 1, 1997.

4-10           SECTION 4.  The importance of this legislation and the

4-11     crowded condition of the calendars in both houses create an

4-12     emergency and an imperative public necessity that the

4-13     constitutional rule requiring bills to be read on three several

4-14     days in each house be suspended, and this rule is hereby suspended.