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.