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.