By Smithee                                            H.B. No. 3036

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to service contracts sold by a manufacturer or seller of

 1-3     the property covered by the service contract.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 2(b), Article 1.14-1, Insurance Code, is

 1-6     amended by adding Subsection (9) to read as follows:

 1-7                 (9)  Transactions in this state involving service

 1-8     contracts sold by the manufacturer or seller of the property

 1-9     covered by the service contract where the manufacturer or seller of

1-10     the property or a third party is the obligor of the service

1-11     contract; provided that, in the case of a third party obligor, the

1-12     third party's obligation is insured by an insurer licensed to do

1-13     business in this state and the third party obligor is acting

1-14     through or with the written agreement of the manufacturer or seller

1-15     of the property.  For purposes of this subsection, "service

1-16     contract" means a contract or agreement for a separately stated

1-17     consideration for a specific duration to perform the repair,

1-18     replacement or maintenance of property or indemnification for

1-19     repair, replacement or maintenance, for the operational or

1-20     structural failure due to a defect in materials, workmanship or

1-21     normal wear and tear, with or without additional provision for

1-22     incidental payment of indemnity under limited circumstances,

1-23     including, but not limited to, towing, rental and emergency road

1-24     service, but does not include mechanical breakdown insurance

 2-1     agreements sold by a person as defined in Section 2(a), Article

 2-2     21.21, of this code.

 2-3           SECTION 2.  The importance of this legislation and the

 2-4     crowded condition of the calendars in both houses create an

 2-5     emergency and an imperative public necessity that the

 2-6     constitutional rule requiring bills to be read on three several

 2-7     days in each house be suspended, and this rule is hereby suspended,

 2-8     and that this Act take effect and be in force from and after its

 2-9     passage, and it is so enacted.