By Smithee H.B. No. 3563
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to procedures to issue rental car companies limited
1-3 licenses as insurance agents.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 21.07, Insurance Code, is amended by
1-6 adding Section 21 to read as follows:
1-7 Sec. 21. (a) Notwithstanding any provisions of either this
1-8 Article or of this Code to the contrary, the Commissioner may issue
1-9 a license under this Article to a rental car company, or to the
1-10 franchisee of a rental car company, that complies with the
1-11 provisions of this section and only for the limited purposes as set
1-12 forth in this section.
1-13 (b) As used in this section:
1-14 (1) "Limited licensee" means a person authorized to
1-15 sell certain insurance coverages relating to the rental of motor
1-16 vehicles pursuant to the provisions of this section.
1-17 (2) "Rental agreement" means any written agreement
1-18 setting forth the terms and conditions governing the use of a
1-19 vehicle provided by the rental car company.
1-20 (3) "Rental car company" means any person in the
1-21 business of providing leased or rented vehicles to the public.
1-22 (4) "Renter" means any person obtaining the use of a
1-23 vehicle from a rental car company under the terms of a rental
1-24 agreement.
2-1 (5) "Vehicle" means a motor vehicle of the private
2-2 passenger type including passenger vans and minivans that are
2-3 primarily intended for the transport of persons.
2-4 (c) The Commissioner may issue to a rental car company, or
2-5 to a franchisee of a rental car company, that has complied with the
2-6 requirements of this section a limited license authorizing the
2-7 licensee, known as a "limited licensee" for the purpose of this
2-8 section, to act as agent, with reference to the kinds of insurance
2-9 specified in this section, or any insurer authorized to write such
2-10 kinds of insurance in this State.
2-11 (d) The prerequisites for issuance of a limited license
2-12 under this section are the filing with the Commissioner of the
2-13 following:
2-14 (1) a written application, signed by an officer of the
2-15 applicant, for the limited license in such form or forms, and
2-16 supplements thereto, and containing such information, as the
2-17 Commissioner may prescribe; and
2-18 (2) a certificate by the insurer that is to be named
2-19 in such limited license, stating that it has satisfied itself that
2-20 the named applicant is trustworthy and competent to act as its
2-21 insurance agent for this limited purpose and that the insurer will
2-22 appoint such applicant to act as the agent in reference to the
2-23 doing of such kind or kinds of insurance as are permitted by this
2-24 section, if the limited license applied for is issued by the
2-25 Commissioner. Such certification shall be subscribed by an officer
2-26 or managing agent of such insurer and affirmed as true under the
2-27 penalties of perjury.
3-1 (e) In the event that any provision of this section is
3-2 violated by a limited licensee, the Commissioner may:
3-3 (1) revoke or suspend a limited license issued under
3-4 this section in accordance with the provisions of Article 21.01-2
3-5 of this Code; or
3-6 (2) after notice and hearing, impose such other
3-7 penalties, including suspending the transaction of insurance at
3-8 specific rental locations where violations of this section have
3-9 occurred, as the Commissioner deems to be necessary or convenient
3-10 to carry out the purposes of this section.
3-11 (f) The rental car company or franchisee licensed pursuant
3-12 to Subsection (c) of this section may act as agent for an
3-13 authorized insurer only in connection with the rental of vehicles
3-14 and only with respect to the following kinds of insurance:
3-15 (1) excess liability insurance that provides coverage
3-16 to the rental car company or franchisee and renters and other
3-17 authorized drivers of rental vehicles, in excess of the standard
3-18 liability limits provided by the rental car company in its rental
3-19 agreement, for liability arising from the negligent operation of
3-20 the rental vehicle;
3-21 (2) accident and health insurance that provides
3-22 coverage to renters and other vehicle occupants for accidental
3-23 death or dismemberment and for medical expenses resulting from an
3-24 accident involving the rental vehicle that occurs during the rental
3-25 period;
3-26 (3) personal effects insurance that provides coverage
3-27 to renters and other rental vehicle occupants for the loss of, or
4-1 damage to, personal effects that occurs during the rental period;
4-2 or
4-3 (4) any other coverage that the Commissioner may
4-4 approve as meaningful and appropriate in connection with the rental
4-5 of vehicles.
4-6 (g) No insurance may be issued pursuant to this section
4-7 unless:
4-8 (1) the rental period of the rental agreement does not
4-9 exceed 30 consecutive days; and
4-10 (2) at every rental car location where rental car
4-11 agreements are executed, brochures or other written materials are
4-12 prominently displayed and readily available to the prospective
4-13 renter that:
4-14 (A) summarize, clearly and correctly, the
4-15 material terms of insurance coverage, including the identity of the
4-16 insurer, offered to renters;
4-17 (B) disclose that these policies offered by the
4-18 rental car company may provide a duplication of coverage already
4-19 provided by a renter's personal automobile insurance policy,
4-20 homeowner's insurance policy, personal liability insurance policy,
4-21 or other source of coverage;
4-22 (C) state that the purchase by the renter of the
4-23 kinds of insurance specified in this section is not required in
4-24 order to rent a vehicle;
4-25 (D) describe the process for filing a claim in
4-26 the event the renter elects to purchase coverage and in the event
4-27 of a claim; and
5-1 (E) contain any additional information on the
5-2 price, benefits, exclusions, conditions, or other limitations of
5-3 such policies as the Commissioner may by regulation prescribe; and
5-4 (3) evidence of coverage is provided to every renter
5-5 who elects to purchase such coverage.
5-6 (h) Any limited license issued under this section shall also
5-7 authorize any salaried employee of the licensee who, pursuant to
5-8 Subsection (i) of this section, is trained to act individually on
5-9 behalf, and under the supervision, of the licensee with respect to
5-10 the kinds of insurance specified in this section.
5-11 (i) Each rental car company or franchisee licensed pursuant
5-12 to this section shall conduct a training program which shall be
5-13 submitted to the Commissioner for approval prior to use and which
5-14 shall meet the following minimum standards:
5-15 (1) each trainee shall receive basic instruction about
5-16 the kinds of insurance specified in this section offered for
5-17 purchase by prospective renters of rental vehicles;
5-18 (2) each trainee shall be instructed to acknowledge to
5-19 a prospective renter of a rental vehicle that purchase of any such
5-20 insurance specified in this section is not required in order for
5-21 the renter to rent a vehicle; and
5-22 (3) each trainee shall be instructed to acknowledge to
5-23 a prospective renter of a rental vehicle that the renter may have
5-24 insurance policies that already provide the coverage being offered
5-25 by the rental car company pursuant to this section.
5-26 (j) Limited licensees acting pursuant to and under the
5-27 authority of this section shall comply with all applicable
6-1 provisions of this Article, except that notwithstanding any other
6-2 provision of this Article, or any rule adopted by the Commissioner,
6-3 a limited licensee pursuant to this section shall not be required
6-4 to treat premiums collected from renters purchasing such insurance
6-5 when renting vehicles as funds received in a fiduciary capacity,
6-6 provided that:
6-7 (1) the insurer represented by the limited licensee
6-8 has consented in writing, signed by the insurer's officer, that
6-9 premiums need not be segregated from funds received by the rental
6-10 car company on account of vehicle rental; and
6-11 (2) the charges for insurance coverage are itemized
6-12 but not billed to the renter separately from the charges for rental
6-13 vehicles.
6-14 (k) No limited licensee under this section shall advertise,
6-15 represent, or otherwise hold itself or any of its employees or
6-16 themselves out as licensed insurance agents.
6-17 SECTION 2. This Act takes effect September 1, 1997.
6-18 SECTION 3. The importance of this legislation and the
6-19 crowded condition of the calendars in both houses create an
6-20 emergency and an imperative public necessity that the
6-21 constitutional rule requiring bills to be read on three several
6-22 days in each house be suspended, and this rule is hereby suspended.