By Smithee H.B. No. 3563 Substitute the following for H.B. No. 3563: By Smithee C.S.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, Texas Insurance Code, is amended 1-6 by adding a new Section 21 thereto to read as follows: 1-7 Section 21. (a) Notwithstanding any provisions of either 1-8 this Article or of this Code to the contrary, the Commissioner may 1-9 issue a license under this Article to a rental car company, or to 1-10 the 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 license" 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; and 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; 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.