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