1-1     By:  Smithee (Senate Sponsor - Cain)                  H.B. No. 3563

 1-2           (In the Senate - Received from the House May 12, 1997;

 1-3     May 13, 1997, read first time and referred to Committee on Economic

 1-4     Development; May 18, 1997, reported favorably by the following

 1-5     vote:  Yeas 10, Nays 0; May 18, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to procedures to issue rental car companies limited

 1-9     licenses as insurance agents.

1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-11           SECTION 1.  Article 21.07, Insurance Code, is amended by

1-12     adding Section 21 to read as follows:

1-13           Sec. 21.   (a)  Notwithstanding any provisions of either this

1-14     Article or of this Code to the contrary, the Commissioner may issue

1-15     a license under this Article to a rental car company, or to the

1-16     franchisee of a rental car company, that complies with the

1-17     provisions of this section and only for the limited purposes as set

1-18     forth in this section.

1-19           (b)  As used in this section:

1-20                 (1)  "Limited licensee" means a person authorized to

1-21     sell certain insurance coverages relating to the rental of motor

1-22     vehicles pursuant to the provisions of this section.

1-23                 (2)  "Rental agreement" means any written agreement

1-24     setting forth the terms and conditions governing the use of a

1-25     vehicle provided by the rental car company.

1-26                 (3)  "Rental car company" means any person in the

1-27     business of providing leased or rented vehicles to the public.

1-28                 (4)  "Renter" means any person obtaining the use of a

1-29     vehicle from a rental car company under the terms of a rental

1-30     agreement.

1-31                 (5)  "Vehicle" means a motor vehicle of the private

1-32     passenger type including passenger vans and minivans that are

1-33     primarily intended for the transport of persons.

1-34           (c)  The Commissioner may issue to a rental car company, or

1-35     to a franchisee of a rental car company, that has complied with the

1-36     requirements of this section a limited license authorizing the

1-37     licensee, known as a "limited licensee" for the purpose of this

1-38     section, to act as agent, with reference to the kinds of insurance

1-39     specified in this section, or any insurer authorized to write such

1-40     kinds of insurance in this State.

1-41           (d)  The prerequisites for issuance of a limited license

1-42     under this section are the filing with the Commissioner of the

1-43     following:

1-44                 (1)  a written application, signed by an officer of the

1-45     applicant, for the limited license in such form or forms, and

1-46     supplements thereto, and containing such information, as the

1-47     Commissioner may prescribe; and

1-48                 (2)  a certificate by the insurer that is to be named

1-49     in such limited license, stating that it has satisfied itself that

1-50     the named applicant is trustworthy and competent to act as its

1-51     insurance agent for this limited purpose and that the insurer will

1-52     appoint such applicant to act as the agent in reference to the

1-53     doing of such kind or kinds of insurance as are permitted by this

1-54     section, if the limited license applied for is issued by the

1-55     Commissioner.  Such certification shall be subscribed by an officer

1-56     or managing agent of such insurer and affirmed as true under the

1-57     penalties of perjury.

1-58           (e)  In the event that any provision of this section is

1-59     violated by a limited licensee, the Commissioner may:

1-60                 (1)  revoke or suspend a limited license issued under

1-61     this section in accordance with the provisions of Article 21.01-2

1-62     of this Code; or

1-63                 (2)  after notice and hearing, impose such other

1-64     penalties, including suspending the transaction of insurance at

 2-1     specific rental locations where violations of this section have

 2-2     occurred, as the Commissioner deems to be necessary or convenient

 2-3     to carry out the purposes of this section.

 2-4           (f)  The rental car company or franchisee licensed pursuant

 2-5     to Subsection (c) of this section may act as agent for an

 2-6     authorized insurer only in connection with the rental of vehicles

 2-7     and only with respect to the following kinds of insurance:

 2-8                 (1)  excess liability insurance that provides coverage

 2-9     to the rental car company or franchisee and renters and other

2-10     authorized drivers of rental vehicles, in excess of the standard

2-11     liability limits provided by the rental car company in its rental

2-12     agreement, for liability arising from the negligent operation of

2-13     the rental vehicle;

2-14                 (2)  accident and health insurance that provides

2-15     coverage to renters and other vehicle occupants for accidental

2-16     death or dismemberment and for medical expenses resulting from an

2-17     accident involving the rental vehicle that occurs during the rental

2-18     period;

2-19                 (3)  personal effects insurance that provides coverage

2-20     to renters and other rental vehicle occupants for the loss of, or

2-21     damage to, personal effects that occurs during the rental period;

2-22     or

2-23                 (4)  any other coverage that the Commissioner may

2-24     approve as meaningful and appropriate in connection with the rental

2-25     of vehicles.

2-26           (g)  No insurance may be issued pursuant to this section

2-27     unless:

2-28                 (1)  the rental period of the rental agreement does not

2-29     exceed 30 consecutive days; and

2-30                 (2)  at every rental car location where rental car

2-31     agreements are executed, brochures or other written materials are

2-32     prominently displayed and readily available to the prospective

2-33     renter that:

2-34                       (A)  summarize, clearly and correctly, the

2-35     material terms of insurance coverage, including the identity of the

2-36     insurer, offered to renters;

2-37                       (B)  disclose that these policies offered by the

2-38     rental car company may provide a duplication of coverage already

2-39     provided by a renter's personal automobile insurance policy,

2-40     homeowner's insurance policy, personal liability insurance policy,

2-41     or other source of coverage;

2-42                       (C)  state that the purchase by the renter of the

2-43     kinds of insurance specified in this section is not required in

2-44     order to rent a vehicle;

2-45                       (D)  describe the process for filing a claim in

2-46     the event the renter elects to purchase coverage and in the event

2-47     of a claim; and

2-48                       (E)  contain any additional information on the

2-49     price, benefits, exclusions, conditions, or other limitations of

2-50     such policies as the Commissioner may by regulation prescribe; and

2-51                 (3)  evidence of coverage is provided to every renter

2-52     who elects to purchase such coverage.

2-53           (h)  Any limited license issued under this section shall also

2-54     authorize any salaried employee of the licensee who, pursuant to

2-55     Subsection (i) of this section, is trained to act individually on

2-56     behalf, and under the supervision, of the licensee with respect to

2-57     the kinds of insurance specified in this section.

2-58           (i)  Each rental car company or franchisee licensed pursuant

2-59     to this section shall conduct a training program which shall be

2-60     submitted to the Commissioner for approval prior to use and which

2-61     shall meet the following minimum standards:

2-62                 (1)  each trainee shall receive basic instruction about

2-63     the kinds of insurance specified in this section offered for

2-64     purchase by prospective renters of rental vehicles;

2-65                 (2)  each trainee shall be instructed to acknowledge to

2-66     a prospective renter of a rental vehicle that purchase of any such

2-67     insurance specified in this section is not required in order for

2-68     the renter to rent a vehicle; and

2-69                 (3)  each trainee shall be instructed to acknowledge to

 3-1     a prospective renter of a rental vehicle that the renter may have

 3-2     insurance policies that already provide the coverage being offered

 3-3     by the rental car company pursuant to this section.

 3-4           (j)  Limited licensees acting pursuant to and under the

 3-5     authority of this section shall comply with all applicable

 3-6     provisions of this Article, except that notwithstanding any other

 3-7     provision of this Article, or any rule adopted by the Commissioner,

 3-8     a limited licensee pursuant to this section shall not be required

 3-9     to treat premiums collected from renters purchasing such insurance

3-10     when renting vehicles as funds received in a fiduciary capacity,

3-11     provided that:

3-12                 (1)  the insurer represented by the limited licensee

3-13     has consented in writing, signed by the insurer's officer, that

3-14     premiums need not be segregated from funds received by the rental

3-15     car company on account of vehicle rental; and

3-16                 (2)  the charges for insurance coverage are itemized

3-17     but not billed to the renter separately from the charges for rental

3-18     vehicles.

3-19           (k)  No limited licensee under this section shall advertise,

3-20     represent, or otherwise hold itself or any of its employees or

3-21     themselves out as licensed insurance agents.

3-22           SECTION 2.  This Act takes effect September 1, 1997.

3-23           SECTION 3.  The importance of this legislation and the

3-24     crowded condition of the calendars in both houses create an

3-25     emergency and an imperative public necessity that the

3-26     constitutional rule requiring bills to be read on three several

3-27     days in each house be suspended, and this rule is hereby suspended.

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