By: Cain S.B. No. 33
A BILL TO BE ENTITLED
AN ACT
1-1 relating to procedures to issue rental car companies limited
1-2 licenses as insurance agents.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 21.07, Insurance Code, is amended by
1-5 adding Section 21 to read as follows:
1-6 Sec. 21. LIMITED LICENSE. (a) Notwithstanding any
1-7 provisions of either this Article or of this code to the contrary,
1-8 the commissioner shall issue a license under this Article to a
1-9 rental car company, or to the franchise of a rental car company,
1-10 that 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 license authorizing a
1-14 person to sell certain insurance coverages relating to the rental
1-15 of motor 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 a 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
1-22 vehicle from a rental car company under the terms of a rental
1-23 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 purposes of this
2-8 section, to act as agent, with reference to the kinds of insurance
2-9 specified in this section, of 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 the limited license stating that the insurer has satisfied
2-20 itself that the named applicant is trustworthy and competent to act
2-21 as its insurance agent for this limited purpose and that the
2-22 insurer will appoint such applicant to act as the agent in
2-23 reference to the doing of such kind or kinds of insurance as are
2-24 permitted by this section if the limited license applied for is
2-25 issued by the commissioner. The certification shall be subscribed
3-1 by an officer or managing agent of the insurer and affirmed as true
3-2 under the penalties of perjury.
3-3 (e) In the event that any provision of this section is
3-4 violated by a limited licensee, the commissioner may:
3-5 (1) revoke or suspend a limited license issued under
3-6 this section in accordance with the provisions of Article 21.01-2
3-7 of this code; or
3-8 (2) after notice and hearing, impose such other
3-9 penalties, including suspending the transaction of insurance at
3-10 specific rental locations where violations of this section have
3-11 occurred, as the commissioner deems to be necessary or convenient
3-12 to carry out the purposes of this section.
3-13 (f) The rental car company or franchisee licensed pursuant
3-14 to Subsection (c) of this section may act as agent for an
3-15 authorized insurer only in connection with the rental of vehicles
3-16 and only with respect to the following kinds of insurance:
3-17 (1) excess liability insurance that provides coverage
3-18 to the rental car company or franchisee and renters and other
3-19 authorized drivers of rental vehicles, in excess of the standard
3-20 liability limits provided by the rental car company in its rental
3-21 agreement, for liability arising from the negligent operation of
3-22 the rental vehicle;
3-23 (2) accident and health insurance that provides
3-24 coverage to renters and other vehicle occupants for accidental
3-25 death or dismemberment and for medical expenses resulting from an
4-1 accident involving the rental vehicle that occurs during the rental
4-2 period;
4-3 (3) personal effects insurance that provides coverage
4-4 to renters and other rental vehicle occupants for the loss of, or
4-5 damage to, personal effects that occurs during the rental period;
4-6 or
4-7 (4) any other coverage that the commissioner may
4-8 approve as meaningful and appropriate in connection with the rental
4-9 of vehicles.
4-10 (g) No insurance may be issued pursuant to this section
4-11 unless:
4-12 (1) the rental period of the rental agreement does not
4-13 exceed 30 consecutive days;
4-14 (2) at every rental car location where rental car
4-15 agreements are executed, brochures or other written materials are
4-16 prominently displayed and readily available to the prospective
4-17 renter that:
4-18 (A) summarize, clearly and correctly, the
4-19 material terms of insurance coverage, including the identity of the
4-20 insurer, offered to renters;
4-21 (B) disclose that these policies offered by the
4-22 rental car company may provide a duplication of coverage already
4-23 provided by a renter's personal automobile insurance policy,
4-24 homeowner's insurance policy, personal liability insurance policy,
4-25 or other source of coverage;
5-1 (C) state that the purchase by the renter of the
5-2 kinds of insurance specified in this section is not required in
5-3 order to rent a vehicle;
5-4 (D) describe the process for filing a claim in
5-5 the event the renter elects to purchase coverage and in the event
5-6 of a claim; and
5-7 (E) contain any additional information on the
5-8 price, benefits, exclusions, conditions, or other limitations of
5-9 such policies as the commissioner may by regulation prescribe; and
5-10 (3) evidence of coverage is provided to every renter
5-11 who elects to purchase such coverage.
5-12 (h) Any limited license issued under this section shall also
5-13 authorize any salaried employee of the licensee who, pursuant to
5-14 Subsection (i) of this section, is trained to act individually on
5-15 behalf and under the supervision of the licensee with respect to
5-16 the kinds of insurance specified in this section.
5-17 (i) Each rental car company or franchisee licensed pursuant
5-18 to this section shall conduct a training program which shall be
5-19 submitted to the commissioner for approval prior to use and which
5-20 shall meet the following minimum standards:
5-21 (1) each trainee shall receive basic instruction about
5-22 the kinds of insurance specified in this section offered for
5-23 purchase by prospective renters of rental vehicles;
5-24 (2) each trainee shall be instructed to acknowledge to
5-25 a prospective renter of a rental vehicle that purchase of any such
6-1 insurance specified in this section is not required in order for
6-2 the renter to rent a vehicle; and
6-3 (3) each trainee shall be instructed to acknowledge to
6-4 a prospective renter of a rental vehicle that the renter may have
6-5 insurance policies that already provide the coverage being offered
6-6 by the rental car company pursuant to this section.
6-7 (j) Limited licensees acting pursuant to and under the
6-8 authority of this section shall comply with all applicable
6-9 provisions of this Article, except that notwithstanding any other
6-10 provision of this Article or any rule adopted by the commissioner,
6-11 a limited licensee pursuant to this section shall not be required
6-12 to treat premiums collected from renters purchasing such insurance
6-13 when renting vehicles as funds received in a fiduciary capacity,
6-14 provided that:
6-15 (1) the insurer represented by the limited licensee
6-16 has consented in writing, signed by the insurer's officer, that
6-17 premiums need not be segregated from funds received by the rental
6-18 car company pursuant to vehicle rental; and
6-19 (2) the charges for insurance coverage are itemized
6-20 but not billed to the renter separately from the charges for rental
6-21 vehicles.
6-22 (k) No limited licensee under this section shall advertise,
6-23 represent, or otherwise hold itself or any of its employees or
6-24 themselves out as licensed insurance agents.
6-25 SECTION 2. This Act takes effect September 1, 1997, and
7-1 applies to an insurance policy that is delivered, issued for
7-2 delivery, or renewed on or after September 1, 1997. A policy
7-3 delivered, issued for delivery, or renewed before September 1,
7-4 1997, is governed by the law as it existed prior to the effective
7-5 date of this Act.
7-6 SECTION 3. The importance of this legislation and the
7-7 crowded condition of the calendars in both houses create an
7-8 emergency and an imperative public necessity that the
7-9 constitutional rule requiring bills to be read on three several
7-10 days in each house be suspended, and this rule is hereby suspended.