By: Cain S.B. No. 33
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
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, Texas Insurance Code, is amended
1-5 by adding a new Section 21 to read as follows:
1-6 Section 21. (a) Notwithstanding any provisions of either
1-7 this Article or of this Code to the contrary, the Commissioner may
1-8 issue a license under this Article to a rental car company that
1-9 complies with the provisions of this section and only for the
1-10 limited purposes as set forth in this section.
1-11 (b) As used in this section:
1-12 (1) "Limited license" means a person authorized to
1-13 sell certain insurance coverages relating to the rental of motor
1-14 vehicles pursuant to the provisions of this section;
1-15 (2) "Rental agreement" means any written agreement
1-16 setting forth the terms and conditions governing the use of a
1-17 vehicle provided by the rental car company;
1-18 (3) "Rental car company" means any person in the
1-19 business of providing leased or rented vehicles to the public;
1-20 (4) "Renter" means any person obtaining the use of a
1-21 vehicle from a rental car company under the terms of a rental
2-1 agreement; and
2-2 (5) "Vehicle" means a motor vehicle of the private
2-3 passenger type including passenger vans and minivans that are
2-4 primarily intended for the transport of persons.
2-5 (c) The Commissioner may issue to a rental car company, or
2-6 to a franchisee of a rental car company, that has complied with the
2-7 requirements of this section, a limited license authorizing the
2-8 licensee, known as a "limited licensee" for the purpose of this
2-9 section, to act as agent, with reference to the kinds of insurance
2-10 specified in this section, or any insurer authorized to write such
2-11 kinds of insurance in this State.
2-12 (d) The prerequisites for issuance of a limited license
2-13 under this section are the filing with the Commissioner of the
2-14 following:
2-15 (1) A written application, signed by an officer of the
2-16 applicant, for the limited license in such form or forms, and
2-17 supplements thereto, and containing such information, as the
2-18 Commissioner may prescribe; and
2-19 (2) A certificate by the insurer that is to be named
2-20 in such limited license, stating that it has satisfied itself that
2-21 the named applicant trustworthy and competent to act as its
2-22 insurance agent for this limited purpose and that the insurer will
2-23 appoint 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
3-1 or managing agent of such insurer and affirmed as true under the
3-2 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 that occurs during the rental period;
4-2 (3) Personal effects insurance that provides coverage
4-3 to renters and other vehicle occupants for the loss of, or damage
4-4 to, personal effects that occurs during the rental period; or
4-5 (4) Any other coverage that the Commissioner may
4-6 approve as meaningful and appropriate in connection with the rental
4-7 of vehicles.
4-8 (g) No insurance may be issued pursuant to this section
4-9 unless:
4-10 (1) The rental period of the rental agreement does not
4-11 exceed 30 consecutive days; and
4-12 (2) At every rental car location where rental car
4-13 agreements are executed, brochures or other written materials are
4-14 readily available to the prospective renter that:
4-15 a. Summarize, clearly and correctly, the
4-16 material terms of insurance coverage, including the identity of the
4-17 insurer, offered to renters;
4-18 b. Disclose that these policies offered by the
4-19 rental car company may provide a duplication of coverage already
4-20 provided by a renter's personal automobile insurance policy,
4-21 homeowner's insurance policy, personal liability insurance policy,
4-22 or other source of coverage;
4-23 c. State that the purchase by the renter of the
4-24 kinds of insurance specified in this section is not required in
4-25 order to rent a vehicle;
5-1 d. Describe the process for filing a claim in
5-2 the event the renter elects to purchase coverage and in the event
5-3 of a claim; and
5-4 e. Contain any additional information on the
5-5 price, benefits, exclusions, conditions or other limitations of
5-6 such policies as the Commissioner may be regulation prescribe; and
5-7 (3) Evidence of coverage is provided to every renter
5-8 who elects to purchase such coverage.
5-9 (h) Any limited license issued under this section shall also
5-10 authorize any salaried employee of the licensee who, pursuant to
5-11 subsection (i) of this section, is trained to act individually on
5-12 behalf, and under the supervision, of the licensee with respect to
5-13 the kinds of insurance specified in this section.
5-14 (i) Each rental car company or franchisee licensed pursuant
5-15 to this section shall conduct a training program which shall be
5-16 submitted to the Commissioner for approval prior to use and which
5-17 shall meet the following minimum standards:
5-18 (1) Each trainee shall receive basic instruction about
5-19 the kinds of insurance specified in this section offered for
5-20 purchase by prospective renters of rental vehicles;
5-21 (2) Each trainee shall be instructed to acknowledge to
5-22 a prospective renter of a rental vehicle that purchase of any such
5-23 insurance specified in this section is not required in order for
5-24 the renter to rent a vehicle;
5-25 (3) Each trainee shall be instructed to acknowledge to
6-1 a prospective renter of a rental vehicle that the renter may have
6-2 insurance policies that already provide the coverage being offered
6-3 by the rental car company pursuant to this section.
6-4 (j) Limited licensees acting pursuant to and under the
6-5 authority of this section shall comply with all applicable
6-6 provisions of this Article, except that notwithstanding any other
6-7 provision of this Article, or any rule adopted by the Commissioner,
6-8 a limited licensee pursuant to this section shall not be required
6-9 to treat premiums collected from renters purchasing such insurance
6-10 when renting vehicles as funds received in a fiduciary capacity,
6-11 provided that:
6-12 (1) The insurer represented by the limited licensee
6-13 has consented in writing, signed by the insurer's officer, that
6-14 premiums need not be segregated from funds received by the rental
6-15 car company on account of vehicle rental; and
6-16 (2) The charges for insurance coverage are itemized
6-17 but not billed to the renter separately from the charges for rental
6-18 vehicles.
6-19 (k) No limited licensee under this section shall advertise,
6-20 represent, or otherwise hold itself or any of its employees
6-21 themselves out as licensed insurance agents.
6-22 SECTION 2. This Act takes effect September 1, 1997.
6-23 SECTION 3. The importance of this legislation and the
6-24 crowded condition of the calendars in both houses create an
6-25 emergency and an imperative public necessity that the
7-1 constitutional rule requiring bills to be read on three several
7-2 days in each house be suspended, and this rule is hereby suspended.