1-1     By:  Cain                                               S.B. No. 33

 1-2           (In the Senate - Filed April 4, 1997; April 8, 1997, read

 1-3     first time and referred to Committee on Economic Development;

 1-4     May  2, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 11, Nays 0; May 2, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 33                      By:  Cain

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to procedures to issue rental car companies limited

1-11     licenses as insurance agents.

1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-13           SECTION 1.  Article 21.07, Insurance Code, is amended by

1-14     adding Section 21 to read as follows:

1-15           Sec. 21.  LIMITED LICENSE.  (a)  Notwithstanding any

1-16     provisions of either this Article or of this code to the contrary,

1-17     the commissioner shall issue a license under this Article to a

1-18     rental car company, or to the franchise of a rental car company,

1-19     that complies with the provisions of this section and only for the

1-20     limited purposes as set forth in this section.

1-21           (b)  As used in this section:

1-22                 (1)  "Limited license" means a license authorizing a

1-23     person to sell certain insurance coverages relating to the rental

1-24     of motor vehicles pursuant to the provisions of this section.

1-25                 (2)  "Rental agreement" means any written agreement

1-26     setting forth the terms and conditions governing the use of a

1-27     vehicle provided by a rental car company.

1-28                 (3)  "Rental car company" means any person in the

1-29     business of providing leased or rented vehicles to the public.

1-30                 (4)  "Renter" means any person obtaining the use of a

1-31     vehicle from a rental car company under the terms of a rental

1-32     agreement.

1-33                 (5)  "Vehicle" means a motor vehicle of the private

1-34     passenger type including passenger vans and minivans that are

1-35     primarily intended for the transport of persons.

1-36           (c)  The commissioner may issue to a rental car company, or

1-37     to a franchisee of a rental car company, that has complied with the

1-38     requirements of this section a limited license authorizing the

1-39     licensee, known as a "limited licensee" for the purposes of this

1-40     section, to act as agent, with reference to the kinds of insurance

1-41     specified in this section, of any insurer authorized to write such

1-42     kinds of insurance in this State.

1-43           (d)  The prerequisites for issuance of a limited license

1-44     under this section are the filing with the commissioner of the

1-45     following:

1-46                 (1)  a written application, signed by an officer of the

1-47     applicant, for the limited license in such form or forms, and

1-48     supplements thereto, and containing such information, as the

1-49     commissioner may prescribe; and

1-50                 (2)  a certificate by the insurer that is to be named

1-51     in the limited license stating that the insurer has satisfied

1-52     itself that the named applicant is trustworthy and competent to act

1-53     as its insurance agent for this limited purpose and that the

1-54     insurer will appoint such applicant to act as the agent in

1-55     reference to the doing of such kind or kinds of insurance as are

1-56     permitted by this section if the limited license applied for is

1-57     issued by the commissioner.  The certification shall be subscribed

1-58     by an officer or managing agent of the insurer and affirmed as true

1-59     under the penalties of perjury.

1-60           (e)  In the event that any provision of this section is

1-61     violated by a limited licensee, the commissioner may:

1-62                 (1)  revoke or suspend a limited license issued under

1-63     this section in accordance with the provisions of Article 21.01-2

1-64     of this code; or

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

 2-2     penalties, including suspending the transaction of insurance at

 2-3     specific rental locations where violations of this section have

 2-4     occurred, as the commissioner deems to be necessary or convenient

 2-5     to carry out the purposes of this section.

 2-6           (f)  The rental car company or franchisee licensed pursuant

 2-7     to Subsection (c) of this section may act as agent for an

 2-8     authorized insurer only in connection with the rental of vehicles

 2-9     and only with respect to the following kinds of insurance:

2-10                 (1)  excess liability insurance that provides coverage

2-11     to the rental car company or franchisee and renters and other

2-12     authorized drivers of rental vehicles, in excess of the standard

2-13     liability limits provided by the rental car company in its rental

2-14     agreement, for liability arising from the negligent operation of

2-15     the rental vehicle;

2-16                 (2)  accident and health insurance that provides

2-17     coverage to renters and other vehicle occupants for accidental

2-18     death or dismemberment and for medical expenses resulting from an

2-19     accident involving the rental vehicle that occurs during the rental

2-20     period;

2-21                 (3)  personal effects insurance that provides coverage

2-22     to renters and other rental vehicle occupants for the loss of, or

2-23     damage to, personal effects that occurs during the rental period;

2-24     or

2-25                 (4)  any other coverage that the commissioner may

2-26     approve as meaningful and appropriate in connection with the rental

2-27     of vehicles.

2-28           (g)  No insurance may be issued pursuant to this section

2-29     unless:

2-30                 (1)  the rental period of the rental agreement does not

2-31     exceed 30 consecutive days;

2-32                 (2)  at every rental car location where rental car

2-33     agreements are executed, brochures or other written materials are

2-34     prominently displayed and readily available to the prospective

2-35     renter that:

2-36                       (A)  summarize, clearly and correctly, the

2-37     material terms of insurance coverage, including the identity of the

2-38     insurer, offered to renters;

2-39                       (B)  disclose that these policies offered by the

2-40     rental car company may provide a duplication of coverage already

2-41     provided by a renter's personal automobile insurance policy,

2-42     homeowner's insurance policy, personal liability insurance policy,

2-43     or other source of coverage;

2-44                       (C)  state that the purchase by the renter of the

2-45     kinds of insurance specified in this section is not required in

2-46     order to rent a vehicle;

2-47                       (D)  describe the process for filing a claim in

2-48     the event the renter elects to purchase coverage and in the event

2-49     of a claim; and

2-50                       (E)  contain any additional information on the

2-51     price, benefits, exclusions, conditions, or other limitations of

2-52     such policies as the commissioner may by regulation prescribe; and

2-53                 (3)  evidence of coverage is provided to every renter

2-54     who elects to purchase such coverage.

2-55           (h)  Any limited license issued under this section shall also

2-56     authorize any salaried employee of the licensee who, pursuant to

2-57     Subsection (i) of this section, is trained to act individually on

2-58     behalf and under the supervision of the licensee with respect to

2-59     the kinds of insurance specified in this section.

2-60           (i)  Each rental car company or franchisee licensed pursuant

2-61     to this section shall conduct a training program which shall be

2-62     submitted to the commissioner for approval prior to use and which

2-63     shall meet the following minimum standards:

2-64                 (1)  each trainee shall receive basic instruction about

2-65     the kinds of insurance specified in this section offered for

2-66     purchase by prospective renters of rental vehicles;

2-67                 (2)  each trainee shall be instructed to acknowledge to

2-68     a prospective renter of a rental vehicle that purchase of any such

2-69     insurance specified in this section is not required in order for

 3-1     the renter to rent a vehicle; and

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

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

 3-4     insurance policies that already provide the coverage being offered

 3-5     by the rental car company pursuant to this section.

 3-6           (j)  Limited licensees acting pursuant to and under the

 3-7     authority of this section shall comply with all applicable

 3-8     provisions of this Article, except that notwithstanding any other

 3-9     provision of this Article or any rule adopted by the commissioner,

3-10     a limited licensee pursuant to this section shall not be required

3-11     to treat premiums collected from renters purchasing such insurance

3-12     when renting vehicles as funds received in a fiduciary capacity,

3-13     provided that:

3-14                 (1)  the insurer represented by the limited licensee

3-15     has consented in writing, signed by the insurer's officer, that

3-16     premiums need not be segregated from funds received by the rental

3-17     car company pursuant to vehicle rental; and

3-18                 (2)  the charges for insurance coverage are itemized

3-19     but not billed to the renter separately from the charges for rental

3-20     vehicles.

3-21           (k)  No limited licensee under this section shall advertise,

3-22     represent, or otherwise hold itself or any of its employees or

3-23     themselves out as licensed insurance agents.

3-24           SECTION 2.  This Act takes effect September 1, 1997, and

3-25     applies to an insurance policy that is delivered, issued for

3-26     delivery, or renewed on or after September 1, 1997.  A policy

3-27     delivered, issued for delivery, or renewed before September 1,

3-28     1997, is governed by the law as it existed prior to the effective

3-29     date of this Act.

3-30           SECTION 3.  The importance of this legislation and the

3-31     crowded condition of the calendars in both houses create an

3-32     emergency and an imperative public necessity that the

3-33     constitutional rule requiring bills to be read on three several

3-34     days in each house be suspended, and this rule is hereby suspended.

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