By:  Sibley                                           S.B. No. 1913

         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 service contracts sold by a manufacturer or seller of

 1-2     property covered by a service contract.


 1-4           SECTION 1.  Section 2, Article 1.14-1, Insurance Code, is

 1-5     amended by adding Subsection (b)(9) to read as follows:

 1-6                 (9)  Transactions in this state involving service

 1-7     contracts where the manufacturer or seller of the property or a

 1-8     third party is the obligor of the service contract; provided that,

 1-9     in the case of a third party obligor, the third party's obligation

1-10     is insured by an insurer licensed to do business in this state and

1-11     the third party obligor is acting through or with the written

1-12     agreement of the manufacturer or seller of the property.  For

1-13     purposes of this subsection, "service contract" means a contract or

1-14     agreement for a separately stated consideration for a specific

1-15     duration to perform the repair, replacement or maintenance of

1-16     property or indemnification for repair, replacement or maintenance,

1-17     for the operational or structural failure due to defect in

1-18     materials, workmanship or normal wear and tear, with or without

1-19     additional provision for incidental payment of indemnity under

1-20     limited circumstances, including, but not limited to, towing,

1-21     rental and emergency road service, but does not include mechanical

 2-1     breakdown insurance agreements sold by a person as defined in

 2-2     Section 2(a), Article 21.21 of this code.

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

 2-4           SECTION 3.  The importance of this legislation and the

 2-5     crowded condition of the calendars in both houses create an

 2-6     emergency and an imperative public necessity that the

 2-7     constitutional rule requiring bills to be read on three several

 2-8     days in each house be suspended, and this rule is hereby suspended.