By Carona                                             S.B. No. 1940

         75R13218 CLG-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to a charge for certain types of noncredit insurance and

 1-3     products.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Chapter 3, Title 79, Revised Statutes (Article

 1-6     5069-3.01 et seq., Vernon's Texas Civil Statutes), is amended by

 1-7     adding Article 3.18A to read as follows:

 1-8           Art. 3.18A.  NONCREDIT INSURANCE AND PRODUCTS.  (a)  In

 1-9     connection with a loan made under this chapter, an authorized

1-10     lender may charge and collect a charge for the following types of

1-11     noncredit insurance or products if agent licensing requirements and

1-12     policy forms comply with the applicable provisions of the Insurance

1-13     Code and other insurance laws of this state:

1-14                 (1)  life insurance;

1-15                 (2)  disability insurance;

1-16                 (3)  accident insurance;

1-17                 (4)  home security plans and club memberships; and

1-18                 (5)  auto security plans and club memberships.

1-19           (b)  A borrower of a loan made under this chapter has the

1-20     option of including in the amount financed the cost of noncredit

1-21     insurance or products purchased by the borrower under this article

1-22     if:

1-23                 (1)  the purchase of the noncredit insurance or product

1-24     is not a factor in the approval of the loan and this fact is

 2-1     clearly disclosed in writing to the borrower;

 2-2                 (2)  the borrower gives specific, express written

 2-3     indication of the borrower's desire to purchase the noncredit

 2-4     insurance or product;

 2-5                 (3)  the borrower has 30 days to cancel the transaction

 2-6     and receive a full refund of the purchase price; and

 2-7                 (4)  any benefit payable as a result of the ownership

 2-8     of the noncredit insurance or product will be paid directly to the

 2-9     borrower or the borrower's designated representative and not to the

2-10     lender.

2-11           (c)  An authorized lender may not charge or collect a charge

2-12     for a type of noncredit insurance or product that is not specified

2-13     in Subsection (a) of this article unless the commissioner

2-14     authorizes the charge or collection.

2-15           (d)  Notwithstanding Article 3.15 of this chapter, the cost

2-16     of noncredit insurance or products purchased under this article,

2-17     and any gain or advantage received by an authorized lender or an

2-18     employee, officer, director, general or other agent, affiliate, or

2-19     associate of the lender as a result of a charge for noncredit

2-20     insurance or products imposed under this article, is not considered

2-21     a further or other charge or amount received in connection with a

2-22     loan made under this chapter.

2-23           SECTION 2.  This Act takes effect September 1, 1997, and

2-24     applies only to a loan contract made on or after that date.  A loan

2-25     contract made before the effective date of this Act is governed by

2-26     the law in effect on the date on which the loan contract was made,

2-27     and the former law is continued in effect for that purpose.

 3-1           SECTION 3.  The importance of this legislation and the

 3-2     crowded condition of the calendars in both houses create an

 3-3     emergency and an imperative public necessity that the

 3-4     constitutional rule requiring bills to be read on three several

 3-5     days in each house be suspended, and this rule is hereby suspended.