Amend HB 2031 by adding the following new section and
renumbering other sections appropriately.
SUBCHAPTER N. VERIFICATION OF COMPLIANCE WITH AND ENFORCEMENT
OF FINANCIAL RESPONSIBILITY REQUIREMENTS
Sec. 601.501. DEFINITIONS. In this subchapter:
(1) "Department" means the Texas Department of
Transportation.
(2) "Verification date" means the date set by the
department in the written request to the owner of a motor vehicle
requiring the owner to state whether the owner has established
financial responsibility in accordance with Section 601.051.
Sec. 601.502. VERIFICATION OF ESTABLISHMENT OF FINANCIAL
RESPONSIBILITY THROUGH RANDOM SAMPLING. (a) The department or an
agent of the department shall randomly select samples of
registrations of motor vehicles subject to this chapter, or samples
of owners of motor vehicles subject to this chapter, to verify
whether the owner has established financial responsibility in
accordance with Section 601.051. A sample selected under this
section may not be classified on the basis of the owner's race,
color, religion, sex, national origin, age, marital status,
physical or mental disability, economic status, or geographic
location.
(b) In addition to the general random sampling of motor
vehicle registrations, the department may randomly select other
persons to verify that the person has established financial
responsibility, including:
(1) a person who, during the four years preceding the
date of selection:
(A) has been convicted of a violation of Section
601.051, 601.191, 601.195, 601.196, or 601.509, including a
violation that occurred while the person was operating a motor
vehicle owned by another person; or
(B) has received deferred disposition under
Article 45.54, Code of Criminal Procedure, for a violation of
Section 601.051, 601.191, 601.195, 601.196, or 601.509;
(2) a person whose motor vehicle registration has been
the subject of a deferred suspension under Section 601.505(a)
during the preceding four years; or
(3) a person whose driver's license or motor vehicle
registration has been suspended during the preceding four years.
(c) The department shall send to the motor vehicle owner a
request for information about the motor vehicle and the owner's
method of establishing financial responsibility. The request must:
(1) state the verification date; and
(2) require the owner to state whether the owner has,
as of the verification date, established financial responsibility
in accordance with Section 601.051.
(d) The department by rule shall prescribe:
(1) the methods employed for the random selection of
samples and the procedures necessary for implementation of the
verification process, including the method of sending the
verification request, which may include certified mail, return
receipt requested;
(2) the frequency of sample selection;
(3) the form for verification of financial
responsibility; and
(4) the information to be requested in the prescribed
form.
(e) The department may require the information provided by
the owner to include a statement by the owner that the owner had,
as of the verification date, established financial responsibility:
(1) through liability insurance under Subchapter D,
including:
(A) the name and address of the insurer;
(B) the number of the insurance policy; and
(C) the expiration date of the insurance
coverage;
(2) by filing a surety bond with the Department of
Public Safety under Section 601.121, including:
(A) the name and address of the company issuing
the bond;
(B) the identification number of the bond; and
(C) the expiration date of the bond;
(3) by depositing cash or securities with the
comptroller under Section 601.122, including a copy of the
certificate issued by the comptroller showing compliance;
(4) by depositing cash or a cashier's check with the
county judge of the county in which the motor vehicle is registered
under Section 601.123, including a copy of the certificate issued
by the county judge showing compliance; or
(5) through self-insurance under Section 601.124,
including a copy of the certificate of self-insurance issued by the
Department of Public Safety.
(f) Not later than the 30th day after the verification date,
the owner to whom the notice is sent shall furnish the requested
information to the department in the form prescribed by the
department, accompanied by the owner's signed affirmation that the
information is true and correct.
(g) An owner whose response indicates that the owner had not
established financial responsibility in accordance with Section
601.051, or who fails to respond to the request, is subject to
suspension of the owner's motor vehicle registration in the manner
provided by Section 601.505.
(h) If the owner responds to the request for information by
asserting that the owner had, as of the verification date,
established financial responsibility in accordance with a method
authorized by Section 601.051, the department may conduct a
verification investigation as provided by Section 601.503.
Sec. 601.503. VERIFICATION INVESTIGATION. (a) To verify a
response received from an owner under Section 601.502, the
department or an agent of the department may furnish necessary
information to the insurer, surety, or officer named in the
response. Not later than the 30th day after the date of receipt of
the information, the insurer, surety, or officer shall inform the
department whether, as of the verification date, financial
responsibility had been established for the affected motor vehicle
in accordance with Section 601.051.
(b) If the response received from an owner under Section
601.502 states that financial responsibility has been established
through self-insurance, the department shall examine the
department's records to verify that a certificate of self-insurance
has been issued in accordance with Section 601.124.
Sec. 601.504. WARNING NOTICE. (a) If an owner responds
under Section 601.502 that the owner has not established financial
responsibility or the owner fails to respond in a timely manner, or
if the department otherwise determines that an owner has registered
or maintained the registration of a motor vehicle without
establishing financial responsibility in accordance with Section
601.051, the department shall issue a warning notice to the owner.
(b) The warning notice must inform the owner that the owner
is not in compliance with Section 601.051 and that the owner's
motor vehicle registration is suspended on the 45th day after the
date on which the warning notice is mailed unless the owner
complies with the requirements described by Subsection (c) for
deferral of the suspension.
(c) The warning notice must include a statement informing
the owner that the department shall defer the suspension of the
owner's registration if, not later than the 30th day after the date
of the mailing of the warning notice, the owner establishes
financial responsibility in the manner prescribed by Section
601.505.
Sec. 601.505. SUSPENSION; REINSTATEMENT; EXCEPTION.
(a) The department shall suspend the registration of an owner to
whom a notice is issued under Section 601.504. For a first
violation, the department shall terminate the suspension on payment
by the owner of a $100 reinstatement fee and submission of proof of
financial responsibility as prescribed by the department. For a
second or subsequent violation within the preceding four years or a
violation of Section 601.507, the department shall terminate the
suspension on the 120th day after the effective date of the
suspension on payment by the owner of a $100 reinstatement fee and
submission of proof of financial responsibility as prescribed by
the department.
(b) For a first violation, the department shall defer the
suspension and any reinstatement fee if the owner submits to the
department, not later than the 15th day after the date of the
warning notice under Section 601.504, proof of financial
responsibility evidenced by a motor vehicle insurance policy, the
premiums of which have been prepaid for a term of at least six
months. On the earlier of the 180th day after the date of the
warning notice or the expiration date of the insurance policy
described by this subsection, the owner shall submit to the
department evidence of renewal of the motor vehicle insurance
policy, the premiums of which have been prepaid for a term of at
least six months. If the owner fails to submit the required
evidence of renewal, the department shall impose the suspension and
reinstatement fee.
(c) Notwithstanding any other provision of this subchapter,
the department may register in accordance with Chapter 502 the
motor vehicle of an applicant for registration who:
(1) received a request for information under Section
601.502; and
(2) presents proof of financial responsibility that:
(A) complies with Section 601.051; and
(B) was in effect on the verification date of
the request for information.
Sec. 601.506. SUBMISSION OF FALSE PROOF. If the department
determines that the proof of financial responsibility submitted by
a motor vehicle owner under Section 601.502 is false, the
department shall suspend the owner's motor vehicle registration.
The department shall terminate the suspension on the 180th day
after the effective date of the suspension on payment by the owner
of a $200 reinstatement fee and submission of proof of financial
responsibility as prescribed by the department.
Sec. 601.507. OPERATION OF MOTOR VEHICLE WHILE REGISTRATION
SUSPENDED FOR FAILURE TO ESTABLISH FINANCIAL RESPONSIBILITY. (a) A
person may not operate a motor vehicle if the registration of the
motor vehicle is suspended under this subchapter.
(b) A person commits a business offense if the person
violates Subsection (a). A business offense under this subsection
is punishable by a fine of not less than $1,000 or more than
$2,000.
Sec. 601.508. MAINTENANCE OF EVIDENCE OF FINANCIAL
RESPONSIBILITY. (a) Each operator of a motor vehicle subject to
Section 601.051 shall carry within the vehicle a written document
providing evidence of financial responsibility. The document must
be legible and provide information sufficient to demonstrate that
the owner or operator of the motor vehicle has established
financial responsibility as required under Section 601.051 and may
include:
(1) a motor vehicle liability insurance policy
covering the vehicle that satisfies Subchapter D or a photocopy of
the policy;
(2) a standard proof of motor vehicle liability
insurance form prescribed by the Texas Department of Insurance;
(3) a liability insurance binder as specified by
Section 601.080 or a certificate of liability insurance as
specified by Section 601.083;
(4) the combination of proof of purchase of the motor
vehicle within the previous 30 days and current proof of insurance;
(5) evidence that a surety bond has been filed with
the Department of Public Safety in accordance with Section 601.121;
(6) a certificate issued by the comptroller stating
that a deposit has been made with the comptroller that complies
with Section 601.122;
(7) a certificate issued by a county judge stating
that a deposit has been made with the county judge that complies
with Section 601.123;
(8) a certificate of self-insurance issued by the
Department of Public Safety in accordance with Section 601.124; or
(9) a certificate, decal, or other document issued by
a governmental agency for a motor vehicle that indicates that the
vehicle is owned by the United States, this state, or a political
subdivision of this state.
(b) The operator of a motor vehicle shall surrender the
evidence of financial responsibility into the possession of a peace
officer, court, or court officer who requests inspection of the
evidence of financial responsibility. A person who fails or
refuses to comply with such a request is presumed to violate
Section 601.051.
(c) A person who provides evidence of financial
responsibility knowing that financial responsibility has not been
established as required under Section 601.051 or that the evidence
of financial responsibility is illegally altered, counterfeit, or
otherwise invalid is presumed to violate Sections 601.196 and
601.509.
Sec. 601.509. DISPLAY OF FALSE PROOF OF FINANCIAL
RESPONSIBILITY; CRIMINAL PENALTY. (a) A person commits an offense
if the person provides evidence of financial responsibility to a
peace officer, court, or officer of the court knowing that
financial responsibility has not been established as required under
Section 601.051 or that the evidence of financial responsibility is
illegally altered, counterfeit, or otherwise invalid.
(b) If a peace officer issues a citation to a motor vehicle
operator for displaying invalid evidence of financial
responsibility, the officer shall confiscate the invalid evidence
of financial responsibility for presentation in court.
(c) An offense under this section is a Class B misdemeanor.
Sec. 601.510. DISPOSITION OF FEES. From the reinstatement
fees collected under this subchapter, the department shall recover
its costs in implementing and administering the verification
program. The department shall deposit any amounts collected that
exceed the administrative costs of the department under this
subchapter in the general revenue fund.
Sec. 601.511. USE OF AGENTS BY DEPARTMENT. The department
may submit requests for proposals for contracts with private
vendors to perform the random sampling and the verification
investigations required under this subchapter. The department may
enter into contracts as necessary to implement this section.
SECTION 1.02. Section 601.051, Transportation Code, is
amended to read as follows:
Sec. 601.051. REQUIREMENT OF FINANCIAL RESPONSIBILITY.
(a) A person may not operate, register, or maintain registration
of a motor vehicle in this state unless financial responsibility is
established for that vehicle through:
(1) a motor vehicle liability insurance policy that
complies with Subchapter D;
(2) a surety bond filed under Section 601.121;
(3) a deposit under Section 601.122;
(4) a deposit under Section 601.123; or
(5) self-insurance under Section 601.124.
(b) An owner of a motor vehicle may not permit another
person to operate, register, or maintain registration of the motor
vehicle in this state unless financial responsibility is
established for that vehicle and evidenced through a method
described by Subsection (a).
SECTION 1.03. Section 601.191, Transportation Code, is
amended to read as follows:
Sec. 601.191. OPERATION OF MOTOR VEHICLE IN VIOLATION OF
FINANCIAL RESPONSIBILITY REQUIREMENTS <MOTOR VEHICLE LIABILITY
INSURANCE REQUIREMENT; OFFENSE>. (a) A person commits an offense
if the person operates a motor vehicle in violation of Section
601.051.
(b) Except as provided by Subsection <Subsections (c) and>
(d), an offense under this section is a business offense
<misdemeanor> punishable by a fine of not less than $500 <$175> or
more than $1,000 <$350>.
(c) It is a defense to prosecution under this section,
Section 601.195, and Section 601.507 that the person charged with a
violation produces in court satisfactory evidence that, at the time
of the arrest, the owner or operator had established financial
responsibility in accordance with Section 601.051 <If a person has
been previously convicted of an offense under this section, an
offense under this section is a misdemeanor punishable by a fine of
not less than $350 or more than $1,000>.
(d) If the court determines that a person who has not been
previously convicted of a business <an> offense under this section
is economically unable to pay the fine, the court may reduce the
fine to less than $500 <$175>.
SECTION 1.04. Section 12.02, Penal Code, is amended to read
as follows:
Sec. 12.02. CLASSIFICATION OF OFFENSES. Offenses are
designated as felonies, <or> misdemeanors, or business offenses.
SECTION 1.05. Subchapter A, Chapter 12, Penal Code, is
amended by adding Section 12.05 to read as follows:
Sec. 12.05. BUSINESS OFFENSE. (a) A business offense is a
nonmisdemeanor offense for which the penalty is a fine of at least
$500.
(b) Conviction of a business offense does not impose any
legal disability or disadvantage.
SECTION 1.06. The heading to Subchapter B, Chapter 12, Penal
Code, is amended to read as follows:
SUBCHAPTER B. ORDINARY MISDEMEANOR
AND BUSINESS OFFENSE PUNISHMENTS
SECTION 1.07. Subchapter B, Chapter 12, Penal Code, is
amended by adding Section 12.24 to read as follows:
Sec. 12.24. BUSINESS OFFENSE. An individual adjudged guilty
of a business offense shall be punished by a fine of at least $500.
SECTION 1.08. In performing sample selection under Section
601.502, Transportation Code, as added by this Act, the Texas
Department of Transportation shall ensure that at least 500,000
samples are selected on or before September 1, 2001.
SECTION 1.09. (a) In cooperation with the Texas Department
of Insurance and the Department of Public Safety of the State of
Texas, the Texas Department of Transportation shall conduct an
evaluation of the implementation and operation of the verification
of compliance with the financial responsibility program adopted
under Subchapter N, Chapter 601, Transportation Code, as added by
this Act, and of the effectiveness of the verification program in
increasing compliance with the financial responsibility
requirements established under Subchapter C, Chapter 601,
Transportation Code. The evaluation must include:
(1) a computation, by year, of the number of persons
determined by the department through the application of the
verification program to be driving without compliance with the
financial responsibility requirements established under Subchapter
C, Chapter 601, Transportation Code; and
(2) the annual effect of the program, as determined by
the Texas Department of Insurance, on the rate for uninsured
motorist insurance coverage under Article 5.06-1, Insurance Code.
(b) The Texas Department of Transportation shall enter into
contracts, memoranda of understanding, or interagency agreements as
necessary to implement this section.
(c) The Texas Department of Transportation shall report the
results of the evaluation conducted under this section to the 80th
Legislature not later than February 1, 2007. The department shall
provide written copies of the report to the governor, the
lieutenant governor, and the speaker of the house of
representatives.
ARTICLE 2. UNINSURED AND UNDERINSURED MOTORIST COVERAGE
SECTION 2.01. Article 5.06-1, Insurance Code, is amended to
read as follows:
Art. 5.06-1. UNINSURED OR UNDERINSURED MOTORIST COVERAGE.
(a) <(1)> No automobile liability insurance (including insurance
issued through the Texas Automobile Insurance Plan Association
<pursuant to an Assigned Risk Plan established under authority of
Section 35 of the Texas Motor Vehicle Safety-Responsibility Act>),
covering liability arising out of the ownership, maintenance, or
use of any motor vehicle shall be delivered or issued for delivery
in this state unless coverage is provided therein or supplemental
thereto, <in at least the limits described in the Texas Motor
Vehicle Safety-Responsibility Act,> under provisions prescribed by
the commissioner <Board>, for the protection of persons insured
thereunder who are legally entitled to recover damages from owners
or operators of uninsured or underinsured motor vehicles because of
bodily injury, sickness, or disease, including death, or property
damage resulting therefrom. The coverages required under this
Article shall not be applicable where any insured named in the
policy shall reject the coverage in writing; provided that unless
the named insured thereafter requests such coverage in writing,
such coverage need not be provided in or supplemental to a renewal
policy where the named insured has rejected the coverage in
connection with a policy previously issued to the named insured
<him> by the same insurer or by an affiliated insurer.
(b) <(2)> For the purpose of these coverages:
(1) "Exemplary damages" has the meaning assigned by
Section 41.001, Civil Practice and Remedies Code.
(2) "Noneconomic damages" means damages other than
compensatory damages for pecuniary loss. The term includes damages
for physical pain and mental anguish, loss of consortium,
disfigurement, physical impairment, or loss of companionship and
society. The term does not include exemplary damages.
(3) "Uninsured <(a) the term "uninsured> motor
vehicle" shall, subject to the terms and conditions of such
coverage, be deemed to include an insured motor vehicle where the
liability insurer thereof is unable to make payment with respect to
the legal liability of its insured within the limits specified
therein because of insolvency.
(4) "Underinsured <(b) The term "underinsured> motor
vehicle" means an insured motor vehicle on which there is valid and
collectible liability insurance coverage with limits of liability
for the owner or operator which were originally lower than, or have
been reduced by payment of claims arising from the same accident
to, an amount less than the limit of liability stated in the
underinsured coverage of the insured's policy.
(c) The commissioner <Board> may, in the policy forms
adopted under Article 5.06 of this code, define "uninsured motor
vehicle" to exclude certain motor vehicles whose operators are in
fact uninsured.
(d) The portion of a policy form adopted under Article 5.06
of this code to provide coverage under this article shall include
provisions that, regardless of the number of persons insured,
policies or bonds applicable, vehicles involved, or claims made,
the total aggregate limit of liability to any one person who
sustains bodily injury or property damage as the result of any one
occurrence shall not exceed the limit of liability for these
coverages as stated in the policy and the total aggregate limit of
liability to all claimants, if more than one, shall not exceed the
total limit of liability per occurrence as stated in the policy;
and shall provide for the exclusion of the recovery of damages for
bodily injury or property damage or both resulting from the
intentional acts of the insured. The portion of a policy form
adopted under Article 5.06 of this code to provide coverage under
this article shall require that in order for the insured to recover
under the uninsured motorist coverages where the owner or operator
of any motor vehicle which causes bodily injury or property damage
to the insured is unknown, actual physical contact must have
occurred between the motor vehicle owned or operated by such
unknown person and the person or property of the insured.
(e) Except as provided by Subsection (f) of this article,
the <(3) The> limits of liability for bodily injury, sickness, or
disease, including death, shall be offered to the insured in
amounts not less than those prescribed in Chapter 601,
Transportation Code, <the Texas Motor Vehicle Safety-Responsibility
Act> and such higher available limits as may be desired by the
insured, but not greater than the limits of liability specified in
the bodily injury liability provisions of the insured's policy.
(f) The named insured may elect to waive coverage under this
article for recovery of noneconomic and exemplary damages resulting
from bodily injury, sickness, or disease, including death. If an
insured elects to waive coverage under this subsection, Subsection
(e) of this article does not apply to the limits of liability that
are applicable to the coverage provided under the policy issued to
the named insured for damages resulting from bodily injury,
sickness, or disease, including death. The commissioner by rule
may adopt minimum limits of liability applicable to those damages.
Waiver of coverage under this subsection does not affect the
insured's right to bring an action for noneconomic and exemplary
damages against a responsible party.
(g) <(4) (a)> Coverage for property damage shall be offered
to the insured in amounts not less than those prescribed in Chapter
601, Transportation Code, <the Texas Motor Vehicle
Safety-Responsibility Act> and such higher available limits as may
be desired by the insured, but not greater than limits of liability
specified in the property damage liability provisions of the
insured's policy, subject to a deductible amount of $250.
(h) <(b)> If the insured has collision coverage and
uninsured or underinsured property damage liability coverage, the
insured may recover under the policy coverage chosen by the
insured. In the event neither coverage is sufficient alone to
cover all damage resulting from a single occurrence, the insured
may recover under both coverages. When recovering under both
coverages, the insured shall designate one coverage as the primary
coverage and pay the deductible applicable to that coverage. The
primary coverage must be exhausted before any recovery is made
under the secondary coverage. If both coverages are utilized in
the payment of damages from a single occurrence, the insured shall
not be required to pay the deductible applicable to the secondary
coverage when the amount of the deductible otherwise applicable to
the secondary coverage is the same as or less than the amount of
the deductible applicable to the primary coverage. If both
coverages are utilized in the payment of damages from a single
occurrence and the amount of the deductible otherwise applicable to
the secondary coverage is greater than the amount of the deductible
applicable to the primary coverage, the insured shall be required
to pay in respect of the secondary coverage only the difference
between the amount of the two deductibles. In no event shall the
insured recover under both coverages more than the actual damages
suffered.
(i) <(5)> The underinsured motorist coverage shall provide
for payment to the insured of all sums which the insured <he> shall
be legally entitled to recover as damages from owners or operators
of underinsured motor vehicles because of bodily injury or property
damage in an amount up to the limit specified in the policy,
reduced by the amount recovered or recoverable from the insurer of
the underinsured motor vehicle. If the named insured has waived
coverage under Subsection (f) of this article for recovery of
noneconomic and exemplary damages, the amount paid to the insured
may not include any amount attributable to noneconomic and
exemplary damages.
(j) <(6)> In the event of payment to any person under any
coverage required by this Section and subject to the terms and
conditions of such coverage, the insurer making such payment shall,
to the extent thereof, be entitled to the proceeds of any
settlement or judgment resulting from the exercise of any rights of
recovery of such person against any person or organization legally
responsible for the bodily injury, sickness or disease, or death
for which such payment is made, including the proceeds recoverable
from the assets of the insolvent insurer; provided, however,
whenever an insurer shall make payment under a policy of insurance
issued pursuant to this Act, which payment is occasioned by the
insolvency of an insurer, the insured of said insolvent insurer
shall be given credit in any judgment obtained against the insured
<him>, with respect to the insured's <his> legal liability for such
damages, to the extent of such payment, but, subject to Section 12
of Article 21.28-C of this code, such paying insurer shall have the
right to proceed directly against the insolvent insurer or its
receiver, and in pursuance of such right such paying insurer shall
possess any rights which the insured of the insolvent company might
otherwise have had if the insured of the insolvent insurer had made
the payment.
(k) <(7)> If a dispute exists as to whether a motor vehicle
is uninsured, the burden of proof as to that issue shall be upon
the insurer.
(l) <(8)> Notwithstanding Section 15.032, Civil Practice and
Remedies Code, an action against an insurer in relation to the
coverage provided under this article, including an action to
enforce that coverage, may be brought only:
(1) <(a)> in the county in which the policyholder or
beneficiary instituting the suit resided at the time of the
accident; or
(2) <(b)> in the county in which the accident
involving the uninsured or underinsured motor vehicle occurred.
ARTICLE 3. PROOF OF INSURANCE CARDS
SECTION 3.01. Subchapter A, Chapter 5, Insurance Code, is
amended by adding Article 5.06-7 to read as follows:
Art. 5.06-7. FORM AND APPEARANCE OF PROOF OF MOTOR VEHICLE
LIABILITY INSURANCE. (a) The commissioner shall prescribe by rule
a standard appearance and form for a card issued by an insurer as
proof of motor vehicle liability insurance prescribed by Section
601.081, Transportation Code.
(b) In prescribing the appearance of a proof of motor
vehicle liability insurance card under Subsection (a) of this
article, the commissioner shall require an appearance that is:
(1) difficult to alter, duplicate, or counterfeit; and
(2) not cost-prohibitive for consumers.
(c) A card issued as proof of motor vehicle liability
insurance issued in this state by an insurer must conform to the
form and appearance prescribed under Subsection (a) of this
article.
SECTION 3.02. (a) The commissioner of insurance shall
prescribe the standard appearance and form of proof of motor
vehicle liability insurance cards as required by Article 5.06-7,
Insurance Code, as added by this Act, not later than December 1,
1999.
(b) A card issued by an insurer as proof of motor vehicle
liability insurance that is issued on or after January 1, 2000,
must conform with rules established by the commissioner of
insurance under Article 5.06-7, Insurance Code, as added by this
Act. Proof of motor vehicle liability insurance that is issued
before January 1, 2000, is governed by the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
ARTICLE 4. UNAUTHORIZED INSURANCE
SECTION 4.01. The heading to Section 2, Article 1.14-1,
Insurance Code, is amended to read as follows:
Sec. 2. ENGAGING IN <INSURANCE> BUSINESS OF INSURANCE;
DEFINITIONS <DEFINED>.
SECTION 4.02. Section 2, Article 1.14-1, Insurance Code, is
amended by amending Subsections (a) and (c) and adding Subsection
(d) to read as follows:
(a) In this article:
(1) "Engaging in the business of insurance" includes
the performance of any <Any> of the following acts in this state,
whether effected by mail or otherwise: <is defined to be doing an
insurance business in this state. The venue of an act committed by
mail is at the point where the matter transmitted by mail is
delivered and takes effect. Unless otherwise indicated, the term
insurer as used in this Article includes all corporations,
associations, partnerships and individuals engaged as principals in
the business of insurance and also includes interinsurance
exchanges, mutual benefit societies, and insurance exchanges and
syndicates as defined by rules promulgated by the State Board of
Insurance.>
1. The making of or proposing to make, as an
insurer, an insurance contract.
2. The making of or proposing to make, as
guarantor or surety, any contract of guaranty or suretyship as a
vocation and not merely incidental to any other legitimate business
or activity of the guarantor or surety.
3. The taking or receiving of any application
for insurance.
4. The receiving or collection of any premium,
commission, membership fees, assessments, dues or other
consideration for any insurance or any part thereof.
5. The issuance or delivery of contracts of
insurance to residents of this state or to persons authorized to do
business in this state.
6. Directly or indirectly acting as an agent for
or otherwise representing or aiding on behalf of another any person
or insurer in the solicitation, negotiation, procurement or
effectuation of insurance or renewals thereof or in the
dissemination of information as to coverage or rates, or forwarding
of applications, or delivery of policies or contracts, or
inspection of risks, a fixing of rates or investigation or
adjustment of claims or losses or in the transaction of matters
subsequent to effectuation of the contract and arising out of it,
or in any other manner representing or assisting a person or
insurer in the transaction of insurance with respect to subjects of
insurance resident, located or to be performed in this state. The
provisions of this subdivision shall not operate to prohibit
full-time salaried employees of a corporate insured from acting in
the capacity of an insurance manager or buyer in placing insurance
in behalf of such employer, its parent or affiliated companies.
7. Contracting to provide indemnification or
expense reimbursement in this state to persons domiciled in this
state or for risks located in this state, whether as an insurer,
agent, administrator, trust, funding mechanism, or by any other
method, for any type of medical expenses including, but not limited
to surgical, chiropractic, physical therapy, speech pathology,
audiology, professional mental health, dental, hospital, or
optometric expenses, whether this coverage is by direct payment,
reimbursement, or otherwise. This provision shall not apply to:
(i) any program otherwise authorized by
law that is established by any political subdivision of this state
or under Chapter 791, Government Code, <the provisions of The
Interlocal Cooperation Act (Article 4413(32c), Vernon's Texas Civil
Statutes)> or by a state agency; or
(ii) a multiple employer welfare
arrangement which is fully insured as defined in 29 U.S.C.A.
Section 1144(b)(6) except that the Commissioner may apply any laws
that regulate the business of insurance in this state to the extent
that such laws provide <(1)> standards requiring the maintenance of
specified levels of contributions, which any such plan, or any
trust established under such a plan, must meet in order to be
considered under such law able to pay benefits in full when due,
and <(2)> provisions to enforce such standards.
8. The doing of any kind of insurance business
specifically recognized as constituting the doing of an insurance
business within the meaning of the statutes relating to insurance.
9. The doing or proposing to do any insurance
business in substance equivalent to any of the foregoing in a
manner designed to evade the provisions of the statutes.
10. Any other transactions of business in this
state by an insurer.
11. With respect to policies authorized under
Article 3.74 of this code, the use, creation, publication, mailing,
or dissemination of an advertisement relating to any of the acts
defined in this subsection to be doing an insurance business
unless:
(i) that advertisement is used, created,
published, mailed, or disseminated on behalf of a person or insurer
authorized under this title to engage in the business of insurance
in this state, who has actual knowledge of the content of the
advertisement and has authorized the advertisement to be used,
created, published, mailed, or disseminated on that person's or
insurer's behalf; and
(ii) the person or insurer on whose behalf
the advertisement is used, created, published, mailed, or
disseminated is, in that advertisement, clearly identified by name
as the sponsor of the advertisement.
(2) "Insurer" means a person engaged as a principal in
the business of insurance.
(3) "Person" means:
(A) an individual;
(B) a corporation;
(C) an association;
(D) a partnership;
(E) a reciprocal exchange;
(F) an interinsurance exchange;
(G) a Lloyd's plan;
(H) a fraternal benefit society; and
(I) any other legal entity engaged in the
business of insurance, including:
(i) an agent;
(ii) a broker;
(iii) an adjuster; or
(iv) a life insurance counselor.
(c) The commissioner <State Board of Insurance> shall
promulgate rules defining insurance exchanges and syndicates
covered by Subsection (a)(1) of this section.
(d) The venue of an act described by Subsection (a)(1) of
this section that is committed by mail is in the location where the
matter transmitted by mail is delivered and takes effect.
SECTION 4.03. Subsection (b), Section 3, Article 1.14-1,
Insurance Code, is amended to read as follows:
(b) A <No> person may not <or insurer shall> directly or
indirectly engage in the <do any of the acts of an insurance>
business of insurance <set forth in this Article> except as
provided by and in accordance with the specific authorization of
statute. In respect to the insurance of subjects resident, located
or to be performed within this state this section shall not
prohibit the collection of premium or other acts performed outside
of this state by persons or insurers authorized to do business in
this state provided such transactions and insurance contracts
otherwise comply with statute.
SECTION 4.04. Subsection (a), Section 13, Article 1.14-1,
Insurance Code, is amended to read as follows:
(a) A person <who violates Section 3(b) of this article>
commits an offense if the person engages in the business of
insurance:
(1) without:
(A) holding a certificate of authority, license,
or other authorization issued by the department; or
(B) having an exemption that is recognized by
the department from the requirement to hold a certificate of
authority, license, or other authorization issued by the
department; or
(2) after the person's certificate of authority,
license, or other authorization has been revoked or suspended by
the commissioner.
ARTICLE 5. INSURANCE AVAILABILITY
SECTION 5.01. Section 4, Article 21.81, Insurance Code, is
amended by adding Subsections (c) and (d) to read as follows:
(c) Notwithstanding Section 5 of this article, an applicant
is eligible for insurance through the association if the applicant
and servicing agent certify that the applicant is unable to find
coverage at a rate that is within the benchmark flexibility band,
pursuant to Article 5.101 of this code, and the applicant is a good
driver. Such an applicant shall be charged a rate for coverage
that does not exceed a rate that is greater than the midway point
between 115 percent of the benchmark rate promulgated pursuant to
Article 5.101 of this code and the rate promulgated under Section 5
of this article. The commissioner may make rules to implement this
section.
(d) In this section, a "good driver" means an individual
who:
(1) is over the age of:
(A) if male, 25 years of age; and
(B) if female, 21 years of age;
(2) has been licensed for at least three years to
drive the type of motor vehicle to be insured;
(3) during the previous three years, has not:
(A) been at fault in a motor vehicle accident
that resulted in bodily injury, death, or property damage;
(B) been convicted of a violation of a traffic
safety regulation that involved a moving vehicle; or
(C) been convicted of an offense under Section
49.04, Penal Code, or Section 106.041, Alcoholic Beverage Code;
(4) has never made a fraudulent insurance claim; and
(5) does not drive a sports or high-performance
vehicle.
ARTICLE 6. REPEALER
SECTION 6.01. The following laws are repealed:
(1) Subsection (a), Section 3, Article 1.14-1,
Insurance Code;
(2) Subsection (c), Section 13, Article 1.14-1,
Insurance Code;
(3) Section 601.053, Transportation Code;
(4) Section 601.193, Transportation Code;
(5) Subchapter H, Chapter 601, Transportation Code;
and
(6) Subchapter I, Chapter 601, Transportation Code.
ARTICLE 7. TRANSITION; EFFECTIVE DATE; EMERGENCY
SECTION 7.01. (a) The change in law made by this Act to
Section 13, Article 1.14-1, Insurance Code, and to Chapter 601,
Transportation Code, applies only to punishment for an offense
committed on or after the effective date of this Act. For purposes
of this section, an offense is committed before the effective date
of this Act if any element of the offense occurs before that date.
(b) An offense committed under Section 13, Article 1.14-1,
Insurance Code, before the effective date of this Act is covered by
the law in effect when the offense was committed, and the former
law is continued in effect for that purpose.
SECTION 7.02. Article 5.06-1, Insurance Code, as amended by
this Act, applies only to a motor vehicle liability insurance
policy that is delivered, issued for delivery, or renewed on or
after January 1, 2000. A policy that is delivered, issued for
delivery, or renewed before January 1, 2000, is governed by the law
as it existed immediately before the effective date of this Act,
and that law is continued in effect for that purpose.
SECTION 7.03. Subsections (c) and (d), Section 4, Article
21.81, Insurance Code, as added by this Act, apply only to a motor
vehicle liability insurance policy that is delivered, issued for
delivery, or renewed on or after January 1, 2001. A policy that is
delivered, issued for delivery, or renewed before January 1, 2001,
is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 7.04. The provisions of Subsections (c) and (d),
Section 4, Article 21.81, Insurance Code, as added by this Act,
expire January 1, 2003.
SECTION 7.05. (a) Except as provided by Subsection (b) of
this section, this Act takes effect September 1, 1999.
(b) Article 1 of this Act takes effect January 1, 2001.
SECTION 7.06. The importance of this legislation and the
crowded condition of the calendars in both houses create an
emergency and an imperative public necessity that the
constitutional rule requiring bills to be read on three several
days in each house be suspended, and this rule is hereby
suspended.