SRC-JJJ H.B. 3515 76(R)   BILL ANALYSIS


Senate Research Center   H.B. 3515
By: Marchant (Sibley)
Economic Development
5/10/1999
Engrossed


DIGEST 

Historically, a service contract sold by the retail seller of a motor
vehicle has not been considered insurance and is not subject to regulation
by the Texas Department of Insurance.  Buyers and sellers have long relied
on this interpretation of the law.  H.B. 3515 would establish conditions
regarding the nature of certain contracts included in the cash price of
motor vehicles sold at retail.   

PURPOSE

As proposed, H.B. 3515 establishes conditions regarding the nature of
certain contracts included in the cash price of motor vehicles sold at
retail.   

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 345.005, Finance Code, to provide that an amount
charged to a retail buyer in a retail installment contract or retail charge
agreement is an itemized  charge if the amount is not included in the cash
price and is certain amounts, including premiums and other charges for
insurance or debt cancellation contracts or waivers authorized by
Subchapter E.   

SECTION 2.  Amends Chapter 345, Finance Code, by adding Section 345.216, as
follows: 

Sec. 345.216.  CHARGE FOR DEBT CANCELLATION PROVISION INCLUDED IN RETAIL
INSTALLMENT CONTRACT.  Authorizes a buyer or seller to agree to include in
a retail installment contract for the sale of goods a separate charge for a
debt cancellation contract or waiver by which the seller or holder agrees
that, if the goods are rendered a total loss because of theft or collision,
the seller or holder will waive the difference between the actual cash
value of the goods and the amount owed on the goods.  Authorizes a seller
or holder to agree to waive the deductible amount, in addition to any other
liability incurred under a debt cancellation contract or waiver included in
the contract, and if any, the buyer is required to pay the policy.
Provides that a debt cancellation contract or waiver included in a contract
is not insurance or an insurance product or service and is not subject to
regulation by the commissioner of insurance or the Texas Department of
Insurance. 

SECTION 3.  Amends Section 348.005, Finance Code, to make conforming
changes. 
  
SECTION 4.  Amends Section 348.202(b), Finance Code, to authorize a seller
to offer involuntary unemployment insurance to the buyer at the time the
contract is executed, for additional protection in the contract. Makes a
conforming change. 

SECTION 5.  Amends Section 348.208, Finance Code, by adding Subsections
(c), (d), and (e), to provide that a warranty or service contract sold by
the retail seller of a motor vehicle to a retail buyer is not insurance.
Authorizes a buyer and seller to agree to include in a retail installment
contract for the sale of a motor vehicle a separate charge for a debt
cancellation contract or waiver by which the seller or holder will waive
the difference between the actual cash value of the vehicle immediately
before the loss and the amount owed on the vehicle.  Authorizes a seller or
holder to agree to waive  the deductible amount. 
  
SECTION 6.  Emergency clause.
  Effective date: upon passage.