76R12343 DB-D
By Burnam, et al. H.B. No. 1613
Substitute the following for H.B. No. 1613:
By Olivo C.S.H.B. No. 1613
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the repair of a motor vehicle under an insurance
1-3 policy.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 5.07-1, Insurance Code, is amended to
1-6 read as follows:
1-7 Art. 5.07-1. REPAIR OF MOTOR VEHICLES; DISCLOSURE OF
1-8 CONSUMER INFORMATION. (a) Except as provided by rules duly
1-9 adopted by the commissioner, under an auto insurance policy that is
1-10 delivered, issued for delivery, or renewed in this state a person
1-11 subject to this article [an insurer] may not, directly or
1-12 indirectly:
1-13 (1) specify on any damage report, estimate, or
1-14 appraisal[, limit its coverage under a policy covering damage to a
1-15 motor vehicle by specifying] the brand, type, kind, age, vendor,
1-16 supplier, or condition of the parts or products that may be used to
1-17 repair the motor vehicle;
1-18 (2) require the use of any part or product in the
1-19 repair of a motor vehicle; or
1-20 (3) require any repair person or facility to specify
1-21 on any damage report, estimate, or appraisal the brand, type, kind,
1-22 age, vendor, supplier, or condition of a part or product that may
1-23 be used to repair the motor vehicle.
1-24 (b) Under an auto insurance policy that is delivered, issued
2-1 for delivery, or renewed in this state, a person subject to this
2-2 article may not directly or indirectly limit [by limiting] the
2-3 beneficiary of the policy or a third-party claimant from selecting
2-4 a repair person or facility to repair damage to the motor vehicle
2-5 covered under the policy.
2-6 (c) [(b)] In connection with the repair of damage to a motor
2-7 vehicle covered under an auto insurance policy, a person subject to
2-8 this article [an insurer, an employee of an insurer, an agent of an
2-9 insurer, a solicitor of insurance for an insurer, an insurance
2-10 adjuster, or an entity that employs an insurance adjuster] may not:
2-11 (1) solicit or accept a referral fee, [or] gratuity,
2-12 discount, or other form of compensation in exchange for referring a
2-13 beneficiary of a policy or third-party claimant to one or more [a]
2-14 repair persons [person] or facilities [facility] to repair the
2-15 damage;
2-16 (2) communicate [state or suggest, either orally or in
2-17 writing,] to a beneficiary of a policy or a third-party claimant
2-18 that, for the damage repair or parts replacement to be covered by
2-19 the policy, a beneficiary of a policy or a third-party claimant is
2-20 required to use one or more [a specific] repair persons [person] or
2-21 facilities;
2-22 (3) communicate to a beneficiary of a policy or a
2-23 third-party claimant that one or more [facility or a] repair
2-24 persons [person] or facilities [facility] identified on a
2-25 [preferred] list of repair persons and facilities maintained by or
2-26 compiled by a person subject to this article is preferred or
2-27 recommended [an insurer must be used by a beneficiary in order for
3-1 the damage repair or parts replacement to be covered by the
3-2 policy]; [or]
3-3 (4) [(3)] restrict a beneficiary's or third-party
3-4 claimant's right to choose a repair person or facility;
3-5 (5) require [by requiring] the beneficiary of a policy
3-6 or third-party claimant to travel an unreasonable distance to
3-7 repair the damage;
3-8 (6) threaten to remove the beneficiary's or claimant's
3-9 motor vehicle from a repair person or facility selected by the
3-10 beneficiary or claimant for any reason;
3-11 (7) communicate to a beneficiary of a policy or a
3-12 third-party claimant that repairs, including parts, materials, or
3-13 labor, are guaranteed by a person other than the repair person or
3-14 facility that performs the damage repairs;
3-15 (8) communicate to a beneficiary of a policy or a
3-16 third-party claimant that alternative direct billed transportation
3-17 coverage is allowed following the filing of a claim only if the
3-18 damaged motor vehicle is repaired by a repair person or facility
3-19 selected or recommended by the insurer or an agent of the insurer;
3-20 (9) provide any other incentive to induce the
3-21 beneficiary of a policy or a third-party claimant to waive the
3-22 right to select the repair person or facility to repair damage to
3-23 the beneficiary's or the claimant's motor vehicle;
3-24 (10) reduce the amount paid for repairs by applying
3-25 predesignated limits on the quantity of or charges for materials
3-26 that are used to repair a motor vehicle; or
3-27 (11) enter into an agreement with a repair person or
4-1 facility that:
4-2 (A) requires the repair person or facility to
4-3 use or penalizes the repair person or facility for the use of a
4-4 sheet metal part on a motor vehicle that is not made by the motor
4-5 vehicle manufacturer on a motor vehicle that is less than five
4-6 years old;
4-7 (B) requires the repair person or facility to
4-8 use or penalizes the repair person or facility for the use of any
4-9 collision repair procedure on a motor vehicle that does not restore
4-10 the motor vehicle to the motor vehicle's preaccident condition or
4-11 value; or
4-12 (C) requires the repair person or facility to
4-13 take any action that would result in reduction of motor vehicle
4-14 coverage for a motor vehicle under the insured's motor vehicle
4-15 insurance policy.
4-16 [(c) A contract between an insurer and a repair person or
4-17 facility, including an agreement under which the repair person or
4-18 facility agrees to extend discounts for parts or labor to the
4-19 insurer in exchange for referrals by the insurer, may not result in
4-20 a reduction of coverage under the insured's auto insurance policy.]
4-21 (d) A person subject to this article [An insurer] may not
4-22 directly or indirectly prohibit a repair person or facility from
4-23 providing a beneficiary of a policy or third-party claimant with
4-24 any information about the damage repairs to the beneficiary's or
4-25 the claimant's vehicle [that states the description, manufacturer,
4-26 or source of the parts used and the amounts charged to the insurer
4-27 for the parts and related labor].
5-1 (e) At the time the vehicle is presented to a person subject
5-2 to this article [an insurer or an insurance adjuster or other
5-3 person in connection with a claim for damage repair], the [insurer
5-4 or insurance adjuster or other] person shall provide to the
5-5 beneficiary or third-party claimant notice of the provisions of
5-6 this article. The commissioner shall adopt a rule establishing the
5-7 method or methods insurers shall use to comply with the notice
5-8 provisions in this subsection.
5-9 (f) Any beneficiary, third-party claimant, consumer group,
5-10 representative of a consumer, insurer, [or] repair person, or
5-11 repair facility may submit a written, documented complaint to the
5-12 department with respect to an alleged violation of this article.
5-13 (g) In the settlement of liability claims by a third party
5-14 against an insured for property damage claimed by the third party,
5-15 a person subject to this article [an insurer] may not communicate
5-16 to a third-party claimant that:
5-17 (1) in order for repairs to be covered, the claimant
5-18 is required to use a specific [require the third-party claimant to
5-19 have repairs made by a particular] repair person or facility; or
5-20 (2) the person prefers or recommends that the claimant
5-21 use a repair person or facility identified on a list of repair
5-22 persons and facilities maintained by or compiled by a person
5-23 subject to this article.
5-24 (h) In the settlement of liability claims by a third party
5-25 against an insured for property damage claimed by the third party,
5-26 a person subject to this article may not:
5-27 (1) specify on a damage report, estimate, or appraisal
6-1 the [to use a particular] brand, type, kind, age, vendor, supplier,
6-2 or condition of parts or products that may be used to repair the
6-3 motor vehicle;
6-4 (2) require the use of any specific parts in the
6-5 repair of a motor vehicle; or
6-6 (3) require any repair person or facility to specify
6-7 on any damage report, estimate, or appraisal the brand, type, kind,
6-8 age, vendor, supplier, or condition of a part or product that may
6-9 be used to repair the motor vehicle.
6-10 (i) [(h)] The commissioner may exercise the rule-making
6-11 authority under Article 21.21-2 of this code with respect to any
6-12 fraudulent activity of any party under [to an agreement described
6-13 by Subsection (c) of] this article.
6-14 (j) The [(i) Any] rules adopted by the commissioner to
6-15 implement this article shall include, but not be limited to,
6-16 requirements that:
6-17 (1) any limitation described in Subsection (a) of this
6-18 article [section] is clearly and prominently displayed on the face
6-19 of the policy or certificate in lieu of a policy; and
6-20 (2) the insured give written consent to such a
6-21 limitation, following both oral and written notification of any
6-22 limitation at the time the policy is purchased.
6-23 (k) The commissioner may not adopt a rule that allows an
6-24 insurer to specify a non-original equipment manufacturer part as
6-25 the basis for a damage report, estimate, or appraisal as a limit to
6-26 the cost of a repair to a part damaged in an accident in a case in
6-27 which:
7-1 (1) the beneficiary's or third-party claimant's
7-2 vehicle is still under the manufacturer's original warranty;
7-3 (2) the part lacks a warranty that is at least equal
7-4 to the warranty provided by the original equipment manufacturer for
7-5 the same part;
7-6 (3) the use of that part would reduce the market value
7-7 of the beneficiary's vehicle once repairs are completed to a
7-8 greater extent than would the use of an aftermarket part made by
7-9 the original equipment manufacturer;
7-10 (4) the use of that part would lessen the safety of
7-11 the vehicle in any respect; or
7-12 (5) a person subject to this article cannot
7-13 satisfactorily demonstrate the suitability for use of the part to
7-14 the commissioner.
7-15 (l) A person subject to this article who uses or references
7-16 survey data to directly or indirectly determine reasonable costs
7-17 for damage repairs or costs shall:
7-18 (1) ensure that the survey data was obtained by
7-19 statistically sound survey and research methods;
7-20 (2) publish a report that:
7-21 (A) contains the results of the survey;
7-22 (B) contains the complete and factual criteria
7-23 used for the survey; and
7-24 (C) divides the results of the survey by each
7-25 market surveyed;
7-26 (3) provide a copy of the report to the commissioner;
7-27 and
8-1 (4) upon request, provide a copy of the report to:
8-2 (A) a repair person or facility that
8-3 participated in the survey; and
8-4 (B) any person whose claim is decided or
8-5 influenced by the results of the survey.
8-6 (m) This article applies to:
8-7 (1) an insurer;
8-8 (2) an insurance holding company;
8-9 (3) an investment vehicle to which an insurer belongs;
8-10 (4) an affiliate corporation of an insurer;
8-11 (5) a person described by Subdivisions (1) through (4)
8-12 of this subsection who owns, controls, or has a significant
8-13 interest in the business of a person who is engaged in the
8-14 collision repair of motor vehicles;
8-15 (6) an employee or agent of a person described by
8-16 Subdivisions (1) through (4) of this subsection;
8-17 (7) a solicitor of insurance for a person described by
8-18 Subdivisions (1) through (4) of this subsection;
8-19 (8) an insurance adjuster or a person who employs an
8-20 insurance adjuster; or
8-21 (9) an appraiser.
8-22 (n) A person commits an unfair and deceptive act or practice
8-23 in the business of insurance if the person violates this article
8-24 and is subject to each penalty or other sanction provided by
8-25 Article 21.21 of this code for that violation.
8-26 (o) In this article:
8-27 (1) "Communicate" means to infer, imply, or state a
9-1 proposition or idea, either directly or indirectly, orally or in
9-2 writing.
9-3 (2) "Survey data" means data that:
9-4 (A) results from a survey, evaluation, or other
9-5 determination of market pricing for:
9-6 (i) labor, parts, or other items relating
9-7 to collision repair of a motor vehicle;
9-8 (ii) the quality or quantity of parts or
9-9 materials used for collision repair of a motor vehicle; or
9-10 (iii) the rates charged for collision
9-11 repair of a motor vehicle; and
9-12 (B) is used to determine or to influence,
9-13 directly or indirectly, prevailing market pricing or practice in
9-14 specific markets.
9-15 SECTION 2. This Act takes effect September 1, 1999.
9-16 SECTION 3. The importance of this legislation and the
9-17 crowded condition of the calendars in both houses create an
9-18 emergency and an imperative public necessity that the
9-19 constitutional rule requiring bills to be read on three several
9-20 days in each house be suspended, and this rule is hereby suspended.