By Burnam H.B. No. 1613
76R6181 DB-D
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, limit its coverage under a policy covering damage to a
1-13 motor vehicle or limit its liability for a third-party claimant's
1-14 property repairs:
1-15 (1) by recommending or requiring:
1-16 (A) a particular [by specifying the] brand,
1-17 type, kind, age, vendor, supplier, or condition of the parts or
1-18 products that may be used to repair the motor vehicle; or
1-19 (B) a particular quantity of products and
1-20 materials that may be used to repair the motor vehicle; or
1-21 (2) by limiting the beneficiary of the policy from
1-22 selecting a repair person or facility to repair damage to the motor
1-23 vehicle covered under the policy.
1-24 (b) In connection with the repair of damage to a motor
2-1 vehicle covered under an auto insurance policy, a person subject to
2-2 this article [an insurer, an employee of an insurer, an agent of an
2-3 insurer, a solicitor of insurance for an insurer, an insurance
2-4 adjuster, or an entity that employs an insurance adjuster] may not:
2-5 (1) solicit or accept a referral fee, [or] gratuity,
2-6 or other form of compensation in exchange for referring a
2-7 beneficiary or third-party claimant to a repair person or facility
2-8 to repair the damage;
2-9 (2) communicate [state or suggest, either orally or in
2-10 writing,] to a beneficiary that, for the damage repair or parts
2-11 replacement to be covered by the policy, a beneficiary is required
2-12 to use, or that the person recommends or prefers that the
2-13 beneficiary use:
2-14 (A) a specific repair person or facility; or
2-15 (B) a specific repair person or facility
2-16 identified on a [preferred] list of repair persons and facilities
2-17 maintained by or compiled by a person subject to this article [an
2-18 insurer must be used by a beneficiary in order for the damage
2-19 repair or parts replacement to be covered by the policy]; [or]
2-20 (3) restrict a beneficiary's or third-party claimant's
2-21 right to choose a repair person or facility:
2-22 (A) by requiring the beneficiary or third-party
2-23 claimant to travel an unreasonable distance to repair the damage;
2-24 or
2-25 (B) by threatening to remove the beneficiary's
2-26 or claimant's motor vehicle from a repair person or facility
2-27 selected by the beneficiary or claimant for any reason; or
3-1 (4) communicate to a beneficiary or a third-party
3-2 claimant that:
3-3 (A) repair work is guaranteed by a person other
3-4 than the person or facility that performs the damage repairs; or
3-5 (B) alternative direct billed transportation
3-6 coverage is allowed following the filing of a claim only if the
3-7 damaged motor vehicle is repaired by a repair person or facility
3-8 selected by the insurer or an agent of the insurer.
3-9 (c) [A contract between an insurer and a repair person or
3-10 facility, including an agreement under which the repair person or
3-11 facility agrees to extend discounts for parts or labor to the
3-12 insurer in exchange for referrals by the insurer, may not result in
3-13 a reduction of coverage under the insured's auto insurance policy.]
3-14 [(d)] A person subject to this article [An insurer] may not
3-15 prohibit a repair person or facility from providing a beneficiary
3-16 or third-party claimant with any information relative to the damage
3-17 repairs of the beneficiary or the claimant [that states the
3-18 description, manufacturer, or source of the parts used and the
3-19 amounts charged to the insurer for the parts and related labor].
3-20 (d) [(e)] At the time the vehicle is presented to a person
3-21 subject to this article [an insurer or an insurance adjuster or
3-22 other person in connection with a claim for damage repair], the
3-23 [insurer or insurance adjuster or other] person shall provide to
3-24 the beneficiary or third-party claimant notice of the provisions
3-25 of this article. The commissioner shall adopt a rule establishing
3-26 the method or methods insurers shall use to comply with the notice
3-27 provisions in this subsection.
4-1 (e) [(f)] Any beneficiary, third-party claimant, consumer
4-2 group, representative of a consumer, [or] repair person, or
4-3 facility may submit a written, documented complaint to the
4-4 department with respect to an alleged violation of this article.
4-5 (f) [(g)] In the settlement of liability claims by a third
4-6 party against an insured for property damage claimed by the third
4-7 party, a person subject to this article [an insurer] may not
4-8 communicate to a third-party claimant that, in order for repairs to
4-9 be covered, the claimant is required to use, or that a person
4-10 subject to this article recommends or prefers that the claimant
4-11 use:
4-12 (1) a specific [require the third-party claimant to
4-13 have repairs made by a particular] repair person or facility; [or]
4-14 (2) a specific repair person or facility identified on
4-15 a list of repair persons and facilities maintained by or compiled
4-16 by a person subject to this article;
4-17 (3) [to use] a particular brand, type, kind, age,
4-18 vendor, supplier, or condition of parts or products; or
4-19 (4) a particular quantity of products and materials.
4-20 [(h) The commissioner may exercise the rule-making authority
4-21 under Article 21.21-2 of this code with respect to any fraudulent
4-22 activity of any party to an agreement described by Subsection (c)
4-23 of this article.]
4-24 (g) [(i)] Any rules adopted by the commissioner to implement
4-25 this article shall include, but not be limited to, requirements
4-26 that:
4-27 (1) any limitation described in Subsection (a) of this
5-1 section is clearly and prominently displayed on the face of the
5-2 policy or certificate in lieu of a policy; and
5-3 (2) the insured give written consent to such a
5-4 limitation, following both oral and written notification of any
5-5 limitation at the time the policy is purchased.
5-6 (h) A person subject to this article who uses or references
5-7 survey data to directly or indirectly influence persons engaged in
5-8 collision repair, policy holders, or third-party claimants with
5-9 respect to charges for labor, parts, or other items used in the
5-10 repair of collision damage shall:
5-11 (1) ensure that the survey data was obtained by
5-12 statistically sound survey and research methods;
5-13 (2) publish a report that:
5-14 (A) contains the complete and factual criteria
5-15 used for the survey; and
5-16 (B) divides the results of the survey by each
5-17 market surveyed; and
5-18 (3) provide a copy of the report to the commissioner
5-19 and each person surveyed.
5-20 (i) This article applies to:
5-21 (1) an insurer;
5-22 (2) an insurance holding company;
5-23 (3) an investment vehicle to which an insurer belongs;
5-24 (4) an affiliate corporation of an insurer;
5-25 (5) a person described by Subdivisions (1) through (4)
5-26 of this subsection who owns, controls, or has a significant
5-27 interest in the business of a person who is engaged in the
6-1 collision repair of motor vehicles;
6-2 (6) an employee or agent of a person described by
6-3 Subdivisions (1) through (4) of this subsection;
6-4 (7) a solicitor of insurance for a person described by
6-5 Subdivisions (1) through (4) of this subsection;
6-6 (8) a person who is directly or indirectly controlled
6-7 by a person described by Subdivisions (1) through (4) of this
6-8 subsection, either contractually or by other means;
6-9 (9) an insurance adjuster or a person who employs an
6-10 insurance adjuster; or
6-11 (10) an appraiser.
6-12 (j) A person commits an unfair and deceptive act or practice
6-13 in the business of insurance if the person violates Subsection (b)
6-14 of this article and is subject to each penalty or other sanction
6-15 provided by Article 21.21 of this code for that violation.
6-16 (k) In this article:
6-17 (1) "Communicate" means to infer, imply, or state a
6-18 proposition or idea, either directly or indirectly, orally or in
6-19 writing.
6-20 (2) "Survey data" means data that:
6-21 (A) results from a survey, evaluation, or other
6-22 determination of market pricing for:
6-23 (i) labor, parts, or other items relating
6-24 to collision repair of a motor vehicle;
6-25 (ii) the quality or quantity of parts or
6-26 materials used for collision repair of a motor vehicle; or
6-27 (iii) the rates charged for collision
7-1 repair of a motor vehicle; and
7-2 (B) is used to determine or to influence,
7-3 directly or indirectly, prevailing market pricing or practice in
7-4 specific markets.
7-5 SECTION 2. This Act takes effect September 1, 1999.
7-6 SECTION 3. The importance of this legislation and the
7-7 crowded condition of the calendars in both houses create an
7-8 emergency and an imperative public necessity that the
7-9 constitutional rule requiring bills to be read on three several
7-10 days in each house be suspended, and this rule is hereby suspended.