1-1 AN ACT 1-2 relating to rental car damage waivers; providing a penalty. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Chapter 20, Title 132, Revised Statutes, is 1-5 amended by adding Article 9026c to read as follows: 1-6 Art. 9026c. RENTAL CAR DAMAGE WAIVER 1-7 Sec. 1. DEFINITIONS. In this article: 1-8 (1) "Rental company" means a person or other entity 1-9 that is in the business of renting private passenger vehicles to 1-10 the public for 30 days or less. The term does not include an 1-11 individual or other entity who holds a license issued by the Motor 1-12 Vehicle Board of the Texas Department of Transportation under the 1-13 Texas Motor Vehicle Commission Code (Article 4413(36), Vernon's 1-14 Texas Civil Statutes) and whose primary business activity is not 1-15 the renting of private passenger automobiles. 1-16 (2) "Renter" means a person or other entity that 1-17 obtains the use of a private passenger vehicle from a rental 1-18 company under terms of a rental agreement. 1-19 (3) "Rental agreement" means an agreement for 30 days 1-20 or less setting forth the terms and conditions governing the use of 1-21 a private passenger vehicle provided by a rental company. 1-22 (4) "Damage" means damage to or loss of a rented 1-23 vehicle, including theft and loss of use, and any cost or expense 1-24 incident to the damage or loss, including storage, impound, towing, 2-1 and administrative charges, regardless of fault involved in the 2-2 damage or loss. 2-3 (5) "Private passenger vehicle" means a motor vehicle 2-4 of the private passenger type, including a passenger van, that is 2-5 primarily intended for private use. 2-6 (6) "Authorized driver" means: 2-7 (A) the renter; 2-8 (B) the renter's spouse if the spouse is a 2-9 licensed driver and satisfies the rental company's minimum age 2-10 requirement; 2-11 (C) the renter's employer, employee, or coworker 2-12 if the person is a licensed driver, satisfies the rental company's 2-13 minimum age requirement, and at the time of the rental is engaged 2-14 in a business activity with the renter; 2-15 (D) any person who is expressly listed by the 2-16 rental company on the rental agreement as an authorized driver; and 2-17 (E) any person driving directly to a medical or 2-18 police facility under circumstances reasonably believed to 2-19 constitute an emergency and who is a licensed driver. 2-20 (7) "Damage waiver" means a rental company's agreement 2-21 not to hold an authorized driver liable for all or a part of any 2-22 damage to a rented vehicle. 2-23 Sec. 2. PROHIBITED PRACTICES. (a) A rental company may not 2-24 sell a damage waiver unless the renter agrees to the damage waiver 2-25 in writing at or before the time the rental agreement is executed. 2-26 (b) A rental company may not void a damage waiver except for 2-27 one or more of the following reasons: 3-1 (1) the damage is caused intentionally by an 3-2 authorized driver or as a result of wilful and wanton misconduct of 3-3 an authorized driver; 3-4 (2) the damage arises out of the use of the vehicle 3-5 while under the influence of alcohol, illegal drugs, a controlled 3-6 substance, or any other intoxicant that impairs driving ability; 3-7 (3) the rental company entered into the rental 3-8 transaction based on fraudulent information supplied by the renter; 3-9 (4) the damage arises out of the use of the vehicle 3-10 while engaged in the commission of a crime other than a traffic 3-11 infraction; 3-12 (5) the damage arises out of the use of the vehicle to 3-13 carry persons or property for hire, to push or tow anything, to 3-14 engage in a speed contest, or for driver's training; 3-15 (6) the damage arises out of the use of the vehicle by 3-16 a person other than an authorized driver; or 3-17 (7) the damage arises out of the use of the vehicle 3-18 outside the continental United States and the use is not 3-19 specifically authorized by the rental agreement. 3-20 Sec. 3. DISCLOSURE NOTICE REQUIREMENTS. (a) A rental 3-21 company shall provide each renter who purchases a damage waiver 3-22 that is not included in the base rental rate the following 3-23 disclosure notice, which must be in at least 10-point type: 3-24 NOTICE: Your rental agreement offers, for an 3-25 additional charge, an optional waiver to cover all or a 3-26 part of your responsibility for damage to or loss of 3-27 the vehicle. Before deciding whether to purchase the 4-1 waiver, you may wish to determine whether your own 4-2 automobile insurance or credit card agreement provides 4-3 you coverage for rental vehicle damage or loss and 4-4 determine the amount of the deductible under your own 4-5 insurance coverage. The purchase of the waiver is not 4-6 mandatory. The waiver is not insurance. 4-7 (b) In addition to the notice provided to each renter who 4-8 purchases a damage waiver, a rental company shall post in a 4-9 conspicuous location where the waiver is being offered the 4-10 following notice: 4-11 Notice to Texas Residents Regarding Damage Waivers 4-12 The Texas personal automobile insurance policy provides 4-13 coverage with NO DEDUCTIBLE for the legal liabilities 4-14 of the policyholder in connection with the loss of or 4-15 damage to a rented vehicle, except for damages caused 4-16 intentionally, up to the maximum of the property damage 4-17 limits under your liability coverage. If you file a 4-18 claim under your personal automobile insurance policy, 4-19 your insurance company may choose to nonrenew your 4-20 policy at your renewal date, but may do so only if you 4-21 are at fault for the claim. 4-22 Sec. 4. MANDATORY CHARGES. (a) In this section, "mandatory 4-23 charge" means any charge, surcharge, or fee in addition to the base 4-24 rental rate for an item or service provided in connection with a 4-25 rental transaction that the renter does not have the option of 4-26 avoiding or declining and that is not otherwise imposed by law. 4-27 (b) A rental agreement containing a mandatory charge must 5-1 prominently display and fully disclose the charge: 5-2 (1) separately on the face of the agreement; and 5-3 (2) in all of the rental company's price advertising, 5-4 price displays, price quotes, and price offers, including displays 5-5 in computerized reservation systems. 5-6 (c) A rental company may not impose or require the purchase 5-7 of a damage waiver as a mandatory charge. 5-8 Sec. 5. PROHIBITED REPRESENTATIONS. No oral or written 5-9 representations shall be made by any employee or agent of the 5-10 rental company which contradict the provisions of this article. No 5-11 coercive language or action shall be used by any employee or agent 5-12 of the rental company in an attempt to persuade a renter to 5-13 purchase the damage waiver. For the purposes of this section, if 5-14 the renter has declined the damage waiver, further statements or 5-15 questions by an employee or agent of the rental company making 5-16 reference to the damage waiver, other than a statement that the 5-17 waiver has been declined made in conjunction with a review of the 5-18 rental agreement, shall be deemed coercive. 5-19 Sec. 6. PENALTY. (a) A rental company that violates this 5-20 article is subject to a civil penalty in an amount of at least $500 5-21 and not to exceed $1,000 for each act of violation. 5-22 (b) A county or district attorney or the attorney general 5-23 may institute and conduct a suit in the name of the state to 5-24 recover the civil penalty, injunctive relief, or both the civil 5-25 penalty and injunctive relief. 5-26 (c) Any person or entity injured or threatened with injury 5-27 by a violation of this article may seek injunctive relief against 6-1 any company or person who violates or threatens to violate this 6-2 article. 6-3 SECTION 2. Article 9026, Revised Statutes, is repealed. 6-4 SECTION 3. The change in law made by this Act applies only 6-5 to a rental agreement entered on or after the effective date of 6-6 this Act. A rental agreement entered before the effective date of 6-7 this Act is governed by the law in effect when the rental agreement 6-8 was entered, and the former law is continued in effect for that 6-9 purpose. 6-10 SECTION 4. This Act takes effect September 1, 1999. 6-11 SECTION 5. The importance of this legislation and the 6-12 crowded condition of the calendars in both houses create an 6-13 emergency and an imperative public necessity that the 6-14 constitutional rule requiring bills to be read on three several 6-15 days in each house be suspended, and this rule is hereby suspended. _______________________________ _______________________________ President of the Senate Speaker of the House I certify that H.B. No. 3091 was passed by the House on April 27, 1999, by a non-record vote; and that the House concurred in Senate amendments to H.B. No. 3091 on May 19, 1999, by a non-record vote; and that the House adopted H.C.R. No. 297 authorizing certain corrections in H.B. No. 3091 on May 26, 1999, by a non-record vote. _______________________________ Chief Clerk of the House I certify that H.B. No. 3091 was passed by the Senate, with amendments, on May 17, 1999, by the following vote: Yeas 30, Nays 0; and that the Senate adopted H.C.R. No. 297 authorizing certain corrections in H.B. No. 3091 on May 26, 1999, by a viva-voce vote. _______________________________ Secretary of the Senate APPROVED: _____________________ Date _____________________ Governor