By: Shapiro S.B. No. 517
A BILL TO BE ENTITLED
AN ACT
1-1 relating to automobile clubs.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Section 722.002, Transportation Code, is amended
1-4 by amending Subdivision (2) and adding Subdivisions (3), (4), and
1-5 (5) to read as follows:
1-6 (2) "Automobile club" means a person who, for
1-7 consideration, promises the membership assistance in matters
1-8 relating to travel, and to the operation, use, or maintenance of a
1-9 motor vehicle, by supplying services such as [services related to]:
1-10 (A) community traffic safety;
1-11 (B) travel and touring;
1-12 (C) theft prevention or rewards;
1-13 (D) maps;
1-14 (E) towing;
1-15 (F) emergency road service [assistance];
1-16 (G) bail bonds and legal fee reimbursement in
1-17 the defense of traffic offenses; [and]
1-18 (H) lockout or lost key service;
1-19 (I) insurance service as provided by Section
1-20 722.0021;
1-21 (J) immediate destination service;
1-22 (K) trip interruption service; and
1-23 (L) reimbursement service as provided by Section
1-24 722.0022 [purchase of accidental injury and death benefits
2-1 insurance coverage from an authorized insurance company].
2-2 (3) "Emergency road service" means the adjustment,
2-3 repair, or replacement of tires, mechanical parts, or other
2-4 equipment of a motor vehicle performed at or near the site of a
2-5 breakdown or accident involving the motor vehicle, but not at a
2-6 repair facility, to permit the motor vehicle to be operated under
2-7 its own power.
2-8 (4) "Immediate destination service" means the
2-9 provision of transportation to the member's intended destination or
2-10 residence if the member's motor vehicle is stolen or made
2-11 inoperable by an accident, theft, or a breakdown occurring less
2-12 than 50 miles from the member's residence.
2-13 (5) "Trip interruption service" means the provision of
2-14 food, lodging, or transportation to the member's intended
2-15 destination if the member's motor vehicle is stolen or made
2-16 inoperable by an accident, theft, or a breakdown occurring 50 or
2-17 more miles from the member's residence.
2-18 SECTION 2. Chapter 722, Transportation Code, is amended by
2-19 adding Sections 722.0021 and 722.0022 to read as follows:
2-20 Sec. 722.0021. INSURANCE SERVICE. (a) An automobile club
2-21 may provide insurance service only as provided by this section.
2-22 (b) An automobile club may provide a member accidental
2-23 injury and death benefit insurance coverage through purchase of a
2-24 group policy of insurance issued to the automobile club for the
2-25 benefit of its members. The coverage must be purchased from an
2-26 insurance company authorized to sell that type of coverage in this
3-1 state. The automobile club shall provide each member covered by
3-2 the insurance a certificate of participation. The certificate of
3-3 participation must state on its face in at least 14-point black
3-4 boldface type that the certificate is only a certificate of
3-5 participation in a group accidental injury and death policy and is
3-6 not motor vehicle liability insurance coverage.
3-7 (c) An automobile club may endorse insurance products and
3-8 refer members to agents or insurers authorized to provide the
3-9 insurance products in this state. The automobile club or an agent
3-10 of the automobile club may not receive remuneration for the
3-11 referral.
3-12 (d) Except as provided by Subsection (e), an automobile club
3-13 performing services permitted by this chapter is not engaged in the
3-14 insurance business and is not subject to regulation under the
3-15 insurance laws of this state because of the performance of those
3-16 services.
3-17 (e) An automobile club may sell insurance products to a
3-18 member for a consideration separate from the amount that the member
3-19 pays for membership in the automobile club if the automobile club
3-20 is properly licensed as an agent under the applicable provisions of
3-21 the Insurance Code.
3-22 Sec. 722.0022. REIMBURSEMENT SERVICE. An automobile club
3-23 may reimburse expenditures by a member only for:
3-24 (1) bail bonds and legal fees in defense of a traffic
3-25 offense;
3-26 (2) towing;
4-1 (3) emergency road service not to exceed $250 for each
4-2 occurrence;
4-3 (4) lockout or lost key service;
4-4 (5) immediate destination service not to exceed $50
4-5 for each occurrence; and
4-6 (6) trip interruption service not to exceed $1,500 for
4-7 each occurrence.
4-8 SECTION 3. Subsection (a), Section 722.005, Transportation
4-9 Code, is amended to read as follows:
4-10 (a) An applicant for an automobile club certificate of
4-11 authority may provide the security required for that certificate by
4-12 depositing with the state or pledging in the form prescribed by the
4-13 secretary of state:
4-14 (1) $50,000 [$25,000] in securities approved by the
4-15 secretary;
4-16 (2) $50,000 [$25,000] in cash; or
4-17 (3) a $50,000 [$25,000] bond in the form prescribed by
4-18 the secretary that is:
4-19 (A) payable to the state;
4-20 (B) executed by a corporate surety licensed to
4-21 do business in this state; and
4-22 (C) conditioned on the faithful performance of
4-23 the automobile club in selling or providing club services and the
4-24 payment of any fines or penalties levied against the club for
4-25 failure to comply with this chapter.
4-26 SECTION 4. Subsection (a), Section 722.008, Transportation
5-1 Code, is amended to read as follows:
5-2 (a) After a public hearing, the secretary of state shall
5-3 revoke or suspend an automobile club's certificate of authority if
5-4 the secretary determines, for good cause shown, that:
5-5 (1) the club:
5-6 (A) has violated this chapter;
5-7 (B) is not acting as an automobile club;
5-8 (C) is insolvent or has assets valued at less
5-9 than its liabilities;
5-10 (D) has refused to submit to an examination by
5-11 the secretary; [or]
5-12 (E) is transacting business in a fraudulent
5-13 manner;
5-14 (F) has engaged in a false, misleading, or
5-15 deceptive act or practice declared unlawful by Subchapter E,
5-16 Chapter 17, Business & Commerce Code;
5-17 (G) has failed to issue a service contract or
5-18 membership card as required by this chapter;
5-19 (H) has represented a service contract or
5-20 membership card as automobile liability or collision insurance; or
5-21 (I) has knowingly permitted an amount paid by a
5-22 member under a service contract to be included under the amount
5-23 financed in a premium finance agreement, as defined by Article
5-24 24.01, Insurance Code; or
5-25 (2) an owner, officer, or manager of the club is not
5-26 of good moral character.
6-1 SECTION 5. Section 722.009, Transportation Code, is amended
6-2 by amending Subsection (a) and adding Subsection (c) to read as
6-3 follows:
6-4 (a) Each automobile club operating under this chapter shall
6-5 furnish to each member [the membership] a service contract or
6-6 membership card and a list of services and benefits to which the
6-7 member is entitled. The contract, card, or list must include [that
6-8 includes] the following information:
6-9 (1) the club's name;
6-10 (2) the street address of the club's home office and
6-11 of its usual place of business in this state; [and]
6-12 (3) a description of the services or benefits to which
6-13 the members are entitled and a description of the geographic area
6-14 in which the services or benefits are available;
6-15 (4) a toll-free telephone number that is answered 24
6-16 hours a day, if the automobile club provides towing or emergency
6-17 road service or requires prior approval for reimbursement service;
6-18 and
6-19 (5) a statement, in at least 14-point boldface type,
6-20 that contains in substance the following: "This automobile club
6-21 service contract, membership card, and list of services and
6-22 benefits are not automobile liability or collision insurance."
6-23 (c) The service contract, membership card, and list of
6-24 services and benefits must be furnished to the member:
6-25 (1) at the time the member agrees to become a member,
6-26 if the member was solicited in person to become a member; or
7-1 (2) not later than the 30th day after the date the
7-2 member agrees to become a member, if the member was not solicited
7-3 in person to become a member.
7-4 SECTION 6. Section 722.012, Transportation Code, is amended
7-5 to read as follows:
7-6 Sec. 722.012. ADVERTISING RESTRICTIONS. An automobile club
7-7 operating under this chapter may not:
7-8 (1) refer to its certificate of authority or to
7-9 approval by the secretary of state in any advertising, contract, or
7-10 membership card; or
7-11 (2) advertise or describe its service contract
7-12 [services] in a manner that would lead the public to believe that
7-13 the service contract includes [services include] automobile
7-14 liability or collision insurance.
7-15 SECTION 7. Section 722.013, Transportation Code, is
7-16 repealed.
7-17 SECTION 8. An automobile club that has a certificate of
7-18 authority on September 1, 1999, shall meet the increased security
7-19 requirements of Section 722.005, Transportation Code, as amended by
7-20 this Act, on and after that date.
7-21 SECTION 9. This Act takes effect September 1, 1999.
7-22 SECTION 10. The importance of this legislation and the
7-23 crowded condition of the calendars in both houses create an
7-24 emergency and an imperative public necessity that the
7-25 constitutional rule requiring bills to be read on three several
7-26 days in each house be suspended, and this rule is hereby suspended.