By: Cain S.B. No. 522
A BILL TO BE ENTITLED
AN ACT
1-1 relating to insurance coverage on certain rented property.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Subsections (b), (f), (g), (i), and (j), Section
1-4 21, Article 21.07, Insurance Code, as added by Chapter 820, Acts of
1-5 the 75th Legislature, Regular Session, 1997, are amended to read as
1-6 follows:
1-7 (b) As used in this section:
1-8 (1) "Limited licensee" means a person authorized to
1-9 sell certain insurance coverages relating to the rental of [motor]
1-10 vehicles or vehicle equipment pursuant to the provisions of this
1-11 section.
1-12 (2) "Rental agreement" means any written agreement
1-13 setting forth the terms and conditions governing the use of a
1-14 vehicle or vehicle equipment provided by the rental car company.
1-15 (3) "Rental car company" means any person in the
1-16 business of providing leased or rented vehicles or vehicle
1-17 equipment to the public.
1-18 (4) "Renter" means any person obtaining the use of a
1-19 vehicle or vehicle equipment from a rental car company under the
1-20 terms of a rental agreement.
1-21 (5) "Vehicle" means:
1-22 (A) a motor vehicle of the private passenger
1-23 type including passenger vans and minivans that are primarily
1-24 intended for the transport of persons;
2-1 (B) a motor home;
2-2 (C) a motorcycle;
2-3 (D) a trailer with a gross vehicle weight rating
2-4 of 10,000 pounds or less; or
2-5 (E) a truck with a gross vehicle weight rating
2-6 of 26,000 pounds or less the operation of which does not require a
2-7 commercial driver's license.
2-8 (6) "Vehicle equipment" means a cartop carrier, tow
2-9 bar, or tow dolly specifically designed for use with a vehicle.
2-10 (f) The rental car company, agent, licensee, or franchisee
2-11 licensed pursuant to Subsection (c) of this section may act as
2-12 agent for an authorized insurer only in connection with the rental
2-13 of vehicles or vehicle equipment and only with respect to the
2-14 following kinds of insurance:
2-15 (1) excess liability insurance that provides coverage
2-16 to the rental car company or franchisee and renters and other
2-17 authorized drivers of rental vehicles, in excess of the standard
2-18 liability limits provided by the rental car company in its rental
2-19 agreement, for liability arising from the negligent operation of
2-20 the rental vehicle or vehicle equipment;
2-21 (2) accident and health insurance that provides
2-22 coverage to renters and other vehicle occupants for accidental
2-23 death or dismemberment and for medical expenses resulting from an
2-24 accident involving the rental vehicle or vehicle equipment that
2-25 occurs during the rental period;
2-26 (3) personal effects insurance that provides coverage
3-1 to renters and other rental vehicle occupants for the loss of, or
3-2 damage to, personal effects or household belongings that occurs
3-3 during the rental period; or
3-4 (4) any other coverage that the Commissioner may
3-5 approve as meaningful and appropriate in connection with the rental
3-6 of vehicles or vehicle equipment.
3-7 (g) No insurance may be issued pursuant to this section
3-8 unless:
3-9 (1) the rental period of the rental agreement does not
3-10 exceed 30 consecutive days; and
3-11 (2) at every rental car location where rental [car]
3-12 agreements are executed, brochures or other written materials are
3-13 prominently displayed and readily available to the prospective
3-14 renter that:
3-15 (A) summarize, clearly and correctly, the
3-16 material terms of insurance coverage, including the identity of the
3-17 insurer, offered to renters;
3-18 (B) disclose that these policies offered by the
3-19 rental car company may provide a duplication of coverage already
3-20 provided by a renter's personal automobile insurance policy,
3-21 homeowner's insurance policy, personal liability insurance policy,
3-22 or other source of coverage;
3-23 (C) state that the purchase by the renter of the
3-24 kinds of insurance specified in this section is not required in
3-25 order to rent a vehicle or vehicle equipment;
3-26 (D) describe the process for filing a claim in
4-1 the event the renter elects to purchase coverage and in the event
4-2 of a claim; and
4-3 (E) contain any additional information on the
4-4 price, benefits, exclusions, conditions, or other limitations of
4-5 such policies as the Commissioner may by regulation prescribe; and
4-6 (3) evidence of coverage is provided to every renter
4-7 who elects to purchase such coverage.
4-8 (i) Each rental car company or franchisee licensed pursuant
4-9 to this section shall conduct a training program which shall be
4-10 submitted to the Commissioner for approval prior to use and which
4-11 shall meet the following minimum standards:
4-12 (1) each trainee shall receive basic instruction about
4-13 the kinds of insurance specified in this section offered for
4-14 purchase by prospective renters of rental vehicles or vehicle
4-15 equipment;
4-16 (2) each trainee shall be instructed to acknowledge to
4-17 a prospective renter of a rental vehicle or vehicle equipment that
4-18 purchase of any such insurance specified in this section is not
4-19 required in order for the renter to rent a vehicle or vehicle
4-20 equipment; and
4-21 (3) each trainee shall be instructed to acknowledge to
4-22 a prospective renter of a rental vehicle or vehicle equipment that
4-23 the renter may have insurance policies that already provide the
4-24 coverage being offered by the rental car company pursuant to this
4-25 section.
4-26 (j) Limited licensees acting pursuant to and under the
5-1 authority of this section shall comply with all applicable
5-2 provisions of this Article, except that notwithstanding any other
5-3 provision of this Article, or any rule adopted by the Commissioner,
5-4 a limited licensee pursuant to this section shall not be required
5-5 to treat premiums collected from renters purchasing such insurance
5-6 when renting vehicles or vehicle equipment as funds received in a
5-7 fiduciary capacity, provided that:
5-8 (1) the insurer represented by the limited licensee
5-9 has consented in writing, signed by the insurer's officer, that
5-10 premiums need not be segregated from funds received by the rental
5-11 car company on account of vehicle or vehicle equipment rental; and
5-12 (2) the charges for insurance coverage are itemized
5-13 but not billed to the renter separately from the charges for rental
5-14 vehicles or vehicle equipment.
5-15 SECTION 2. The change in law made by this Act to Section 21,
5-16 Article 21.07, Insurance Code, as added by Chapter 820, Acts of the
5-17 75th Legislature, Regular Session, 1997, does not affect the
5-18 validity of a license issued under that section on or before the
5-19 effective date of this Act.
5-20 SECTION 3. This Act takes effect September 1, 1999, and
5-21 applies to an insurance policy that is delivered, issued for
5-22 delivery, or renewed on or after September 1, 1999. A policy
5-23 delivered, issued for delivery, or renewed before September 1,
5-24 1999, is governed by the law as it existed immediately before the
5-25 effective date of this Act, and that law is continued in effect for
5-26 that purpose.
6-1 SECTION 4. The importance of this legislation and the
6-2 crowded condition of the calendars in both houses create an
6-3 emergency and an imperative public necessity that the
6-4 constitutional rule requiring bills to be read on three several
6-5 days in each house be suspended, and this rule is hereby suspended.