By: Bivins, Armbrister S.B. No. 1787
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the regulation of insurance and to requirements
1-2 regarding motor vehicle insurance; establishing business offenses;
1-3 providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 ARTICLE 1. FINANCIAL RESPONSIBILITY REQUIREMENTS
1-6 SECTION 1.01. Chapter 601, Transportation Code, is amended
1-7 by adding Subchapter N to read as follows:
1-8 SUBCHAPTER N. VERIFICATION OF COMPLIANCE WITH AND ENFORCEMENT
1-9 OF FINANCIAL RESPONSIBILITY REQUIREMENTS
1-10 Sec. 601.501. DEFINITIONS. In this subchapter:
1-11 (1) "Department" means the Texas Department of
1-12 Transportation.
1-13 (2) "Verification date" means the date set by the
1-14 department in the written request to the owner of a motor vehicle
1-15 requiring the owner to state whether the owner has established
1-16 financial responsibility in accordance with Section 601.051.
1-17 Sec. 601.502. VERIFICATION OF ESTABLISHMENT OF FINANCIAL
1-18 RESPONSIBILITY THROUGH RANDOM SAMPLING. (a) The department or an
1-19 agent of the department shall randomly select samples of
1-20 registrations of motor vehicles subject to this chapter, or samples
1-21 of owners of motor vehicles subject to this chapter, to verify
1-22 whether the owner has established financial responsibility in
1-23 accordance with Section 601.051. A sample selected under this
1-24 section may not be classified on the basis of the owner's race,
2-1 color, religion, sex, national origin, age, marital status,
2-2 physical or mental disability, economic status, or geographic
2-3 location.
2-4 (b) In addition to the general random sampling of motor
2-5 vehicle registrations, the department may randomly select other
2-6 persons to verify that the person has established financial
2-7 responsibility, including:
2-8 (1) a person who, during the four years preceding the
2-9 date of selection:
2-10 (A) has been convicted of a violation of Section
2-11 601.051, 601.191, 601.195, 601.196, or 601.509, including a
2-12 violation that occurred while the person was operating a motor
2-13 vehicle owned by another person; or
2-14 (B) has received deferred disposition under
2-15 Article 45.54, Code of Criminal Procedure, for a violation of
2-16 Section 601.051, 601.191, 601.195, 601.196, or 601.509;
2-17 (2) a person whose motor vehicle registration has been
2-18 the subject of a deferred suspension under Section 601.505(a)
2-19 during the preceding four years; or
2-20 (3) a person whose driver's license or motor vehicle
2-21 registration has been suspended during the preceding four years.
2-22 (c) The department shall send to the motor vehicle owner a
2-23 request for information about the motor vehicle and the owner's
2-24 method of establishing financial responsibility. The request must:
2-25 (1) state the verification date; and
2-26 (2) require the owner to state whether the owner has,
3-1 as of the verification date, established financial responsibility
3-2 in accordance with Section 601.051.
3-3 (d) The department by rule shall prescribe:
3-4 (1) the methods employed for the random selection of
3-5 samples and the procedures necessary for implementation of the
3-6 verification process, including the method of sending the
3-7 verification request, which may include certified mail, return
3-8 receipt requested;
3-9 (2) the frequency of sample selection;
3-10 (3) the form for verification of financial
3-11 responsibility; and
3-12 (4) the information to be requested in the prescribed
3-13 form.
3-14 (e) The department may require the information provided by
3-15 the owner to include a statement by the owner that the owner had,
3-16 as of the verification date, established financial responsibility:
3-17 (1) through liability insurance under Subchapter D,
3-18 including:
3-19 (A) the name and address of the insurer;
3-20 (B) the number of the insurance policy; and
3-21 (C) the expiration date of the insurance
3-22 coverage;
3-23 (2) by filing a surety bond with the Department of
3-24 Public Safety under Section 601.121, including:
3-25 (A) the name and address of the company issuing
3-26 the bond;
4-1 (B) the identification number of the bond; and
4-2 (C) the expiration date of the bond;
4-3 (3) by depositing cash or securities with the
4-4 comptroller under Section 601.122, including a copy of the
4-5 certificate issued by the comptroller showing compliance;
4-6 (4) by depositing cash or a cashier's check with the
4-7 county judge of the county in which the motor vehicle is registered
4-8 under Section 601.123, including a copy of the certificate issued
4-9 by the county judge showing compliance; or
4-10 (5) through self-insurance under Section 601.124,
4-11 including a copy of the certificate of self-insurance issued by the
4-12 Department of Public Safety.
4-13 (f) Not later than the 30th day after the verification date,
4-14 the owner to whom the notice is sent shall furnish the requested
4-15 information to the department in the form prescribed by the
4-16 department, accompanied by the owner's signed affirmation that the
4-17 information is true and correct.
4-18 (g) An owner whose response indicates that the owner had not
4-19 established financial responsibility in accordance with Section
4-20 601.051, or who fails to respond to the request, is subject to
4-21 suspension of the owner's motor vehicle registration in the manner
4-22 provided by Section 601.505.
4-23 (h) If the owner responds to the request for information by
4-24 asserting that the owner had, as of the verification date,
4-25 established financial responsibility in accordance with a method
4-26 authorized by Section 601.051, the department may conduct a
5-1 verification investigation as provided by Section 601.503.
5-2 Sec. 601.503. VERIFICATION INVESTIGATION. (a) To verify a
5-3 response received from an owner under Section 601.502, the
5-4 department or an agent of the department may furnish necessary
5-5 information to the insurer, surety, or officer named in the
5-6 response. Not later than the 30th day after the date of receipt of
5-7 the information, the insurer, surety, or officer shall inform the
5-8 department whether, as of the verification date, financial
5-9 responsibility had been established for the affected motor vehicle
5-10 in accordance with Section 601.051.
5-11 (b) If the response received from an owner under Section
5-12 601.502 states that financial responsibility has been established
5-13 through self-insurance, the department shall examine the
5-14 department's records to verify that a certificate of self-insurance
5-15 has been issued in accordance with Section 601.124.
5-16 Sec. 601.504. WARNING NOTICE. (a) If an owner responds
5-17 under Section 601.502 that the owner has not established financial
5-18 responsibility or the owner fails to respond in a timely manner, or
5-19 if the department otherwise determines that an owner has registered
5-20 or maintained the registration of a motor vehicle without
5-21 establishing financial responsibility in accordance with Section
5-22 601.051, the department shall issue a warning notice to the owner.
5-23 (b) The warning notice must inform the owner that the owner
5-24 is not in compliance with Section 601.051 and that the owner's
5-25 motor vehicle registration is suspended on the 45th day after the
5-26 date on which the warning notice is mailed unless the owner
6-1 complies with the requirements described by Subsection (c) for
6-2 deferral of the suspension.
6-3 (c) The warning notice must include a statement informing
6-4 the owner that the department shall defer the suspension of the
6-5 owner's registration if, not later than the 30th day after the date
6-6 of the mailing of the warning notice, the owner establishes
6-7 financial responsibility in the manner prescribed by Section
6-8 601.505.
6-9 Sec. 601.505. SUSPENSION; REINSTATEMENT; EXCEPTION.
6-10 (a) The department shall suspend the registration of an owner to
6-11 whom a notice is issued under Section 601.504. For a first
6-12 violation, the department shall terminate the suspension on payment
6-13 by the owner of a $100 reinstatement fee and submission of proof of
6-14 financial responsibility as prescribed by the department. For a
6-15 second or subsequent violation within the preceding four years or a
6-16 violation of Section 601.507, the department shall terminate the
6-17 suspension on the 120th day after the effective date of the
6-18 suspension on payment by the owner of a $100 reinstatement fee and
6-19 submission of proof of financial responsibility as prescribed by
6-20 the department.
6-21 (b) For a first violation, the department shall defer the
6-22 suspension and any reinstatement fee if the owner submits to the
6-23 department, not later than the 15th day after the date of the
6-24 warning notice under Section 601.504, proof of financial
6-25 responsibility evidenced by a motor vehicle insurance policy, the
6-26 premiums of which have been prepaid for a term of at least six
7-1 months. On the earlier of the 180th day after the date of the
7-2 warning notice or the expiration date of the insurance policy
7-3 described by this subsection, the owner shall submit to the
7-4 department evidence of renewal of the motor vehicle insurance
7-5 policy, the premiums of which have been prepaid for a term of at
7-6 least six months. If the owner fails to submit the required
7-7 evidence of renewal, the department shall impose the suspension and
7-8 reinstatement fee.
7-9 (c) Notwithstanding any other provision of this subchapter,
7-10 the department may register in accordance with Chapter 502 the
7-11 motor vehicle of an applicant for registration who:
7-12 (1) received a request for information under Section
7-13 601.502; and
7-14 (2) presents proof of financial responsibility that:
7-15 (A) complies with Section 601.051; and
7-16 (B) was in effect on the verification date of
7-17 the request for information.
7-18 Sec. 601.506. SUBMISSION OF FALSE PROOF. If the department
7-19 determines that the proof of financial responsibility submitted by
7-20 a motor vehicle owner under Section 601.502 is false, the
7-21 department shall suspend the owner's motor vehicle registration.
7-22 The department shall terminate the suspension on the 180th day
7-23 after the effective date of the suspension on payment by the owner
7-24 of a $200 reinstatement fee and submission of proof of financial
7-25 responsibility as prescribed by the department.
7-26 Sec. 601.507. OPERATION OF MOTOR VEHICLE WHILE REGISTRATION
8-1 SUSPENDED FOR FAILURE TO ESTABLISH FINANCIAL RESPONSIBILITY. (a) A
8-2 person may not operate a motor vehicle if the registration of the
8-3 motor vehicle is suspended under this subchapter.
8-4 (b) A person commits a business offense if the person
8-5 violates Subsection (a). A business offense under this subsection
8-6 is punishable by a fine of not less than $1,000 or more than
8-7 $2,000.
8-8 Sec. 601.508. MAINTENANCE OF EVIDENCE OF FINANCIAL
8-9 RESPONSIBILITY. (a) Each operator of a motor vehicle subject to
8-10 Section 601.051 shall carry within the vehicle a written document
8-11 providing evidence of financial responsibility. The document must
8-12 be legible and provide information sufficient to demonstrate that
8-13 the owner or operator of the motor vehicle has established
8-14 financial responsibility as required under Section 601.051 and may
8-15 include:
8-16 (1) a motor vehicle liability insurance policy
8-17 covering the vehicle that satisfies Subchapter D or a photocopy of
8-18 the policy;
8-19 (2) a standard proof of motor vehicle liability
8-20 insurance form prescribed by the Texas Department of Insurance;
8-21 (3) a liability insurance binder as specified by
8-22 Section 601.080 or a certificate of liability insurance as
8-23 specified by Section 601.083;
8-24 (4) the combination of proof of purchase of the motor
8-25 vehicle within the previous 30 days and current proof of insurance;
8-26 (5) evidence that a surety bond has been filed with
9-1 the Department of Public Safety in accordance with Section 601.121;
9-2 (6) a certificate issued by the comptroller stating
9-3 that a deposit has been made with the comptroller that complies
9-4 with Section 601.122;
9-5 (7) a certificate issued by a county judge stating
9-6 that a deposit has been made with the county judge that complies
9-7 with Section 601.123;
9-8 (8) a certificate of self-insurance issued by the
9-9 Department of Public Safety in accordance with Section 601.124; or
9-10 (9) a certificate, decal, or other document issued by
9-11 a governmental agency for a motor vehicle that indicates that the
9-12 vehicle is owned by the United States, this state, or a political
9-13 subdivision of this state.
9-14 (b) The operator of a motor vehicle shall surrender the
9-15 evidence of financial responsibility into the possession of a peace
9-16 officer, court, or court officer who requests inspection of the
9-17 evidence of financial responsibility. A person who fails or
9-18 refuses to comply with such a request is presumed to violate
9-19 Section 601.051.
9-20 (c) A person who provides evidence of financial
9-21 responsibility knowing that financial responsibility has not been
9-22 established as required under Section 601.051 or that the evidence
9-23 of financial responsibility is illegally altered, counterfeit, or
9-24 otherwise invalid is presumed to violate Sections 601.196 and
9-25 601.509.
9-26 Sec. 601.509. DISPLAY OF FALSE PROOF OF FINANCIAL
10-1 RESPONSIBILITY; CRIMINAL PENALTY. (a) A person commits an offense
10-2 if the person provides evidence of financial responsibility to a
10-3 peace officer, court, or officer of the court knowing that
10-4 financial responsibility has not been established as required under
10-5 Section 601.051 or that the evidence of financial responsibility is
10-6 illegally altered, counterfeit, or otherwise invalid.
10-7 (b) If a peace officer issues a citation to a motor vehicle
10-8 operator for displaying invalid evidence of financial
10-9 responsibility, the officer shall confiscate the invalid evidence
10-10 of financial responsibility for presentation in court.
10-11 (c) An offense under this section is a Class B misdemeanor.
10-12 Sec. 601.510. DISPOSITION OF FEES. From the reinstatement
10-13 fees collected under this subchapter, the department shall recover
10-14 its costs in implementing and administering the verification
10-15 program. The department shall deposit any amounts collected that
10-16 exceed the administrative costs of the department under this
10-17 subchapter in the general revenue fund.
10-18 Sec. 601.511. USE OF AGENTS BY DEPARTMENT. The department
10-19 may submit requests for proposals for contracts with private
10-20 vendors to perform the random sampling and the verification
10-21 investigations required under this subchapter. The department may
10-22 enter into contracts as necessary to implement this section.
10-23 SECTION 1.02. Section 601.051, Transportation Code, is
10-24 amended to read as follows:
10-25 Sec. 601.051. REQUIREMENT OF FINANCIAL RESPONSIBILITY.
10-26 (a) A person may not operate, register, or maintain registration
11-1 of a motor vehicle in this state unless financial responsibility is
11-2 established for that vehicle through:
11-3 (1) a motor vehicle liability insurance policy that
11-4 complies with Subchapter D;
11-5 (2) a surety bond filed under Section 601.121;
11-6 (3) a deposit under Section 601.122;
11-7 (4) a deposit under Section 601.123; or
11-8 (5) self-insurance under Section 601.124.
11-9 (b) An owner of a motor vehicle may not permit another
11-10 person to operate, register, or maintain registration of the motor
11-11 vehicle in this state unless financial responsibility is
11-12 established for that vehicle and evidenced through a method
11-13 described by Subsection (a).
11-14 SECTION 1.03. Section 601.191, Transportation Code, is
11-15 amended to read as follows:
11-16 Sec. 601.191. OPERATION OF MOTOR VEHICLE IN VIOLATION OF
11-17 FINANCIAL RESPONSIBILITY REQUIREMENTS [MOTOR VEHICLE LIABILITY
11-18 INSURANCE REQUIREMENT; OFFENSE]. (a) A person commits an offense
11-19 if the person operates a motor vehicle in violation of Section
11-20 601.051.
11-21 (b) Except as provided by Subsection [Subsections (c) and]
11-22 (d), an offense under this section is a business offense
11-23 [misdemeanor] punishable by a fine of not less than $500 [$175] or
11-24 more than $1,000 [$350].
11-25 (c) It is a defense to prosecution under this section,
11-26 Section 601.195, and Section 601.507 that the person charged with a
12-1 violation produces in court satisfactory evidence that, at the time
12-2 of the arrest, the owner or operator had established financial
12-3 responsibility in accordance with Section 601.051 [If a person has
12-4 been previously convicted of an offense under this section, an
12-5 offense under this section is a misdemeanor punishable by a fine of
12-6 not less than $350 or more than $1,000].
12-7 (d) If the court determines that a person who has not been
12-8 previously convicted of a business [an] offense under this section
12-9 is economically unable to pay the fine, the court may reduce the
12-10 fine to less than $500 [$175].
12-11 SECTION 1.04. Section 12.02, Penal Code, is amended to read
12-12 as follows:
12-13 Sec. 12.02. CLASSIFICATION OF OFFENSES. Offenses are
12-14 designated as felonies, [or] misdemeanors, or business offenses.
12-15 SECTION 1.05. Subchapter A, Chapter 12, Penal Code, is
12-16 amended by adding Section 12.05 to read as follows:
12-17 Sec. 12.05. BUSINESS OFFENSE. (a) A business offense is a
12-18 nonmisdemeanor offense for which the penalty is a fine of at least
12-19 $500.
12-20 (b) Conviction of a business offense does not impose any
12-21 legal disability or disadvantage.
12-22 SECTION 1.06. The heading to Subchapter B, Chapter 12, Penal
12-23 Code, is amended to read as follows:
12-24 SUBCHAPTER B. ORDINARY MISDEMEANOR
12-25 AND BUSINESS OFFENSE PUNISHMENTS
12-26 SECTION 1.07. Subchapter B, Chapter 12, Penal Code, is
13-1 amended by adding Section 12.24 to read as follows:
13-2 Sec. 12.24. BUSINESS OFFENSE. An individual adjudged guilty
13-3 of a business offense shall be punished by a fine of at least $500.
13-4 SECTION 1.08. In performing sample selection under Section
13-5 601.502, Transportation Code, as added by this Act, the Texas
13-6 Department of Transportation shall ensure that at least 500,000
13-7 samples are selected on or before September 1, 2001.
13-8 SECTION 1.09. (a) In cooperation with the Texas Department
13-9 of Insurance and the Department of Public Safety of the State of
13-10 Texas, the Texas Department of Transportation shall conduct an
13-11 evaluation of the implementation and operation of the verification
13-12 of compliance with the financial responsibility program adopted
13-13 under Subchapter N, Chapter 601, Transportation Code, as added by
13-14 this Act, and of the effectiveness of the verification program in
13-15 increasing compliance with the financial responsibility
13-16 requirements established under Subchapter C, Chapter 601,
13-17 Transportation Code. The evaluation must include:
13-18 (1) a computation, by year, of the number of persons
13-19 determined by the department through the application of the
13-20 verification program to be driving without compliance with the
13-21 financial responsibility requirements established under Subchapter
13-22 C, Chapter 601, Transportation Code; and
13-23 (2) the annual effect of the program, as determined by
13-24 the Texas Department of Insurance, on the rate for uninsured
13-25 motorist insurance coverage under Article 5.06-1, Insurance Code.
13-26 (b) The Texas Department of Transportation shall enter into
14-1 contracts, memoranda of understanding, or interagency agreements as
14-2 necessary to implement this section.
14-3 (c) The Texas Department of Transportation shall report the
14-4 results of the evaluation conducted under this section to the 80th
14-5 Legislature not later than February 1, 2007. The department shall
14-6 provide written copies of the report to the governor, the
14-7 lieutenant governor, and the speaker of the house of
14-8 representatives.
14-9 ARTICLE 2. UNINSURED AND UNDERINSURED MOTORIST COVERAGE
14-10 SECTION 2.01. Article 5.06-1, Insurance Code, is amended to
14-11 read as follows:
14-12 Art. 5.06-1. UNINSURED OR UNDERINSURED MOTORIST COVERAGE.
14-13 (a) [(1)] No automobile liability insurance (including insurance
14-14 issued through the Texas Automobile Insurance Plan Association
14-15 [pursuant to an Assigned Risk Plan established under authority of
14-16 Section 35 of the Texas Motor Vehicle Safety-Responsibility Act]),
14-17 covering liability arising out of the ownership, maintenance, or
14-18 use of any motor vehicle shall be delivered or issued for delivery
14-19 in this state unless coverage is provided therein or supplemental
14-20 thereto, [in at least the limits described in the Texas Motor
14-21 Vehicle Safety-Responsibility Act,] under provisions prescribed by
14-22 the commissioner [Board], for the protection of persons insured
14-23 thereunder who are legally entitled to recover damages from owners
14-24 or operators of uninsured or underinsured motor vehicles because of
14-25 bodily injury, sickness, or disease, including death, or property
14-26 damage resulting therefrom. The coverages required under this
15-1 Article shall not be applicable where any insured named in the
15-2 policy shall reject the coverage in writing; provided that unless
15-3 the named insured thereafter requests such coverage in writing,
15-4 such coverage need not be provided in or supplemental to a renewal
15-5 policy where the named insured has rejected the coverage in
15-6 connection with a policy previously issued to the named insured
15-7 [him] by the same insurer or by an affiliated insurer.
15-8 (b) [(2)] For the purpose of these coverages:
15-9 (1) "Exemplary damages" has the meaning assigned by
15-10 Section 41.001, Civil Practice and Remedies Code.
15-11 (2) "Noneconomic damages" means damages other than
15-12 compensatory damages for pecuniary loss. The term includes damages
15-13 for physical pain and mental anguish, loss of consortium,
15-14 disfigurement, physical impairment, or loss of companionship and
15-15 society. The term does not include exemplary damages.
15-16 (3) "Uninsured [(a) the term "uninsured] motor
15-17 vehicle" shall, subject to the terms and conditions of such
15-18 coverage, be deemed to include an insured motor vehicle where the
15-19 liability insurer thereof is unable to make payment with respect to
15-20 the legal liability of its insured within the limits specified
15-21 therein because of insolvency.
15-22 (4) "Underinsured [(b) The term "underinsured] motor
15-23 vehicle" means an insured motor vehicle on which there is valid and
15-24 collectible liability insurance coverage with limits of liability
15-25 for the owner or operator which were originally lower than, or have
15-26 been reduced by payment of claims arising from the same accident
16-1 to, an amount less than the limit of liability stated in the
16-2 underinsured coverage of the insured's policy.
16-3 (c) The commissioner [Board] may, in the policy forms
16-4 adopted under Article 5.06 of this code, define "uninsured motor
16-5 vehicle" to exclude certain motor vehicles whose operators are in
16-6 fact uninsured.
16-7 (d) The portion of a policy form adopted under Article 5.06
16-8 of this code to provide coverage under this article shall include
16-9 provisions that, regardless of the number of persons insured,
16-10 policies or bonds applicable, vehicles involved, or claims made,
16-11 the total aggregate limit of liability to any one person who
16-12 sustains bodily injury or property damage as the result of any one
16-13 occurrence shall not exceed the limit of liability for these
16-14 coverages as stated in the policy and the total aggregate limit of
16-15 liability to all claimants, if more than one, shall not exceed the
16-16 total limit of liability per occurrence as stated in the policy;
16-17 and shall provide for the exclusion of the recovery of damages for
16-18 bodily injury or property damage or both resulting from the
16-19 intentional acts of the insured. The portion of a policy form
16-20 adopted under Article 5.06 of this code to provide coverage under
16-21 this article shall require that in order for the insured to recover
16-22 under the uninsured motorist coverages where the owner or operator
16-23 of any motor vehicle which causes bodily injury or property damage
16-24 to the insured is unknown, actual physical contact must have
16-25 occurred between the motor vehicle owned or operated by such
16-26 unknown person and the person or property of the insured.
17-1 (e) Except as provided by Subsection (f) of this article,
17-2 the [(3) The] limits of liability for bodily injury, sickness, or
17-3 disease, including death, shall be offered to the insured in
17-4 amounts not less than those prescribed in Chapter 601,
17-5 Transportation Code, [the Texas Motor Vehicle Safety-Responsibility
17-6 Act] and such higher available limits as may be desired by the
17-7 insured, but not greater than the limits of liability specified in
17-8 the bodily injury liability provisions of the insured's policy.
17-9 (f) The named insured may elect to waive coverage under this
17-10 article for recovery of noneconomic and exemplary damages resulting
17-11 from bodily injury, sickness, or disease, including death. If an
17-12 insured elects to waive coverage under this subsection, Subsection
17-13 (e) of this article does not apply to the limits of liability that
17-14 are applicable to the coverage provided under the policy issued to
17-15 the named insured for damages resulting from bodily injury,
17-16 sickness, or disease, including death. The commissioner by rule
17-17 may adopt minimum limits of liability applicable to those damages.
17-18 Waiver of coverage under this subsection does not affect the
17-19 insured's right to bring an action for noneconomic and exemplary
17-20 damages against a responsible party.
17-21 (g) [(4) (a)] Coverage for property damage shall be offered
17-22 to the insured in amounts not less than those prescribed in Chapter
17-23 601, Transportation Code, [the Texas Motor Vehicle
17-24 Safety-Responsibility Act] and such higher available limits as may
17-25 be desired by the insured, but not greater than limits of liability
17-26 specified in the property damage liability provisions of the
18-1 insured's policy, subject to a deductible amount of $250.
18-2 (h) [(b)] If the insured has collision coverage and
18-3 uninsured or underinsured property damage liability coverage, the
18-4 insured may recover under the policy coverage chosen by the
18-5 insured. In the event neither coverage is sufficient alone to
18-6 cover all damage resulting from a single occurrence, the insured
18-7 may recover under both coverages. When recovering under both
18-8 coverages, the insured shall designate one coverage as the primary
18-9 coverage and pay the deductible applicable to that coverage. The
18-10 primary coverage must be exhausted before any recovery is made
18-11 under the secondary coverage. If both coverages are utilized in
18-12 the payment of damages from a single occurrence, the insured shall
18-13 not be required to pay the deductible applicable to the secondary
18-14 coverage when the amount of the deductible otherwise applicable to
18-15 the secondary coverage is the same as or less than the amount of
18-16 the deductible applicable to the primary coverage. If both
18-17 coverages are utilized in the payment of damages from a single
18-18 occurrence and the amount of the deductible otherwise applicable to
18-19 the secondary coverage is greater than the amount of the deductible
18-20 applicable to the primary coverage, the insured shall be required
18-21 to pay in respect of the secondary coverage only the difference
18-22 between the amount of the two deductibles. In no event shall the
18-23 insured recover under both coverages more than the actual damages
18-24 suffered.
18-25 (i) [(5)] The underinsured motorist coverage shall provide
18-26 for payment to the insured of all sums which the insured [he] shall
19-1 be legally entitled to recover as damages from owners or operators
19-2 of underinsured motor vehicles because of bodily injury or property
19-3 damage in an amount up to the limit specified in the policy,
19-4 reduced by the amount recovered or recoverable from the insurer of
19-5 the underinsured motor vehicle. If the named insured has waived
19-6 coverage under Subsection (f) of this article for recovery of
19-7 noneconomic and exemplary damages, the amount paid to the insured
19-8 may not include any amount attributable to noneconomic and
19-9 exemplary damages.
19-10 (j) [(6)] In the event of payment to any person under any
19-11 coverage required by this Section and subject to the terms and
19-12 conditions of such coverage, the insurer making such payment shall,
19-13 to the extent thereof, be entitled to the proceeds of any
19-14 settlement or judgment resulting from the exercise of any rights of
19-15 recovery of such person against any person or organization legally
19-16 responsible for the bodily injury, sickness or disease, or death
19-17 for which such payment is made, including the proceeds recoverable
19-18 from the assets of the insolvent insurer; provided, however,
19-19 whenever an insurer shall make payment under a policy of insurance
19-20 issued pursuant to this Act, which payment is occasioned by the
19-21 insolvency of an insurer, the insured of said insolvent insurer
19-22 shall be given credit in any judgment obtained against the insured
19-23 [him], with respect to the insured's [his] legal liability for such
19-24 damages, to the extent of such payment, but, subject to Section 12
19-25 of Article 21.28-C of this code, such paying insurer shall have the
19-26 right to proceed directly against the insolvent insurer or its
20-1 receiver, and in pursuance of such right such paying insurer shall
20-2 possess any rights which the insured of the insolvent company might
20-3 otherwise have had if the insured of the insolvent insurer had made
20-4 the payment.
20-5 (k) [(7)] If a dispute exists as to whether a motor vehicle
20-6 is uninsured, the burden of proof as to that issue shall be upon
20-7 the insurer.
20-8 (l) [(8)] Notwithstanding Section 15.032, Civil Practice and
20-9 Remedies Code, an action against an insurer in relation to the
20-10 coverage provided under this article, including an action to
20-11 enforce that coverage, may be brought only:
20-12 (1) [(a)] in the county in which the policyholder or
20-13 beneficiary instituting the suit resided at the time of the
20-14 accident; or
20-15 (2) [(b)] in the county in which the accident
20-16 involving the uninsured or underinsured motor vehicle occurred.
20-17 ARTICLE 3. PROOF OF INSURANCE CARDS
20-18 SECTION 3.01. Subchapter A, Chapter 5, Insurance Code, is
20-19 amended by adding Article 5.06-7 to read as follows:
20-20 Art. 5.06-7. FORM AND APPEARANCE OF PROOF OF MOTOR VEHICLE
20-21 LIABILITY INSURANCE. (a) The commissioner shall prescribe by rule
20-22 a standard appearance and form for a card issued by an insurer as
20-23 proof of motor vehicle liability insurance prescribed by Section
20-24 601.081, Transportation Code.
20-25 (b) In prescribing the appearance of a proof of motor
20-26 vehicle liability insurance card under Subsection (a) of this
21-1 article, the commissioner shall require an appearance that is:
21-2 (1) difficult to alter, duplicate, or counterfeit; and
21-3 (2) not cost-prohibitive for consumers.
21-4 (c) A card issued as proof of motor vehicle liability
21-5 insurance issued in this state by an insurer must conform to the
21-6 form and appearance prescribed under Subsection (a) of this
21-7 article.
21-8 SECTION 3.02. (a) The commissioner of insurance shall
21-9 prescribe the standard appearance and form of proof of motor
21-10 vehicle liability insurance cards as required by Article 5.06-7,
21-11 Insurance Code, as added by this Act, not later than December 1,
21-12 1999.
21-13 (b) A card issued by an insurer as proof of motor vehicle
21-14 liability insurance that is issued on or after January 1, 2000,
21-15 must conform with rules established by the commissioner of
21-16 insurance under Article 5.06-7, Insurance Code, as added by this
21-17 Act. Proof of motor vehicle liability insurance that is issued
21-18 before January 1, 2000, is governed by the law as it existed
21-19 immediately before the effective date of this Act, and that law is
21-20 continued in effect for that purpose.
21-21 ARTICLE 4. UNAUTHORIZED INSURANCE
21-22 SECTION 4.01. The heading to Section 2, Article 1.14-1,
21-23 Insurance Code, is amended to read as follows:
21-24 Sec. 2. ENGAGING IN [INSURANCE] BUSINESS OF INSURANCE;
21-25 DEFINITIONS [DEFINED].
21-26 SECTION 4.02. Section 2, Article 1.14-1, Insurance Code, is
22-1 amended by amending Subsections (a) and (c) and adding Subsection
22-2 (d) to read as follows:
22-3 (a) In this article:
22-4 (1) "Engaging in the business of insurance" includes
22-5 the performance of any [Any] of the following acts in this state,
22-6 whether effected by mail or otherwise: [is defined to be doing an
22-7 insurance business in this state. The venue of an act committed by
22-8 mail is at the point where the matter transmitted by mail is
22-9 delivered and takes effect. Unless otherwise indicated, the term
22-10 insurer as used in this Article includes all corporations,
22-11 associations, partnerships and individuals engaged as principals in
22-12 the business of insurance and also includes interinsurance
22-13 exchanges, mutual benefit societies, and insurance exchanges and
22-14 syndicates as defined by rules promulgated by the State Board of
22-15 Insurance.]
22-16 1. The making of or proposing to make, as an
22-17 insurer, an insurance contract.
22-18 2. The making of or proposing to make, as
22-19 guarantor or surety, any contract of guaranty or suretyship as a
22-20 vocation and not merely incidental to any other legitimate business
22-21 or activity of the guarantor or surety.
22-22 3. The taking or receiving of any application
22-23 for insurance.
22-24 4. The receiving or collection of any premium,
22-25 commission, membership fees, assessments, dues or other
22-26 consideration for any insurance or any part thereof.
23-1 5. The issuance or delivery of contracts of
23-2 insurance to residents of this state or to persons authorized to do
23-3 business in this state.
23-4 6. Directly or indirectly acting as an agent for
23-5 or otherwise representing or aiding on behalf of another any person
23-6 or insurer in the solicitation, negotiation, procurement or
23-7 effectuation of insurance or renewals thereof or in the
23-8 dissemination of information as to coverage or rates, or forwarding
23-9 of applications, or delivery of policies or contracts, or
23-10 inspection of risks, a fixing of rates or investigation or
23-11 adjustment of claims or losses or in the transaction of matters
23-12 subsequent to effectuation of the contract and arising out of it,
23-13 or in any other manner representing or assisting a person or
23-14 insurer in the transaction of insurance with respect to subjects of
23-15 insurance resident, located or to be performed in this state. The
23-16 provisions of this subdivision shall not operate to prohibit
23-17 full-time salaried employees of a corporate insured from acting in
23-18 the capacity of an insurance manager or buyer in placing insurance
23-19 in behalf of such employer, its parent or affiliated companies.
23-20 7. Contracting to provide indemnification or
23-21 expense reimbursement in this state to persons domiciled in this
23-22 state or for risks located in this state, whether as an insurer,
23-23 agent, administrator, trust, funding mechanism, or by any other
23-24 method, for any type of medical expenses including, but not limited
23-25 to surgical, chiropractic, physical therapy, speech pathology,
23-26 audiology, professional mental health, dental, hospital, or
24-1 optometric expenses, whether this coverage is by direct payment,
24-2 reimbursement, or otherwise. This provision shall not apply to:
24-3 (i) any program otherwise authorized by
24-4 law that is established by any political subdivision of this state
24-5 or under Chapter 791, Government Code, [the provisions of The
24-6 Interlocal Cooperation Act (Article 4413(32c), Vernon's Texas Civil
24-7 Statutes)] or by a state agency; or
24-8 (ii) a multiple employer welfare
24-9 arrangement which is fully insured as defined in 29 U.S.C.A.
24-10 Section 1144(b)(6) except that the Commissioner may apply any laws
24-11 that regulate the business of insurance in this state to the extent
24-12 that such laws provide [(1)] standards requiring the maintenance of
24-13 specified levels of contributions, which any such plan, or any
24-14 trust established under such a plan, must meet in order to be
24-15 considered under such law able to pay benefits in full when due,
24-16 and [(2)] provisions to enforce such standards.
24-17 8. The doing of any kind of insurance business
24-18 specifically recognized as constituting the doing of an insurance
24-19 business within the meaning of the statutes relating to insurance.
24-20 9. The doing or proposing to do any insurance
24-21 business in substance equivalent to any of the foregoing in a
24-22 manner designed to evade the provisions of the statutes.
24-23 10. Any other transactions of business in this
24-24 state by an insurer.
24-25 11. With respect to policies authorized under
24-26 Article 3.74 of this code, the use, creation, publication, mailing,
25-1 or dissemination of an advertisement relating to any of the acts
25-2 defined in this subsection to be doing an insurance business
25-3 unless:
25-4 (i) that advertisement is used, created,
25-5 published, mailed, or disseminated on behalf of a person or insurer
25-6 authorized under this title to engage in the business of insurance
25-7 in this state, who has actual knowledge of the content of the
25-8 advertisement and has authorized the advertisement to be used,
25-9 created, published, mailed, or disseminated on that person's or
25-10 insurer's behalf; and
25-11 (ii) the person or insurer on whose behalf
25-12 the advertisement is used, created, published, mailed, or
25-13 disseminated is, in that advertisement, clearly identified by name
25-14 as the sponsor of the advertisement.
25-15 (2) "Insurer" means a person engaged as a principal in
25-16 the business of insurance.
25-17 (3) "Person" means:
25-18 (A) an individual;
25-19 (B) a corporation;
25-20 (C) an association;
25-21 (D) a partnership;
25-22 (E) a reciprocal exchange;
25-23 (F) an interinsurance exchange;
25-24 (G) a Lloyd's plan;
25-25 (H) a fraternal benefit society; and
25-26 (I) any other legal entity engaged in the
26-1 business of insurance, including:
26-2 (i) an agent;
26-3 (ii) a broker;
26-4 (iii) an adjuster; or
26-5 (iv) a life insurance counselor.
26-6 (c) The commissioner [State Board of Insurance] shall
26-7 promulgate rules defining insurance exchanges and syndicates
26-8 covered by Subsection (a)(1) of this section.
26-9 (d) The venue of an act described by Subsection (a)(1) of
26-10 this section that is committed by mail is in the location where the
26-11 matter transmitted by mail is delivered and takes effect.
26-12 SECTION 4.03. Subsection (b), Section 3, Article 1.14-1,
26-13 Insurance Code, is amended to read as follows:
26-14 (b) A [No] person may not [or insurer shall] directly or
26-15 indirectly engage in the [do any of the acts of an insurance]
26-16 business of insurance [set forth in this Article] except as
26-17 provided by and in accordance with the specific authorization of
26-18 statute. In respect to the insurance of subjects resident, located
26-19 or to be performed within this state this section shall not
26-20 prohibit the collection of premium or other acts performed outside
26-21 of this state by persons or insurers authorized to do business in
26-22 this state provided such transactions and insurance contracts
26-23 otherwise comply with statute.
26-24 SECTION 4.04. Subsection (a), Section 13, Article 1.14-1,
26-25 Insurance Code, is amended to read as follows:
26-26 (a) A person [who violates Section 3(b) of this article]
27-1 commits an offense if the person engages in the business of
27-2 insurance:
27-3 (1) without:
27-4 (A) holding a certificate of authority, license,
27-5 or other authorization issued by the department; or
27-6 (B) having an exemption that is recognized by
27-7 the department from the requirement to hold a certificate of
27-8 authority, license, or other authorization issued by the
27-9 department; or
27-10 (2) after the person's certificate of authority,
27-11 license, or other authorization has been revoked or suspended by
27-12 the commissioner.
27-13 ARTICLE 5. INSURANCE AVAILABILITY
27-14 SECTION 5.01. Section 4, Article 21.81, Insurance Code, is
27-15 amended by adding Subsections (c) and (d) to read as follows:
27-16 (c) Notwithstanding Section 5 of this article, an applicant
27-17 is eligible for insurance through the association if the applicant
27-18 and servicing agent certify that the applicant is unable to find
27-19 coverage at a rate that is within the benchmark flexibility band,
27-20 pursuant to Article 5.101 of this code, and the applicant is a good
27-21 driver. Such an applicant shall be charged a rate for coverage
27-22 that does not exceed a rate that is greater than the midway point
27-23 between 115 percent of the benchmark rate promulgated pursuant to
27-24 Article 5.101 of this code and the rate promulgated under Section 5
27-25 of this article. The commissioner may make rules to implement this
27-26 section.
28-1 (d) In this section, a "good driver" means an individual
28-2 who:
28-3 (1) is over the age of:
28-4 (A) if male, 25 years of age; and
28-5 (B) if female, 21 years of age;
28-6 (2) has been licensed for at least three years to
28-7 drive the type of motor vehicle to be insured;
28-8 (3) during the previous three years, has not:
28-9 (A) been at fault in a motor vehicle accident
28-10 that resulted in bodily injury, death, or property damage;
28-11 (B) been convicted of a violation of a traffic
28-12 safety regulation that involved a moving vehicle; or
28-13 (C) been convicted of an offense under Section
28-14 49.04, Penal Code, or Section 106.041, Alcoholic Beverage Code;
28-15 (4) has never made a fraudulent insurance claim; and
28-16 (5) does not drive a sports or high-performance
28-17 vehicle.
28-18 ARTICLE 6. REPEALER
28-19 SECTION 6.01. The following laws are repealed:
28-20 (1) Subsection (a), Section 3, Article 1.14-1,
28-21 Insurance Code;
28-22 (2) Subsection (c), Section 13, Article 1.14-1,
28-23 Insurance Code;
28-24 (3) Section 601.053, Transportation Code;
28-25 (4) Section 601.193, Transportation Code;
28-26 (5) Subchapter H, Chapter 601, Transportation Code;
29-1 and
29-2 (6) Subchapter I, Chapter 601, Transportation Code.
29-3 ARTICLE 7. TRANSITION; EFFECTIVE DATE; EMERGENCY
29-4 SECTION 7.01. (a) The change in law made by this Act to
29-5 Section 13, Article 1.14-1, Insurance Code, and to Chapter 601,
29-6 Transportation Code, applies only to punishment for an offense
29-7 committed on or after the effective date of this Act. For purposes
29-8 of this section, an offense is committed before the effective date
29-9 of this Act if any element of the offense occurs before that date.
29-10 (b) An offense committed under Section 13, Article 1.14-1,
29-11 Insurance Code, before the effective date of this Act is covered by
29-12 the law in effect when the offense was committed, and the former
29-13 law is continued in effect for that purpose.
29-14 SECTION 7.02. Article 5.06-1, Insurance Code, as amended by
29-15 this Act, applies only to a motor vehicle liability insurance
29-16 policy that is delivered, issued for delivery, or renewed on or
29-17 after January 1, 2000. A policy that is delivered, issued for
29-18 delivery, or renewed before January 1, 2000, is governed by the law
29-19 as it existed immediately before the effective date of this Act,
29-20 and that law is continued in effect for that purpose.
29-21 SECTION 7.03. Subsections (c) and (d), Section 4, Article
29-22 21.81, Insurance Code, as added by this Act, apply only to a motor
29-23 vehicle liability insurance policy that is delivered, issued for
29-24 delivery, or renewed on or after January 1, 2001. A policy that is
29-25 delivered, issued for delivery, or renewed before January 1, 2001,
29-26 is governed by the law as it existed immediately before the
30-1 effective date of this Act, and that law is continued in effect for
30-2 that purpose.
30-3 SECTION 7.04. The provisions of Subsections (c) and (d),
30-4 Section 4, Article 21.81, Insurance Code, as added by this Act,
30-5 expire January 1, 2003.
30-6 SECTION 7.05. (a) Except as provided by Subsection (b) of
30-7 this section, this Act takes effect September 1, 1999.
30-8 (b) Article 1 of this Act takes effect January 1, 2001.
30-9 SECTION 7.06. The importance of this legislation and the
30-10 crowded condition of the calendars in both houses create an
30-11 emergency and an imperative public necessity that the
30-12 constitutional rule requiring bills to be read on three several
30-13 days in each house be suspended, and this rule is hereby suspended.