1-1 By: Bivins, Armbrister S.B. No. 1787
1-2 (In the Senate - Filed March 12, 1999; March 15, 1999, read
1-3 first time and referred to Committee on Economic Development;
1-4 April 23, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 7, Nays 0; April 23, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1787 By: Sibley
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the regulation of insurance and to requirements
1-11 regarding motor vehicle insurance; establishing business offenses;
1-12 providing penalties.
1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14 ARTICLE 1. FINANCIAL RESPONSIBILITY REQUIREMENTS
1-15 SECTION 1.01. Chapter 601, Transportation Code, is amended
1-16 by adding Subchapter N to read as follows:
1-17 SUBCHAPTER N. VERIFICATION OF COMPLIANCE WITH AND ENFORCEMENT
1-18 OF FINANCIAL RESPONSIBILITY REQUIREMENTS
1-19 Sec. 601.501. DEFINITIONS. In this subchapter:
1-20 (1) "Department" means the Texas Department of
1-21 Transportation.
1-22 (2) "Verification date" means the date set by the
1-23 department in the written request to the owner of a motor vehicle
1-24 requiring the owner to state whether the owner has established
1-25 financial responsibility in accordance with Section 601.051.
1-26 Sec. 601.502. VERIFICATION OF ESTABLISHMENT OF FINANCIAL
1-27 RESPONSIBILITY THROUGH RANDOM SAMPLING. (a) The department or an
1-28 agent of the department shall randomly select samples of
1-29 registrations of motor vehicles subject to this chapter, or samples
1-30 of owners of motor vehicles subject to this chapter, to verify
1-31 whether the owner has established financial responsibility in
1-32 accordance with Section 601.051. A sample selected under this
1-33 section may not be classified on the basis of the owner's race,
1-34 color, religion, sex, national origin, age, marital status,
1-35 physical or mental disability, economic status, or geographic
1-36 location.
1-37 (b) In addition to the general random sampling of motor
1-38 vehicle registrations, the department may randomly select other
1-39 persons to verify that the person has established financial
1-40 responsibility, including:
1-41 (1) a person who, during the four years preceding the
1-42 date of selection:
1-43 (A) has been convicted of a violation of Section
1-44 601.051, 601.191, 601.195, 601.196, or 601.509, including a
1-45 violation that occurred while the person was operating a motor
1-46 vehicle owned by another person; or
1-47 (B) has received deferred disposition under
1-48 Article 45.54, Code of Criminal Procedure, for a violation of
1-49 Section 601.051, 601.191, 601.195, 601.196, or 601.509;
1-50 (2) a person whose motor vehicle registration has been
1-51 the subject of a deferred suspension under Section 601.505(a)
1-52 during the preceding four years; or
1-53 (3) a person whose driver's license or motor vehicle
1-54 registration has been suspended during the preceding four years.
1-55 (c) The department shall send to the motor vehicle owner a
1-56 request for information about the motor vehicle and the owner's
1-57 method of establishing financial responsibility. The request must:
1-58 (1) state the verification date; and
1-59 (2) require the owner to state whether the owner has,
1-60 as of the verification date, established financial responsibility
1-61 in accordance with Section 601.051.
1-62 (d) The department by rule shall prescribe:
1-63 (1) the methods employed for the random selection of
1-64 samples and the procedures necessary for implementation of the
2-1 verification process, including the method of sending the
2-2 verification request, which may include certified mail, return
2-3 receipt requested;
2-4 (2) the frequency of sample selection;
2-5 (3) the form for verification of financial
2-6 responsibility; and
2-7 (4) the information to be requested in the prescribed
2-8 form.
2-9 (e) The department may require the information provided by
2-10 the owner to include a statement by the owner that the owner had,
2-11 as of the verification date, established financial responsibility:
2-12 (1) through liability insurance under Subchapter D,
2-13 including:
2-14 (A) the name and address of the insurer;
2-15 (B) the number of the insurance policy; and
2-16 (C) the expiration date of the insurance
2-17 coverage;
2-18 (2) by filing a surety bond with the Department of
2-19 Public Safety under Section 601.121, including:
2-20 (A) the name and address of the company issuing
2-21 the bond;
2-22 (B) the identification number of the bond; and
2-23 (C) the expiration date of the bond;
2-24 (3) by depositing cash or securities with the
2-25 comptroller under Section 601.122, including a copy of the
2-26 certificate issued by the comptroller showing compliance;
2-27 (4) by depositing cash or a cashier's check with the
2-28 county judge of the county in which the motor vehicle is registered
2-29 under Section 601.123, including a copy of the certificate issued
2-30 by the county judge showing compliance; or
2-31 (5) through self-insurance under Section 601.124,
2-32 including a copy of the certificate of self-insurance issued by the
2-33 Department of Public Safety.
2-34 (f) Not later than the 30th day after the verification date,
2-35 the owner to whom the notice is sent shall furnish the requested
2-36 information to the department in the form prescribed by the
2-37 department, accompanied by the owner's signed affirmation that the
2-38 information is true and correct.
2-39 (g) An owner whose response indicates that the owner had not
2-40 established financial responsibility in accordance with Section
2-41 601.051, or who fails to respond to the request, is subject to
2-42 suspension of the owner's motor vehicle registration in the manner
2-43 provided by Section 601.505.
2-44 (h) If the owner responds to the request for information by
2-45 asserting that the owner had, as of the verification date,
2-46 established financial responsibility in accordance with a method
2-47 authorized by Section 601.051, the department may conduct a
2-48 verification investigation as provided by Section 601.503.
2-49 Sec. 601.503. VERIFICATION INVESTIGATION. (a) To verify a
2-50 response received from an owner under Section 601.502, the
2-51 department or an agent of the department may furnish necessary
2-52 information to the insurer, surety, or officer named in the
2-53 response. Not later than the 30th day after the date of receipt of
2-54 the information, the insurer, surety, or officer shall inform the
2-55 department whether, as of the verification date, financial
2-56 responsibility had been established for the affected motor vehicle
2-57 in accordance with Section 601.051.
2-58 (b) If the response received from an owner under Section
2-59 601.502 states that financial responsibility has been established
2-60 through self-insurance, the department shall examine the
2-61 department's records to verify that a certificate of self-insurance
2-62 has been issued in accordance with Section 601.124.
2-63 Sec. 601.504. WARNING NOTICE. (a) If an owner responds
2-64 under Section 601.502 that the owner has not established financial
2-65 responsibility or the owner fails to respond in a timely manner, or
2-66 if the department otherwise determines that an owner has registered
2-67 or maintained the registration of a motor vehicle without
2-68 establishing financial responsibility in accordance with Section
2-69 601.051, the department shall issue a warning notice to the owner.
3-1 (b) The warning notice must inform the owner that the owner
3-2 is not in compliance with Section 601.051 and that the owner's
3-3 motor vehicle registration is suspended on the 45th day after the
3-4 date on which the warning notice is mailed unless the owner
3-5 complies with the requirements described by Subsection (c) for
3-6 deferral of the suspension.
3-7 (c) The warning notice must include a statement informing
3-8 the owner that the department shall defer the suspension of the
3-9 owner's registration if, not later than the 30th day after the date
3-10 of the mailing of the warning notice, the owner establishes
3-11 financial responsibility in the manner prescribed by Section
3-12 601.505.
3-13 Sec. 601.505. SUSPENSION; REINSTATEMENT; EXCEPTION.
3-14 (a) The department shall suspend the registration of an owner to
3-15 whom a notice is issued under Section 601.504. For a first
3-16 violation, the department shall terminate the suspension on payment
3-17 by the owner of a $100 reinstatement fee and submission of proof of
3-18 financial responsibility as prescribed by the department. For a
3-19 second or subsequent violation within the preceding four years or a
3-20 violation of Section 601.507, the department shall terminate the
3-21 suspension on the 120th day after the effective date of the
3-22 suspension on payment by the owner of a $100 reinstatement fee and
3-23 submission of proof of financial responsibility as prescribed by
3-24 the department.
3-25 (b) For a first violation, the department shall defer the
3-26 suspension and any reinstatement fee if the owner submits to the
3-27 department, not later than the 15th day after the date of the
3-28 warning notice under Section 601.504, proof of financial
3-29 responsibility evidenced by a motor vehicle insurance policy, the
3-30 premiums of which have been prepaid for a term of at least six
3-31 months. On the earlier of the 180th day after the date of the
3-32 warning notice or the expiration date of the insurance policy
3-33 described by this subsection, the owner shall submit to the
3-34 department evidence of renewal of the motor vehicle insurance
3-35 policy, the premiums of which have been prepaid for a term of at
3-36 least six months. If the owner fails to submit the required
3-37 evidence of renewal, the department shall impose the suspension and
3-38 reinstatement fee.
3-39 (c) Notwithstanding any other provision of this subchapter,
3-40 the department may register in accordance with Chapter 502 the
3-41 motor vehicle of an applicant for registration who:
3-42 (1) received a request for information under Section
3-43 601.502; and
3-44 (2) presents proof of financial responsibility that:
3-45 (A) complies with Section 601.051; and
3-46 (B) was in effect on the verification date of
3-47 the request for information.
3-48 Sec. 601.506. SUBMISSION OF FALSE PROOF. If the department
3-49 determines that the proof of financial responsibility submitted by
3-50 a motor vehicle owner under Section 601.502 is false, the
3-51 department shall suspend the owner's motor vehicle registration.
3-52 The department shall terminate the suspension on the 180th day
3-53 after the effective date of the suspension on payment by the owner
3-54 of a $200 reinstatement fee and submission of proof of financial
3-55 responsibility as prescribed by the department.
3-56 Sec. 601.507. OPERATION OF MOTOR VEHICLE WHILE REGISTRATION
3-57 SUSPENDED FOR FAILURE TO ESTABLISH FINANCIAL RESPONSIBILITY. (a) A
3-58 person may not operate a motor vehicle if the registration of the
3-59 motor vehicle is suspended under this subchapter.
3-60 (b) A person commits a business offense if the person
3-61 violates Subsection (a). A business offense under this subsection
3-62 is punishable by a fine of not less than $1,000 or more than
3-63 $2,000.
3-64 Sec. 601.508. MAINTENANCE OF EVIDENCE OF FINANCIAL
3-65 RESPONSIBILITY. (a) Each operator of a motor vehicle subject to
3-66 Section 601.051 shall carry within the vehicle a written document
3-67 providing evidence of financial responsibility. The document must
3-68 be legible and provide information sufficient to demonstrate that
3-69 the owner or operator of the motor vehicle has established
4-1 financial responsibility as required under Section 601.051 and may
4-2 include:
4-3 (1) a motor vehicle liability insurance policy
4-4 covering the vehicle that satisfies Subchapter D or a photocopy of
4-5 the policy;
4-6 (2) a standard proof of motor vehicle liability
4-7 insurance form prescribed by the Texas Department of Insurance;
4-8 (3) a liability insurance binder as specified by
4-9 Section 601.080 or a certificate of liability insurance as
4-10 specified by Section 601.083;
4-11 (4) the combination of proof of purchase of the motor
4-12 vehicle within the previous 30 days and current proof of insurance;
4-13 (5) evidence that a surety bond has been filed with
4-14 the Department of Public Safety in accordance with Section 601.121;
4-15 (6) a certificate issued by the comptroller stating
4-16 that a deposit has been made with the comptroller that complies
4-17 with Section 601.122;
4-18 (7) a certificate issued by a county judge stating
4-19 that a deposit has been made with the county judge that complies
4-20 with Section 601.123;
4-21 (8) a certificate of self-insurance issued by the
4-22 Department of Public Safety in accordance with Section 601.124; or
4-23 (9) a certificate, decal, or other document issued by
4-24 a governmental agency for a motor vehicle that indicates that the
4-25 vehicle is owned by the United States, this state, or a political
4-26 subdivision of this state.
4-27 (b) The operator of a motor vehicle shall surrender the
4-28 evidence of financial responsibility into the possession of a peace
4-29 officer, court, or court officer who requests inspection of the
4-30 evidence of financial responsibility. A person who fails or
4-31 refuses to comply with such a request is presumed to violate
4-32 Section 601.051.
4-33 (c) A person who provides evidence of financial
4-34 responsibility knowing that financial responsibility has not been
4-35 established as required under Section 601.051 or that the evidence
4-36 of financial responsibility is illegally altered, counterfeit, or
4-37 otherwise invalid is presumed to violate Sections 601.196 and
4-38 601.509.
4-39 Sec. 601.509. DISPLAY OF FALSE PROOF OF FINANCIAL
4-40 RESPONSIBILITY; CRIMINAL PENALTY. (a) A person commits an offense
4-41 if the person provides evidence of financial responsibility to a
4-42 peace officer, court, or officer of the court knowing that
4-43 financial responsibility has not been established as required under
4-44 Section 601.051 or that the evidence of financial responsibility is
4-45 illegally altered, counterfeit, or otherwise invalid.
4-46 (b) If a peace officer issues a citation to a motor vehicle
4-47 operator for displaying invalid evidence of financial
4-48 responsibility, the officer shall confiscate the invalid evidence
4-49 of financial responsibility for presentation in court.
4-50 (c) An offense under this section is a Class B misdemeanor.
4-51 Sec. 601.510. DISPOSITION OF FEES. From the reinstatement
4-52 fees collected under this subchapter, the department shall recover
4-53 its costs in implementing and administering the verification
4-54 program. The department shall deposit any amounts collected that
4-55 exceed the administrative costs of the department under this
4-56 subchapter in the general revenue fund.
4-57 Sec. 601.511. USE OF AGENTS BY DEPARTMENT. The department
4-58 may submit requests for proposals for contracts with private
4-59 vendors to perform the random sampling and the verification
4-60 investigations required under this subchapter. The department may
4-61 enter into contracts as necessary to implement this section.
4-62 SECTION 1.02. Section 601.051, Transportation Code, is
4-63 amended to read as follows:
4-64 Sec. 601.051. REQUIREMENT OF FINANCIAL RESPONSIBILITY.
4-65 (a) A person may not operate, register, or maintain registration
4-66 of a motor vehicle in this state unless financial responsibility is
4-67 established for that vehicle through:
4-68 (1) a motor vehicle liability insurance policy that
4-69 complies with Subchapter D;
5-1 (2) a surety bond filed under Section 601.121;
5-2 (3) a deposit under Section 601.122;
5-3 (4) a deposit under Section 601.123; or
5-4 (5) self-insurance under Section 601.124.
5-5 (b) An owner of a motor vehicle may not permit another
5-6 person to operate, register, or maintain registration of the motor
5-7 vehicle in this state unless financial responsibility is
5-8 established for that vehicle and evidenced through a method
5-9 described by Subsection (a).
5-10 SECTION 1.03. Section 601.191, Transportation Code, is
5-11 amended to read as follows:
5-12 Sec. 601.191. OPERATION OF MOTOR VEHICLE IN VIOLATION OF
5-13 FINANCIAL RESPONSIBILITY REQUIREMENTS [MOTOR VEHICLE LIABILITY
5-14 INSURANCE REQUIREMENT; OFFENSE]. (a) A person commits an offense
5-15 if the person operates a motor vehicle in violation of Section
5-16 601.051.
5-17 (b) Except as provided by Subsection [Subsections (c) and]
5-18 (d), an offense under this section is a business offense
5-19 [misdemeanor] punishable by a fine of not less than $500 [$175] or
5-20 more than $1,000 [$350].
5-21 (c) It is a defense to prosecution under this section,
5-22 Section 601.195, and Section 601.507 that the person charged with a
5-23 violation produces in court satisfactory evidence that, at the time
5-24 of the arrest, the owner or operator had established financial
5-25 responsibility in accordance with Section 601.051 [If a person has
5-26 been previously convicted of an offense under this section, an
5-27 offense under this section is a misdemeanor punishable by a fine of
5-28 not less than $350 or more than $1,000].
5-29 (d) If the court determines that a person who has not been
5-30 previously convicted of a business [an] offense under this section
5-31 is economically unable to pay the fine, the court may reduce the
5-32 fine to less than $500 [$175].
5-33 SECTION 1.04. Section 12.02, Penal Code, is amended to read
5-34 as follows:
5-35 Sec. 12.02. CLASSIFICATION OF OFFENSES. Offenses are
5-36 designated as felonies, [or] misdemeanors, or business offenses.
5-37 SECTION 1.05. Subchapter A, Chapter 12, Penal Code, is
5-38 amended by adding Section 12.05 to read as follows:
5-39 Sec. 12.05. BUSINESS OFFENSE. (a) A business offense is a
5-40 nonmisdemeanor offense for which the penalty is a fine of at least
5-41 $500.
5-42 (b) Conviction of a business offense does not impose any
5-43 legal disability or disadvantage.
5-44 SECTION 1.06. The heading to Subchapter B, Chapter 12, Penal
5-45 Code, is amended to read as follows:
5-46 SUBCHAPTER B. ORDINARY MISDEMEANOR
5-47 AND BUSINESS OFFENSE PUNISHMENTS
5-48 SECTION 1.07. Subchapter B, Chapter 12, Penal Code, is
5-49 amended by adding Section 12.24 to read as follows:
5-50 Sec. 12.24. BUSINESS OFFENSE. An individual adjudged guilty
5-51 of a business offense shall be punished by a fine of at least $500.
5-52 SECTION 1.08. In performing sample selection under Section
5-53 601.502, Transportation Code, as added by this Act, the Texas
5-54 Department of Transportation shall ensure that at least 500,000
5-55 samples are selected on or before September 1, 2001.
5-56 SECTION 1.09. (a) In cooperation with the Texas Department
5-57 of Insurance and the Department of Public Safety of the State of
5-58 Texas, the Texas Department of Transportation shall conduct an
5-59 evaluation of the implementation and operation of the verification
5-60 of compliance with the financial responsibility program adopted
5-61 under Subchapter N, Chapter 601, Transportation Code, as added by
5-62 this Act, and of the effectiveness of the verification program in
5-63 increasing compliance with the financial responsibility
5-64 requirements established under Subchapter C, Chapter 601,
5-65 Transportation Code. The evaluation must include:
5-66 (1) a computation, by year, of the number of persons
5-67 determined by the department through the application of the
5-68 verification program to be driving without compliance with the
5-69 financial responsibility requirements established under Subchapter
6-1 C, Chapter 601, Transportation Code; and
6-2 (2) the annual effect of the program, as determined by
6-3 the Texas Department of Insurance, on the rate for uninsured
6-4 motorist insurance coverage under Article 5.06-1, Insurance Code.
6-5 (b) The Texas Department of Transportation shall enter into
6-6 contracts, memoranda of understanding, or interagency agreements as
6-7 necessary to implement this section.
6-8 (c) The Texas Department of Transportation shall report the
6-9 results of the evaluation conducted under this section to the 80th
6-10 Legislature not later than February 1, 2007. The department shall
6-11 provide written copies of the report to the governor, the
6-12 lieutenant governor, and the speaker of the house of
6-13 representatives.
6-14 ARTICLE 2. UNINSURED AND UNDERINSURED MOTORIST COVERAGE
6-15 SECTION 2.01. Article 5.06-1, Insurance Code, is amended to
6-16 read as follows:
6-17 Art. 5.06-1. UNINSURED OR UNDERINSURED MOTORIST COVERAGE.
6-18 (a) [(1)] No automobile liability insurance (including insurance
6-19 issued through the Texas Automobile Insurance Plan Association
6-20 [pursuant to an Assigned Risk Plan established under authority of
6-21 Section 35 of the Texas Motor Vehicle Safety-Responsibility Act]),
6-22 covering liability arising out of the ownership, maintenance, or
6-23 use of any motor vehicle shall be delivered or issued for delivery
6-24 in this state unless coverage is provided therein or supplemental
6-25 thereto, [in at least the limits described in the Texas Motor
6-26 Vehicle Safety-Responsibility Act,] under provisions prescribed by
6-27 the commissioner [Board], for the protection of persons insured
6-28 thereunder who are legally entitled to recover damages from owners
6-29 or operators of uninsured or underinsured motor vehicles because of
6-30 bodily injury, sickness, or disease, including death, or property
6-31 damage resulting therefrom. The coverages required under this
6-32 Article shall not be applicable where any insured named in the
6-33 policy shall reject the coverage in writing; provided that unless
6-34 the named insured thereafter requests such coverage in writing,
6-35 such coverage need not be provided in or supplemental to a renewal
6-36 policy where the named insured has rejected the coverage in
6-37 connection with a policy previously issued to the named insured
6-38 [him] by the same insurer or by an affiliated insurer.
6-39 (b) [(2)] For the purpose of these coverages:
6-40 (1) "Exemplary damages" has the meaning assigned by
6-41 Section 41.001, Civil Practice and Remedies Code.
6-42 (2) "Noneconomic damages" means damages other than
6-43 compensatory damages for pecuniary loss. The term includes damages
6-44 for physical pain and mental anguish, loss of consortium,
6-45 disfigurement, physical impairment, or loss of companionship and
6-46 society. The term does not include exemplary damages.
6-47 (3) "Uninsured [(a) the term "uninsured] motor
6-48 vehicle" shall, subject to the terms and conditions of such
6-49 coverage, be deemed to include an insured motor vehicle where the
6-50 liability insurer thereof is unable to make payment with respect to
6-51 the legal liability of its insured within the limits specified
6-52 therein because of insolvency.
6-53 (4) "Underinsured [(b) The term "underinsured] motor
6-54 vehicle" means an insured motor vehicle on which there is valid and
6-55 collectible liability insurance coverage with limits of liability
6-56 for the owner or operator which were originally lower than, or have
6-57 been reduced by payment of claims arising from the same accident
6-58 to, an amount less than the limit of liability stated in the
6-59 underinsured coverage of the insured's policy.
6-60 (c) The commissioner [Board] may, in the policy forms
6-61 adopted under Article 5.06 of this code, define "uninsured motor
6-62 vehicle" to exclude certain motor vehicles whose operators are in
6-63 fact uninsured.
6-64 (d) The portion of a policy form adopted under Article 5.06
6-65 of this code to provide coverage under this article shall include
6-66 provisions that, regardless of the number of persons insured,
6-67 policies or bonds applicable, vehicles involved, or claims made,
6-68 the total aggregate limit of liability to any one person who
6-69 sustains bodily injury or property damage as the result of any one
7-1 occurrence shall not exceed the limit of liability for these
7-2 coverages as stated in the policy and the total aggregate limit of
7-3 liability to all claimants, if more than one, shall not exceed the
7-4 total limit of liability per occurrence as stated in the policy;
7-5 and shall provide for the exclusion of the recovery of damages for
7-6 bodily injury or property damage or both resulting from the
7-7 intentional acts of the insured. The portion of a policy form
7-8 adopted under Article 5.06 of this code to provide coverage under
7-9 this article shall require that in order for the insured to recover
7-10 under the uninsured motorist coverages where the owner or operator
7-11 of any motor vehicle which causes bodily injury or property damage
7-12 to the insured is unknown, actual physical contact must have
7-13 occurred between the motor vehicle owned or operated by such
7-14 unknown person and the person or property of the insured.
7-15 (e) Except as provided by Subsection (f) of this article,
7-16 the [(3) The] limits of liability for bodily injury, sickness, or
7-17 disease, including death, shall be offered to the insured in
7-18 amounts not less than those prescribed in Chapter 601,
7-19 Transportation Code, [the Texas Motor Vehicle Safety-Responsibility
7-20 Act] and such higher available limits as may be desired by the
7-21 insured, but not greater than the limits of liability specified in
7-22 the bodily injury liability provisions of the insured's policy.
7-23 (f) The named insured may elect to waive coverage under this
7-24 article for recovery of noneconomic and exemplary damages resulting
7-25 from bodily injury, sickness, or disease, including death. If an
7-26 insured elects to waive coverage under this subsection, Subsection
7-27 (e) of this article does not apply to the limits of liability that
7-28 are applicable to the coverage provided under the policy issued to
7-29 the named insured for damages resulting from bodily injury,
7-30 sickness, or disease, including death. The commissioner by rule
7-31 may adopt minimum limits of liability applicable to those damages.
7-32 Waiver of coverage under this subsection does not affect the
7-33 insured's right to bring an action for noneconomic and exemplary
7-34 damages against a responsible party.
7-35 (g) [(4) (a)] Coverage for property damage shall be offered
7-36 to the insured in amounts not less than those prescribed in Chapter
7-37 601, Transportation Code, [the Texas Motor Vehicle
7-38 Safety-Responsibility Act] and such higher available limits as may
7-39 be desired by the insured, but not greater than limits of liability
7-40 specified in the property damage liability provisions of the
7-41 insured's policy, subject to a deductible amount of $250.
7-42 (h) [(b)] If the insured has collision coverage and
7-43 uninsured or underinsured property damage liability coverage, the
7-44 insured may recover under the policy coverage chosen by the
7-45 insured. In the event neither coverage is sufficient alone to
7-46 cover all damage resulting from a single occurrence, the insured
7-47 may recover under both coverages. When recovering under both
7-48 coverages, the insured shall designate one coverage as the primary
7-49 coverage and pay the deductible applicable to that coverage. The
7-50 primary coverage must be exhausted before any recovery is made
7-51 under the secondary coverage. If both coverages are utilized in
7-52 the payment of damages from a single occurrence, the insured shall
7-53 not be required to pay the deductible applicable to the secondary
7-54 coverage when the amount of the deductible otherwise applicable to
7-55 the secondary coverage is the same as or less than the amount of
7-56 the deductible applicable to the primary coverage. If both
7-57 coverages are utilized in the payment of damages from a single
7-58 occurrence and the amount of the deductible otherwise applicable to
7-59 the secondary coverage is greater than the amount of the deductible
7-60 applicable to the primary coverage, the insured shall be required
7-61 to pay in respect of the secondary coverage only the difference
7-62 between the amount of the two deductibles. In no event shall the
7-63 insured recover under both coverages more than the actual damages
7-64 suffered.
7-65 (i) [(5)] The underinsured motorist coverage shall provide
7-66 for payment to the insured of all sums which the insured [he] shall
7-67 be legally entitled to recover as damages from owners or operators
7-68 of underinsured motor vehicles because of bodily injury or property
7-69 damage in an amount up to the limit specified in the policy,
8-1 reduced by the amount recovered or recoverable from the insurer of
8-2 the underinsured motor vehicle. If the named insured has waived
8-3 coverage under Subsection (f) of this article for recovery of
8-4 noneconomic and exemplary damages, the amount paid to the insured
8-5 may not include any amount attributable to noneconomic and
8-6 exemplary damages.
8-7 (j) [(6)] In the event of payment to any person under any
8-8 coverage required by this Section and subject to the terms and
8-9 conditions of such coverage, the insurer making such payment shall,
8-10 to the extent thereof, be entitled to the proceeds of any
8-11 settlement or judgment resulting from the exercise of any rights of
8-12 recovery of such person against any person or organization legally
8-13 responsible for the bodily injury, sickness or disease, or death
8-14 for which such payment is made, including the proceeds recoverable
8-15 from the assets of the insolvent insurer; provided, however,
8-16 whenever an insurer shall make payment under a policy of insurance
8-17 issued pursuant to this Act, which payment is occasioned by the
8-18 insolvency of an insurer, the insured of said insolvent insurer
8-19 shall be given credit in any judgment obtained against the insured
8-20 [him], with respect to the insured's [his] legal liability for such
8-21 damages, to the extent of such payment, but, subject to Section 12
8-22 of Article 21.28-C of this code, such paying insurer shall have the
8-23 right to proceed directly against the insolvent insurer or its
8-24 receiver, and in pursuance of such right such paying insurer shall
8-25 possess any rights which the insured of the insolvent company might
8-26 otherwise have had if the insured of the insolvent insurer had made
8-27 the payment.
8-28 (k) [(7)] If a dispute exists as to whether a motor vehicle
8-29 is uninsured, the burden of proof as to that issue shall be upon
8-30 the insurer.
8-31 (l) [(8)] Notwithstanding Section 15.032, Civil Practice and
8-32 Remedies Code, an action against an insurer in relation to the
8-33 coverage provided under this article, including an action to
8-34 enforce that coverage, may be brought only:
8-35 (1) [(a)] in the county in which the policyholder or
8-36 beneficiary instituting the suit resided at the time of the
8-37 accident; or
8-38 (2) [(b)] in the county in which the accident
8-39 involving the uninsured or underinsured motor vehicle occurred.
8-40 ARTICLE 3. PROOF OF INSURANCE CARDS
8-41 SECTION 3.01. Subchapter A, Chapter 5, Insurance Code, is
8-42 amended by adding Article 5.06-7 to read as follows:
8-43 Art. 5.06-7. FORM AND APPEARANCE OF PROOF OF MOTOR VEHICLE
8-44 LIABILITY INSURANCE. (a) The commissioner shall prescribe by rule
8-45 a standard appearance and form for a card issued by an insurer as
8-46 proof of motor vehicle liability insurance prescribed by Section
8-47 601.081, Transportation Code.
8-48 (b) In prescribing the appearance of a proof of motor
8-49 vehicle liability insurance card under Subsection (a) of this
8-50 article, the commissioner shall require an appearance that is:
8-51 (1) difficult to alter, duplicate, or counterfeit; and
8-52 (2) not cost-prohibitive for consumers.
8-53 (c) A card issued as proof of motor vehicle liability
8-54 insurance issued in this state by an insurer must conform to the
8-55 form and appearance prescribed under Subsection (a) of this
8-56 article.
8-57 SECTION 3.02. (a) The commissioner of insurance shall
8-58 prescribe the standard appearance and form of proof of motor
8-59 vehicle liability insurance cards as required by Article 5.06-7,
8-60 Insurance Code, as added by this Act, not later than December 1,
8-61 1999.
8-62 (b) A card issued by an insurer as proof of motor vehicle
8-63 liability insurance that is issued on or after January 1, 2000,
8-64 must conform with rules established by the commissioner of
8-65 insurance under Article 5.06-7, Insurance Code, as added by this
8-66 Act. Proof of motor vehicle liability insurance that is issued
8-67 before January 1, 2000, is governed by the law as it existed
8-68 immediately before the effective date of this Act, and that law is
8-69 continued in effect for that purpose.
9-1 ARTICLE 4. UNAUTHORIZED INSURANCE
9-2 SECTION 4.01. The heading to Section 2, Article 1.14-1,
9-3 Insurance Code, is amended to read as follows:
9-4 Sec. 2. ENGAGING IN [INSURANCE] BUSINESS OF INSURANCE;
9-5 DEFINITIONS [DEFINED].
9-6 SECTION 4.02. Section 2, Article 1.14-1, Insurance Code, is
9-7 amended by amending Subsections (a) and (c) and adding Subsection
9-8 (d) to read as follows:
9-9 (a) In this article:
9-10 (1) "Engaging in the business of insurance" includes
9-11 the performance of any [Any] of the following acts in this state,
9-12 whether effected by mail or otherwise: [is defined to be doing an
9-13 insurance business in this state. The venue of an act committed by
9-14 mail is at the point where the matter transmitted by mail is
9-15 delivered and takes effect. Unless otherwise indicated, the term
9-16 insurer as used in this Article includes all corporations,
9-17 associations, partnerships and individuals engaged as principals in
9-18 the business of insurance and also includes interinsurance
9-19 exchanges, mutual benefit societies, and insurance exchanges and
9-20 syndicates as defined by rules promulgated by the State Board of
9-21 Insurance.]
9-22 1. The making of or proposing to make, as an
9-23 insurer, an insurance contract.
9-24 2. The making of or proposing to make, as
9-25 guarantor or surety, any contract of guaranty or suretyship as a
9-26 vocation and not merely incidental to any other legitimate business
9-27 or activity of the guarantor or surety.
9-28 3. The taking or receiving of any application
9-29 for insurance.
9-30 4. The receiving or collection of any premium,
9-31 commission, membership fees, assessments, dues or other
9-32 consideration for any insurance or any part thereof.
9-33 5. The issuance or delivery of contracts of
9-34 insurance to residents of this state or to persons authorized to do
9-35 business in this state.
9-36 6. Directly or indirectly acting as an agent for
9-37 or otherwise representing or aiding on behalf of another any person
9-38 or insurer in the solicitation, negotiation, procurement or
9-39 effectuation of insurance or renewals thereof or in the
9-40 dissemination of information as to coverage or rates, or forwarding
9-41 of applications, or delivery of policies or contracts, or
9-42 inspection of risks, a fixing of rates or investigation or
9-43 adjustment of claims or losses or in the transaction of matters
9-44 subsequent to effectuation of the contract and arising out of it,
9-45 or in any other manner representing or assisting a person or
9-46 insurer in the transaction of insurance with respect to subjects of
9-47 insurance resident, located or to be performed in this state. The
9-48 provisions of this subdivision shall not operate to prohibit
9-49 full-time salaried employees of a corporate insured from acting in
9-50 the capacity of an insurance manager or buyer in placing insurance
9-51 in behalf of such employer, its parent or affiliated companies.
9-52 7. Contracting to provide indemnification or
9-53 expense reimbursement in this state to persons domiciled in this
9-54 state or for risks located in this state, whether as an insurer,
9-55 agent, administrator, trust, funding mechanism, or by any other
9-56 method, for any type of medical expenses including, but not limited
9-57 to surgical, chiropractic, physical therapy, speech pathology,
9-58 audiology, professional mental health, dental, hospital, or
9-59 optometric expenses, whether this coverage is by direct payment,
9-60 reimbursement, or otherwise. This provision shall not apply to:
9-61 (i) any program otherwise authorized by
9-62 law that is established by any political subdivision of this state
9-63 or under Chapter 791, Government Code, [the provisions of The
9-64 Interlocal Cooperation Act (Article 4413(32c), Vernon's Texas Civil
9-65 Statutes)] or by a state agency; or
9-66 (ii) a multiple employer welfare
9-67 arrangement which is fully insured as defined in 29 U.S.C.A.
9-68 Section 1144(b)(6) except that the Commissioner may apply any laws
9-69 that regulate the business of insurance in this state to the extent
10-1 that such laws provide [(1)] standards requiring the maintenance of
10-2 specified levels of contributions, which any such plan, or any
10-3 trust established under such a plan, must meet in order to be
10-4 considered under such law able to pay benefits in full when due,
10-5 and [(2)] provisions to enforce such standards.
10-6 8. The doing of any kind of insurance business
10-7 specifically recognized as constituting the doing of an insurance
10-8 business within the meaning of the statutes relating to insurance.
10-9 9. The doing or proposing to do any insurance
10-10 business in substance equivalent to any of the foregoing in a
10-11 manner designed to evade the provisions of the statutes.
10-12 10. Any other transactions of business in this
10-13 state by an insurer.
10-14 11. With respect to policies authorized under
10-15 Article 3.74 of this code, the use, creation, publication, mailing,
10-16 or dissemination of an advertisement relating to any of the acts
10-17 defined in this subsection to be doing an insurance business
10-18 unless:
10-19 (i) that advertisement is used, created,
10-20 published, mailed, or disseminated on behalf of a person or insurer
10-21 authorized under this title to engage in the business of insurance
10-22 in this state, who has actual knowledge of the content of the
10-23 advertisement and has authorized the advertisement to be used,
10-24 created, published, mailed, or disseminated on that person's or
10-25 insurer's behalf; and
10-26 (ii) the person or insurer on whose behalf
10-27 the advertisement is used, created, published, mailed, or
10-28 disseminated is, in that advertisement, clearly identified by name
10-29 as the sponsor of the advertisement.
10-30 (2) "Insurer" means a person engaged as a principal in
10-31 the business of insurance.
10-32 (3) "Person" means:
10-33 (A) an individual;
10-34 (B) a corporation;
10-35 (C) an association;
10-36 (D) a partnership;
10-37 (E) a reciprocal exchange;
10-38 (F) an interinsurance exchange;
10-39 (G) a Lloyd's plan;
10-40 (H) a fraternal benefit society; and
10-41 (I) any other legal entity engaged in the
10-42 business of insurance, including:
10-43 (i) an agent;
10-44 (ii) a broker;
10-45 (iii) an adjuster; or
10-46 (iv) a life insurance counselor.
10-47 (c) The commissioner [State Board of Insurance] shall
10-48 promulgate rules defining insurance exchanges and syndicates
10-49 covered by Subsection (a)(1) of this section.
10-50 (d) The venue of an act described by Subsection (a)(1) of
10-51 this section that is committed by mail is in the location where the
10-52 matter transmitted by mail is delivered and takes effect.
10-53 SECTION 4.03. Subsection (b), Section 3, Article 1.14-1,
10-54 Insurance Code, is amended to read as follows:
10-55 (b) A [No] person may not [or insurer shall] directly or
10-56 indirectly engage in the [do any of the acts of an insurance]
10-57 business of insurance [set forth in this Article] except as
10-58 provided by and in accordance with the specific authorization of
10-59 statute. In respect to the insurance of subjects resident, located
10-60 or to be performed within this state this section shall not
10-61 prohibit the collection of premium or other acts performed outside
10-62 of this state by persons or insurers authorized to do business in
10-63 this state provided such transactions and insurance contracts
10-64 otherwise comply with statute.
10-65 SECTION 4.04. Subsection (a), Section 13, Article 1.14-1,
10-66 Insurance Code, is amended to read as follows:
10-67 (a) A person [who violates Section 3(b) of this article]
10-68 commits an offense if the person engages in the business of
10-69 insurance:
11-1 (1) without:
11-2 (A) holding a certificate of authority, license,
11-3 or other authorization issued by the department; or
11-4 (B) having an exemption that is recognized by
11-5 the department from the requirement to hold a certificate of
11-6 authority, license, or other authorization issued by the
11-7 department; or
11-8 (2) after the person's certificate of authority,
11-9 license, or other authorization has been revoked or suspended by
11-10 the commissioner.
11-11 ARTICLE 5. REPEALER
11-12 SECTION 5.01. The following laws are repealed:
11-13 (1) Subsection (a), Section 3, Article 1.14-1,
11-14 Insurance Code;
11-15 (2) Subsection (c), Section 13, Article 1.14-1,
11-16 Insurance Code;
11-17 (3) Section 601.053, Transportation Code;
11-18 (4) Section 601.193, Transportation Code;
11-19 (5) Subchapter H, Chapter 601, Transportation Code;
11-20 and
11-21 (6) Subchapter I, Chapter 601, Transportation Code.
11-22 ARTICLE 6. TRANSITION; EFFECTIVE DATE; EMERGENCY
11-23 SECTION 6.01. (a) The change in law made by this Act to
11-24 Section 13, Article 1.14-1, Insurance Code, and to Chapter 601,
11-25 Transportation Code, applies only to punishment for an offense
11-26 committed on or after the effective date of this Act. For purposes
11-27 of this section, an offense is committed before the effective date
11-28 of this Act if any element of the offense occurs before that date.
11-29 (b) An offense committed under Section 13, Article 1.14-1,
11-30 Insurance Code, before the effective date of this Act is covered by
11-31 the law in effect when the offense was committed, and the former
11-32 law is continued in effect for that purpose.
11-33 SECTION 6.02. Article 5.06-1, Insurance Code, as amended by
11-34 this Act, applies only to a motor vehicle liability insurance
11-35 policy that is delivered, issued for delivery, or renewed on or
11-36 after January 1, 2000. A policy that is delivered, issued for
11-37 delivery, or renewed before January 1, 2000, is governed by the law
11-38 as it existed immediately before the effective date of this Act,
11-39 and that law is continued in effect for that purpose.
11-40 SECTION 6.03. (a) Except as provided by Subsection (b) of
11-41 this section, this Act takes effect September 1, 1999.
11-42 (b) Article 1 of this Act takes effect January 1, 2001.
11-43 SECTION 6.04. The importance of this legislation and the
11-44 crowded condition of the calendars in both houses create an
11-45 emergency and an imperative public necessity that the
11-46 constitutional rule requiring bills to be read on three several
11-47 days in each house be suspended, and this rule is hereby suspended.
11-48 * * * * *