HBA-NRS H.B. 1620 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1620 By: Eiland Licensing & Administrative Procedures 3/22/2001 Introduced BACKGROUND AND PURPOSE There are a disturbing number of cases in Texas involving various establishments irresponsibly serving alcoholic beverages to intoxicated individuals who later injure or kill another person while driving under the influence of alcohol. Dram shop liability laws are designed to hold servers of alcoholic beverages responsible for harm that their intoxicated patrons cause to other people. However, dram shop liability laws do not require an establishment to carry liability insurance. Some of the establishments that do carry such insurance do so under what is known as a "shell corporation," which holds few or no assets to satisfy a judgment. House Bill 1620 requires a person who holds a license or permit to sell alcoholic beverages to maintain liability insurance for damages arising out of the operation of the licensed or permitted premises. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Alcoholic Beverage Commission SECTION 1 (Section 11.13, Alcoholic Beverage Code), SECTION 2 (Section 61.15, Alcoholic Beverage Code), and SECTION 3 of this bill. ANALYSIS House Bill 1620 amends the Alcoholic Beverage Code to prohibit a person from holding a permit or a license allowing the person to sell alcoholic beverages for on-premises consumption, including a permit or license that is held in conjunction with a food and beverage certificate, unless the person maintains a liability insurance policy issued by an insurance company authorized to write liability insurance in this state that will pay, on the person's behalf, amounts the person becomes obligated to pay as damages arising out of the operation of the licensed or permitted premises. The minimum amounts of required insurance coverage are $100,000 for each person to whom damages covered by the policy are owed and $300,000 for each single occurrence giving rise to damages covered by the policy. The bill requires the Texas Alcoholic Beverage Commission (TABC) to adopt rules not later than December 1, 2001 relating to standards for TABC's approval of the form of a required liability insurance policy, the method for filing proof of insurance and obtaining TABC's approval, and verification by TABC of a license or permit holder's continued maintenance of the required insurance coverage. EFFECTIVE DATE September 1, 2001, and applies to a person who applies for or holds a permit or license for the sale of alcoholic beverages for on-premises consumption, including a permit or license that is held in conjunction with a food and beverage certificate, on or after January 1, 2002.