HBA-LJP, JLV H.B. 2139 77(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 2139
By: Marchant
Financial Institutions
7/2/2001
Enrolled



BACKGROUND AND PURPOSE 

Under current law, a retail buyer and retail seller may agree in a motor
vehicle retail installment contract (contract) to include a separate charge
for a debt cancellation agreement which is insurance coverage that
reimburses the retail buyer with the amount of the difference between the
proceeds of the buyer's basic collision insurance policy on the motor
vehicle and the remaining amount owed on the vehicle (gap amount), if the
vehicle has been rendered a total loss.  House Bill 2139 allows a debt
cancellation agreement that forgives the gap amount and that is not
considered insurance or an insurance product to be included in a contract. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2139 amends the Finance Code to provide that a motor vehicle
retail installment contract (contract) may include as a separate charge an
amount for a debt cancellation agreement or waiver by which, if the motor
vehicle is rendered a total loss, the holder agrees to cancel indebtedness
on the contract in an amount computed by subtracting the proceeds of the
retail buyer's basic collision insurance policy on the motor vehicle from
the amount remaining unpaid under the contract.  In addition to other
liability incurred under the debt cancellation agreement or waiver, the
bill authorizes a holder to agree to waive any deductible amount the retail
buyer is required to pay under the policy.  The bill provides that a debt
cancellation agreement or waiver included in a contract is not insurance or
an insurance product or service and is not subject to regulation by the
commissioner of insurance or the Texas Department of Insurance. 

EFFECTIVE DATE

Vetoed.