SRC-TBR C.S.S.B. 1329 77(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 1329
CSSB1329(aja1)By: Bivins
Business & Commerce
4/4/2001
Committee Report (Substituted)


DIGEST AND PURPOSE 

Currently, approximately 17 to 26 percent of Texas drivers are uninsured.
C.S.S.B. 1329 provides methods to enhance enforcement of the state's laws
requiring motorists to possess current liability insurance; provides access
to short-term auto liability insurance for persons entering Texas from
Mexico; requires standard appearance and form for proof of insurance cards;
and permits the insured to waive coverage for noneconomic and exemplary
damages. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Texas Department of
Transportation in Article 1 (Section 601.502, Transportation Code) and to
the commissioner of insurance in Article 2 (Section 2.01, Article 5.01C,
Insurance Code), Article 3 (Section 3.01, Article 5.06-1, Insurance Code)
and Article 4 (Section 4.01, Article 5.06-7, Insurance Code, and Section
4.02) of this bill. 

SECTION BY SECTION ANALYSIS

  ARTICLE 1.  FINANCIAL RESPONSIBILITY REQUIREMENTS

SECTION 1.01.  Amends Chapter 601, Transportation Code, by adding
Subchapter N as follows: 

SUBCHAPTER N.  VERIFICATION OF COMPLIANCE WITH AND ENFORCEMENT
OF FINANCIAL RESPONSIBILITY REQUIREMENTS

 Sec. 601.501.  DEFINITIONS.  Defines "department" and "verification date."

Sec. 601.502.  VERIFICATION OF ESTABLISHMENT OF FINANCIAL RESPONSIBILITY
THROUGH RANDOM SAMPLING.  (a)  Requires the Texas Department of
Transportation (department) or an agent of the department to randomly
select samples of registrations of motor vehicles subject to this chapter,
or samples of owners of motor vehicles subject to this chapter, to verify
whether the owner has established financial responsibility in accordance
with Section 601.051(a).  Requires the Department of Public Safety to
provide the department access to any information that will allow the
department to comply with this subsection. 

(b)  Prohibits a sample selected under this section from being classified
on the basis of the owner's race, color, religion, sex, national origin,
age, marital status, physical or mental disability, economic status, or
geographic location. 

(c)  Authorizes the department, in addition to the general random sampling
of motor vehicle registrations, to randomly select other persons who own a
registered motor vehicle to verify that the person has established
financial responsibility, including certain specified persons. 

(d)  Requires the department to send to the owner of a randomly selected
motor  vehicle, or to a randomly selected motor vehicle owner, a request
for information about the motor vehicle and the owner's method of
establishing financial responsibility. Requires the request to require the
owner to state whether the owner has, as of the verification date,
established financial responsibility in accordance with Section 601.051(a). 

(e)  Requires the department by rule to establish the frequency of sample
selection and prescribe the methods employed for the random selection of
samples and the procedures necessary for implementation of the verification
process, including the method of sending the verification request, which
may include certified mail, return receipt requested, the form for
verification of financial responsibility, and  information to be requested
in the prescribed form. 

(f)  Authorizes the department to require the information provided by the
owner to include a statement by the owner that the owner had, as of the
verification date, established financial responsibility by certain means. 

(g)  Requires the owner to whom the notice is sent to furnish the requested
information, that not later than the 30th day after the verification date,
to the department in the form prescribed by the department, accompanied by
the owner's signed affirmation that the information is true and correct. 

(h)  Provides that an owner whose response indicates that the owner had not
established financial responsibility in accordance with Section 601.051(a),
or who fails to respond to the request, is subject to suspension of the
owner's motor vehicle registration in the manner provided by Section
601.505. 

(i)  Authorizes the department, if the owner responds to the request for
information by asserting that the owner had, as of the verification date,
established financial responsibility in accordance with a method authorized
by Section 601.051(a), to conduct a verification investigation as provided
by Section 601.503. 

Sec. 601.503.  VERIFICATION INVESTIGATION.  (a)  Authorizes the department,
in order to verify a response received from an owner under Section 601.502,
to furnish necessary information to the insurer, surety, or officer named
in the response.  Requires that not later than the 30th day after the date
of receipt of the information, the insurer, surety, or officer inform the
department whether, as of the verification date, financial responsibility
had been established for the affected motor vehicle in accordance with
Section 601.051(a).  Provides that an insurer who does not comply with this
subsection is subject to an administrative penalty under Chapter 84,
Insurance Code. 

(b)  Requires the department, if the response received from an owner under
Section 601.502 states that financial responsibility has been established
through self-insurance, to examine the department's records to verify that
a certificate of self-insurance has been issued in accordance with Section
601.124. 

Sec. 601.504.  WARNING NOTICE.  Requires the department, if an owner
responds under Section 601.502 that the owner has not established financial
responsibility or the owner fails to respond in a timely manner, or if the
department otherwise determines that an owner has registered or maintained
the registration of a motor vehicle without establishing financial
responsibility in accordance with Section 601.051(a), to issue a warning
notice by certified mail to the owner that informs the owner that the owner
is not in compliance with Section 601.051(a) and that the owner's motor
vehicle registration will be suspended on the 45th day after the date on
which the warning notice is mailed unless the owner, not later than the
30th day after the date of the mailing of the warning notice, establishes
financial responsibility in the  manner prescribed by Section 601.505(e) or
mails to the department a written request for a hearing. 

Sec. 601.505.  SUSPENSION; REINSTATEMENT; EXCEPTION. (a)  Requires the
department, unless the owner requests a hearing under Subsection (b), to
suspend the registration of an owner to whom a warning notice is issued
under Section 601.504 on the 45th day after the date of the mailing of the
notice. 

(b)  Authorizes an owner who receives a warning notice under Section
601.504 to request a hearing on or before the 30th day after the date of
the mailing of the notice. Requires the department to adopt rules governing
a hearing under this subsection. Requires the department to suspend the
registration of an owner who requests a hearing if on or before the date of
the hearing the owner does not present proof of financial responsibility
that complies with Section 601.051(a) and was in effect on the verification
date of the request for information. 

(c)  Requires the department, if the department suspends an owner's motor
vehicle registration under this section, to notify the owner of the
suspension by certified mail. 

(d)  Requires the department, for a first violation, to terminate the
suspension on payment by the owner of a $100 reinstatement fee and
submission of proof of financial responsibility in the manner prescribed by
the department.  Requires the department, for a subsequent violation within
the four years that follow the first violation or for a violation of
Section 601.507, to terminate the suspension on the 120th day after the
effective date of the suspension on payment by the owner of a $200
reinstatement fee and submission of proof of financial responsibility in a
manner prescribed by the department. 

(e)  Requires the department, for a first violation, to defer the
suspension if the owner submits to the department, not later than the 30th
day after the date of the mailing of the warning notice under Section
601.504, proof of financial responsibility evidenced by a motor vehicle
insurance policy that complies with Subchapter D, the premiums for which
have been prepaid for a term of at least six months.  Requires the owner,
on the earlier of the 180th day after the date of the mailing of the
warning notice or the expiration date of the insurance policy described by
this subsection, to submit to the department evidence of renewal of the
motor vehicle insurance policy, the premiums for which have been prepaid
for a term of at least six months.  Requires the department, if the owner
fails to submit the required evidence of renewal, to impose the suspension
and reinstatement fee. 

(f)  Authorizes the department, notwithstanding any other provision of this
subchapter, to reinstate the suspended motor vehicle registration of an
owner who received a request for information under Section 601.502, and
presents proof of financial responsibility that complies with Section
601.051(a) and  was in effect on the verification date of the request for
information. 

(g)  Prohibits an owner whose vehicle registration has been suspended under
this section from transferring the registration unless the transfer is
authorized under Subsection (h) or registering in another name the motor
vehicle to which the registration applies. 

(h)  Authorizes the department to authorize the transfer of vehicle
registration if the department is satisfied that the transfer is proposed
in good faith and not to defeat the purposes of this subchapter. 

 (i)  Provides that Subsection (g) does not affect the rights of a
conditional vendor or lessor of, or a person with a security interest in, a
motor vehicle owned by a person whose vehicle registration has been
suspended under this section if the vendor, lessor, or secured party is not
the registered owner of the vehicle. 

Sec. 601.506.  SUBMISSION OF FALSE PROOF.  Requires the department, if the
department determines that the proof of financial responsibility submitted
by a motor vehicle owner under Section 601.502 is false, to suspend the
owner's motor vehicle registration. Requires the department to terminate
the suspension on or after the 180th day after the effective date of the
suspension on payment by the owner of a $200 reinstatement fee and
submission of proof of financial responsibility as prescribed by the
department. 

Sec. 601.507.  OPERATION OF MOTOR VEHICLE WHILE REGISTRATION SUSPENDED FOR
FAILURE TO ESTABLISH FINANCIAL RESPONSIBILITY. (a) Provides that a person
who operates a motor vehicle while the registration of the motor vehicle is
suspended under this subchapter commits an offense. 

(b)  Provides that an offense under this section is punishable by a fine of
not less than $1,000 or more than $2,000. 

(c)  Provides that it is a defense to prosecution under this section that
the person charged with an offense produces in court satisfactory evidence
that, at the time of the alleged offense, the owner or operator had
established financial responsibility in accordance with Section 601.051(a). 

Sec. 601.508.  DISPLAY OF FALSE PROOF OF FINANCIAL RESPONSIBILITY; CRIMINAL
PENALTY. (a)  Provides that a person commits an offense if the person
provides evidence of financial responsibility to a peace officer, as
defined by Article 2.12, Code of Criminal Procedure, court, or officer of
the court knowing that financial responsibility has not been established as
required under Section 601.051(a) or that the evidence of financial
responsibility is illegally altered, counterfeit, or otherwise invalid. 

(b)  Requires the peace officer, if a peace officer issues a citation to a
motor vehicle operator for displaying invalid evidence of financial
responsibility, to  confiscate the invalid evidence of financial
responsibility for presentation in court. 

(c)  Provides that an offense under this section is punishable by a fine of
not less than $500 or more than $750. 
 
Sec. 601.509.  DISPOSITION OF FEES.  Requires the department, from the
reinstatement fees collected under this subchapter, to recover its costs in
implementing and administering the verification program under this
subchapter.  Requires the department to deposit any amounts collected that
exceed the administrative costs of the department under this subchapter in
the general revenue fund. 

Sec. 601.511.  USE OF AGENTS BY DEPARTMENT.  Authorizes the department to
submit requests for proposals for contracts with private vendors to perform
the random sampling and the verification investigations required under this
subchapter as an agent of the department.  Authorizes the department to
enter into contracts as necessary to implement this section. 

SECTION 1.02.  Amends Section 601.051, Transportation Code, as follows: (a)
Prohibits a person from operating, registering, or maintaining registration
of a motor vehicle in this state unless financial responsibility is
established for that vehicle through certain means. 

 (b)  Prohibits an owner of a motor vehicle from permitting another person
to operate the motor vehicle in this state unless financial responsibility
is established for that vehicle and evidenced through a method described by
Subsection (a). 

SECTION 1.03.  Amends Section 601.191, Transportation Code, as follows:

Sec. 601.191.  New heading: OPERATION OF MOTOR VEHICLE IN VIOLATION OF
FINANCIAL RESPONSIBILITY REQUIREMENTS. (a)  Provides that a person commits
an offense if the person operates a motor vehicle or permits another person
to operate a motor vehicle in violation of Section 601.051. 

(b)  Provides that except as provided by Subsection (d), an offense under
this section is punishable by a fine of not less than $500, rather than
$175 or more than $1,000, rather than $350.  Deletes language regarding
Subsection (c) and a misdemeanor. 

(c)  Provides that it is a defense to prosecution under this section that
the person charged with an offense produces in court satisfactory evidence
that, at the time of the alleged offense, the owner or operator had
established financial responsibility in accordance with Section 601.051(a).
Deletes language regarding a previous conviction. 

(d)  Makes a conforming change.

SECTION 1.04.  Amends Section 601.195, Transportation Code, by adding
Subsection (c), as follows: 

(c)  Provides that it is a defense to prosecution under this section that
the person charged with an offense produces in court satisfactory evidence
that, at the time of the alleged offense, the owner or operator had
established financial responsibility in accordance with Section 601.051(a). 

SECTION 1.05.  Requires the department in performing sample selection under
Section 601.502, Transportation Code, as added by this Act, to ensure that
at least 500,000 samples are selected on or before September 1, 2003. 

SECTION 1.06. (a)  Requires the department, in cooperation with the Texas
Department of Insurance and the Department of Public Safety of the State of
Texas, to conduct an evaluation of the implementation and operation of the
verification program adopted under Subchapter N, Chapter 601,
Transportation Code, as added by this Act, and of the effectiveness of the
verification program in increasing compliance with the  financial
responsibility requirements established under Subchapter C, Chapter 601,
Transportation Code.  Requires the evaluation to include certain
information. 

(b)  Requires the department to enter into contracts, memoranda of
understanding, or interagency agreements as necessary to implement this
section. 

(c)  Requires the department to report the results of the evaluation
conducted under this section to the 81st Legislature not later than
February 1, 2009.  Requires the department to provide written copies of the
report to the governor, the lieutenant governor, and the speaker of the
house of representatives. 

ARTICLE 2.  SHORT-TERM MOTOR VEHICLE
LIABILITY INSURANCE FOR CERTAIN MOTORISTS

SECTION 2.01.  Amends Chapter 5A, Insurance Code, by adding Article 5.01C,
as follows: 

 Art. 5.01C.  SHORT-TERM LIABILITY INSURANCE FOR NON-TEXAS RESIDENT
MOTORISTS VISITING THIS STATE 

Sec. 1.  DEFINITIONS.  Defines "insurer," "motor vehicle," and "short-term
liability insurance policy." 

Sec. 2.  RULES. (a)  Authorizes the commissioner of insurance
(commissioner) by rule to establish a program to provide for the sale of
short-term liability insurance policies to nonTexas resident motorists
visiting this state. 

(b)  Authorizes the commissioner to negotiate an agreement with any insurer
under which the insurer will sell policies described by Subsection (a) of
this section. 

Sec. 3.  LICENSE REQUIRED.  Requires that a person representing an insurer
in selling short-term liability insurance policies under this article to be
licensed under Chapter 21A of this code. 

Sec. 4.  FORMS.  Requires an insurer selling short-term liability insurance
policies under this article to use the policy forms adopted by the
commissioner under Article 5.06 of this code unless the insurer is exempt
from using those forms. 

ARTICLE 3.  UNINSURED AND UNDERINSURED MOTORIST COVERAGE

SECTION 3.01.  Amends Article 5.06-1, Insurance Code, to provide that no
automobile liability insurance, including insurance issued through the
Texas Automobile Insurance Plan Association, covering liability arising out
of the ownership, maintenance, or use of any motor vehicle shall be
delivered or issued for delivery in this state unless coverage is provided
therein or supplemental thereto, under provisions prescribed by the
commissioner, rather than board, for the protection of persons insured
thereunder who are legally entitled to recover damages from owners or
operators of uninsured or underinsured motor vehicles because of bodily
injury, sickness, or disease, including death, or property damage resulting
therefrom.  Makes a nonsubstantive change. 

(b) Defines, for the purpose of these coverages, "exemplary damages,"
"noneconomic damages," "uninsured motor vehicle," and "underinsured motor
vehicle." 

(c)  Authorizes the commissioner, in the policy forms adopted under Article
5.06 of this code, to define "uninsured motor vehicle" to exclude certain
motor vehicles whose operators are in fact uninsured. 

(e)  Requires that except as provided by Subsection (f) of this article,
the limits of liability for bodily injury, sickness, or disease, including
death, shall be offered to the insured in amounts not less than those
prescribed in Chapter 601, Transportation Code, rather than the Texas Motor
Vehicle Safety Responsibility Act,  and such higher available limits as may
be desired by the insured, but not greater than the limits of liability
specified in the bodily injury liability provisions of the insured's
policy. 

(f)  Provides that the named insured may elect to waive coverage under this
article for recovery of noneconomic and exemplary damages resulting from
bodily injury, sickness, or disease, including death.  Provides that if an
insured elects to waive coverage under this subsection, Subsection (e) of
this article does not apply to the limits of liability that are applicable
to the coverage provided under the policy issued to the named insured for
damages resulting from bodily injury, sickness, or disease, including
death.  Authorizes the commissioner by rule to adopt minimum limits of
liability applicable to those damages.  Provides that waiver of coverage
under this subsection does not affect the insured's right to bring an
action for noneconomic and exemplary damages against a responsible party. 
 
 (g)  Makes a conforming change.

(i)  Provides that if the named insured has waived coverage under
Subsection (f) of this article for recovery of noneconomic and exemplary
damages, the amount paid to the insured may not include any amount
attributable to noneconomic and exemplary damages.  Makes a nonsubstantive
change. 

(j)  Makes conforming and nonsubstantive changes.

ARTICLE 4.  PROOF OF INSURANCE CARDS

SECTION 4.01.  Amends Chapter 5A, Insurance Code, by adding Article 5.06-7,
as follows: 

Art. 5.06-7.  FORM AND APPEARANCE OF PROOF OF MOTOR VEHICLE LIABILITY
INSURANCE. (a)  Requires the commissioner to prescribe by rule a standard
appearance and form for a card issued by an insurer as proof of motor
vehicle liability insurance prescribed by Section 601.081, Transportation
Code. 

 (b)  Requires the commissioner, in prescribing the appearance of a proof
of motor vehicle liability insurance card under Subsection (a) of this
article, to require an appearance that is difficult to alter, duplicate, or
counterfeit and not cost-prohibitive for consumers. 

(c)  Requires a card issued as proof of motor vehicle liability insurance
issued in this state by an insurer to conform to the form and appearance
prescribed under Subsection (a) of this article. 

SECTION 4.02. (a)  Requires the commissioner of insurance to prescribe the
standard appearance and form of proof of motor vehicle liability insurance
cards as required by Article 5.06-7, Insurance Code, as added by this Act,
not later than December 1, 2001. 

(b)  Requires that a card issued by an insurer as proof of motor vehicle
liability insurance that is issued on or after January 1, 2002, to conform
with rules established by the commissioner of insurance under Article
5.06-7, Insurance Code, as added by this Act.  Provides that proof of motor
vehicle liability insurance that is issued before January 1, 2002, is
governed by the law as it existed immediately before the effective date of
this Act, and that law is continued in effect for that purpose. 

ARTICLE 5.  CONDUCT THAT CONSTITUTES THE BUSINESS OF INSURANCE

SECTION 5.01.  Amends Section 101.051(b), Insurance Code, to delete
language regarding a person domiciled in this state and a risk located in
this state. 

ARTICLE 6.  REPEALER

SECTION 6.01.  Repealer: Section 601.193 (Defense: Financial Responsibility
in Effect at Time of Alleged Offense), Transportation Code. 

ARTICLE 7.  TRANSITION; EFFECTIVE DATE

SECTION 7.01.  Provides that the change in law made by this Act to Chapter
601, Transportation Code, applies only to punishment for an offense
committed on or after the effective date of this Act. Provides that for
purposes of this section, an offense is committed before the effective date
of this Act if any element of the offense occurs before that date. 

 SECTION 7.02.  Provides that Article 5.06-1, Insurance Code, as amended by
this Act, applies only to a motor vehicle liability insurance policy that
is delivered, issued for delivery, or renewed on or after January 1, 2002.
Provides that a policy that is delivered, issued for delivery, or renewed
before January 1, 2002, is governed by the law as it existed immediately
before the effective date of this Act, and that law is continued in effect
for that purpose. 

SECTION 7.03.  Effective date: September 1, 2001, except as provided by
Subsection (b) of this section.  Provides that Article 1 of this Act takes
effect January 1, 2003. 


SUMMARY OF COMMITTEE CHANGES

SECTION 1.01.  Amends As Filed S.B. 1329 to include a requirement that the
Department of Public Safety provide the Texas Department of Transportation
access to any information that will allow the department to comply with
this subsection.  Provides that an insurer who does not comply with this
subsection is subject to an administrative penalty under Chapter 84,
Insurance Code.  Authorizes an owner who receives a warning notice under
Section 601.504 to request a hearing on or before the 30th day after the
date of the mailing of the notice.  Requires the department to adopt rules
governing a hearing under this subsection.  Requires the department to
suspend the registration of an owner who requests a hearing if on or before
the date of the hearing the owner does not present proof of financial
responsibility that complies with Section 601.051(a) and was in effect on
the verification date of the request for information.  Requires the
department, for a first violation, to terminate the suspension on payment
by the owner of a $100 reinstatement fee and submission of proof of
financial responsibility in the manner prescribed by the department.
Requires the department, for a subsequent violation within the four years
that follow the first violation or for a violation of Section 601.507, to
terminate the suspension on the 120th day after the effective date of the
suspension on payment by the owner of a $200 reinstatement fee and
submission of proof of financial responsibility in a manner prescribed by
the department.  Makes conforming and nonsubstantive changes. 

SECTION 6.01.  Amends As Filed S.B. 1329 by not repealing Sections 601.053,
601(H), and 601(I), Transportation Code.