By Burnam H.B. No. 187
77R1153 PB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to required procedures for certain third-party claims
1-3 under motor vehicle liability insurance policies; providing an
1-4 administrative penalty.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subchapter E, Chapter 21, Insurance Code, is
1-7 amended by adding Article 21.56A to read as follows:
1-8 Art. 21.56A. THIRD-PARTY CLAIMS PROCEDURES UNDER MOTOR
1-9 VEHICLE INSURANCE COVERAGE
1-10 Sec. 1. DEFINITIONS. In this article:
1-11 (1) "Claimant" means a third-party claimant under a
1-12 motor vehicle insurance policy.
1-13 (2) "Insurer" means a person who delivers, issues for
1-14 delivery, or renews a motor vehicle liability insurance policy in
1-15 this state. The term includes an interinsurance exchange, a mutual
1-16 insurance company, a reciprocal exchange, an association, or a
1-17 Lloyd's plan.
1-18 (3) "Motor vehicle" means a private passenger or
1-19 commercial motor vehicle, including a motorcycle.
1-20 Sec. 2. APPLICATION. This article applies only to a
1-21 third-party claim for property damage to the claimant's motor
1-22 vehicle.
1-23 Sec. 3. INSURER RESPONSE TO NOTICE OF CLAIM. (a) On
1-24 notification by a claimant to an insurer of a claim against a
2-1 policyholder of the insurer for property damage to the claimant's
2-2 motor vehicle, the insurer shall respond to the claimant as
2-3 provided by this article. Except as provided by Subsection (c) of
2-4 this section, not later than the 15th business day after the date
2-5 on which the insurer is notified of the claim by the claimant and
2-6 receives all items, statements, and forms required by the insurer,
2-7 the insurer must respond to the claimant in writing and must state:
2-8 (1) whether the insurer admits or denies liability for
2-9 the claim or why the insurer cannot admit or deny liability for the
2-10 claim; and
2-11 (2) if the insurer does admit liability for the claim,
2-12 the percentage share of liability that the insurer does admit.
2-13 (b) If the insurer denies all or a percentage of liability
2-14 for the claim, the insurer shall state in writing the factual bases
2-15 under which it denies liability.
2-16 (c) On notification in writing to a claimant of the specific
2-17 reason for the delay, an insurer may extend the 15-day period
2-18 imposed under Subsection (a) of this section for an additional
2-19 period not to exceed 45 days.
2-20 Sec. 4. APPRAISAL OF PROPERTY DAMAGE. (a) The insurer shall
2-21 provide for an appraisal of the property damage to the claimant's
2-22 motor vehicle. Unless the claimant requests a delay in writing,
2-23 the appraisal required under this subsection must be completed not
2-24 later than the seventh business day after the applicable date under
2-25 Section 3(a) of this article.
2-26 (b) An appraisal provided under this section must specify
2-27 the amount necessary to repair the property damage to the vehicle.
3-1 Sec. 5. STATEMENT OF RIGHTS. (a) On receipt of
3-2 notification of a claim by a claimant, the insurer shall send the
3-3 claimant a written statement of the claimant's rights under this
3-4 article. The insurer must send the statement not later than the
3-5 seventh business day after the date on which the insurer is
3-6 notified by the claimant.
3-7 (b) The commissioner by rule shall specify the form of the
3-8 statement required under this section.
3-9 Sec. 6. VIOLATION; ADMINISTRATIVE PENALTY. (a) An insurer
3-10 commits a violation of this code if the insurer fails or refuses to
3-11 comply with the requirements imposed under this article.
3-12 (b) The commissioner may impose an administrative penalty
3-13 under Chapter 84 for a violation under this section.
3-14 Sec. 7. CIVIL ACTION; DAMAGES. (a) A claimant may bring an
3-15 action for a violation of this article if the insurer:
3-16 (1) fails to comply with the requirements imposed
3-17 under Section 3 or 4 of this article;
3-18 (2) denies all or a percentage of liability for the
3-19 claim without a reasonable basis for the denial of liability; or
3-20 (3) appraises the property damage to the motor vehicle
3-21 in an amount insufficient to repair that damage without a
3-22 reasonable basis for the amount of the appraisal.
3-23 (b) A claimant who prevails in a cause of action brought
3-24 under this section is entitled to recover:
3-25 (1) the amount necessary to repair the property damage
3-26 to the motor vehicle without regard to whether the insurer would
3-27 otherwise be obligated to pay the claim;
4-1 (2) a penalty equal to 12 percent of the amount
4-2 recovered under Subdivision (1) of this subsection; and
4-3 (3) reasonable attorney's fees.
4-4 Sec. 8. EFFECT ON FIDUCIARY DUTIES. This article does not
4-5 create new fiduciary relationships or duties or affect fiduciary
4-6 relationships or duties in effect on September 1, 2001.
4-7 SECTION 2. Article 21.56A, Insurance Code, as added by this
4-8 Act, applies only to a claim brought under a motor vehicle
4-9 insurance policy that is delivered, issued for delivery, or renewed
4-10 on or after January 1, 2002. A claim brought under a policy that
4-11 is delivered, issued for delivery, or renewed before January 1,
4-12 2002, is governed by the law as it existed immediately before the
4-13 effective date of this Act, and that law is continued in effect for
4-14 this purpose.
4-15 SECTION 3. This Act takes effect September 1, 2001.