By Burnam H.B. No. 955
77R1166 MXM-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to requiring certain parts for the repair of a motor
1-3 vehicle under an insurance policy.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 5.07-1, Insurance Code, is amended to
1-6 read as follows:
1-7 Art. 5.07-1. REPAIR OF MOTOR VEHICLES; DISCLOSURE OF
1-8 CONSUMER INFORMATION. (a) Except as provided by rules duly
1-9 adopted by the commissioner, under an auto insurance policy that is
1-10 delivered, issued for delivery, or renewed in this state a person
1-11 subject to this article [an insurer] may not, directly or
1-12 indirectly:
1-13 (1) specify on any damage report, estimate, or
1-14 appraisal[, limit its coverage under a policy covering damage to a
1-15 motor vehicle by specifying] the brand, type, kind, age, vendor,
1-16 supplier, or condition of the parts or products that may be used to
1-17 repair the motor vehicle;
1-18 (2) require the use of any part or product in the
1-19 repair of a motor vehicle;
1-20 (3) require any repair person or facility to specify
1-21 on any damage report, estimate, or appraisal the brand, type, kind,
1-22 age, vendor, supplier, or condition of a part or product that may
1-23 be used to repair the motor vehicle; or
1-24 (4) limit [by limiting] the beneficiary of the policy
2-1 from selecting a repair person or facility to repair damage to the
2-2 motor vehicle covered under the policy.
2-3 (b) In connection with the repair of damage to a motor
2-4 vehicle covered under an auto insurance policy, a person subject to
2-5 this article [an insurer, an employee of an insurer, an agent of an
2-6 insurer, a solicitor of insurance for an insurer, an insurance
2-7 adjuster, or an entity that employs an insurance adjuster] may not:
2-8 (1) solicit or accept a referral fee or gratuity in
2-9 exchange for referring a beneficiary or third-party claimant to a
2-10 repair person or facility to repair the damage;
2-11 (2) state or suggest, either orally or in writing, to
2-12 a beneficiary that a specific repair person or facility or a repair
2-13 person or facility identified on a preferred list compiled by an
2-14 insurer must be used by a beneficiary in order for the damage
2-15 repair or parts replacement to be covered by the policy; [or]
2-16 (3) restrict a beneficiary's or third-party claimant's
2-17 right to choose a repair person or facility by requiring the
2-18 beneficiary or third-party claimant to travel an unreasonable
2-19 distance to repair the damage;
2-20 (4) reduce the amount paid for repairs by applying
2-21 predesignated limits on the quantity of or charges for materials
2-22 that are used to repair a motor vehicle; or
2-23 (5) enter into an agreement with a repair person or
2-24 facility that:
2-25 (A) requires the repair person or facility to
2-26 use or penalizes the repair person or facility for the use of a
2-27 sheet metal part on a motor vehicle that is not made by the motor
3-1 vehicle manufacturer on a motor vehicle that is less than five
3-2 years old;
3-3 (B) requires the repair person or facility to
3-4 use or penalizes the repair person or facility for the use of any
3-5 collision repair procedure on a motor vehicle that does not restore
3-6 the motor vehicle to the motor vehicle's preaccident condition or
3-7 value; or
3-8 (C) requires the repair person or facility to
3-9 take any action that would result in reduction of motor vehicle
3-10 coverage for a motor vehicle under the insured's motor vehicle
3-11 insurance policy.
3-12 (c) A person subject to this article [A contract between an
3-13 insurer and a repair person or facility, including an agreement
3-14 under which the repair person or facility agrees to extend
3-15 discounts for parts or labor to the insurer in exchange for
3-16 referrals by the insurer, may not result in a reduction of coverage
3-17 under the insured's auto insurance policy.]
3-18 [(d) An insurer] may not directly or indirectly prohibit a
3-19 repair person or facility from providing a beneficiary of a policy
3-20 or third-party claimant with any information about the damage
3-21 repairs to the beneficiary's or the claimant's vehicle [that states
3-22 the description, manufacturer, or source of the parts used and the
3-23 amounts charged to the insurer for the parts and related labor].
3-24 (d) [(e)] At the time the vehicle is presented to a person
3-25 subject to this article [an insurer or an insurance adjuster or
3-26 other person in connection with a claim for damage repair], the
3-27 [insurer or insurance adjuster or other] person shall provide to
4-1 the beneficiary or third-party claimant notice of the provisions
4-2 of this article. The commissioner shall adopt a rule establishing
4-3 the method or methods insurers shall use to comply with the notice
4-4 provisions in this subsection.
4-5 (e) [(f)] Any beneficiary, third-party claimant, consumer
4-6 group, representative of a consumer, insurer, [or] repair person,
4-7 or repair facility may submit a written, documented complaint to
4-8 the department with respect to an alleged violation of this
4-9 article.
4-10 (f) [(g)] In the settlement of liability claims by a third
4-11 party against an insured for property damage claimed by the third
4-12 party, a person subject to this article [an insurer] may not
4-13 require the third-party claimant to have repairs made by a
4-14 particular repair person or facility.
4-15 (g) In the settlement of liability claims by a third party
4-16 against an insured for property damage claimed by the third party,
4-17 a person subject to this article may not:
4-18 (1) specify on a damage report, estimate, or appraisal
4-19 the [or to use a particular] brand, type, kind, age, vendor,
4-20 supplier, or condition of parts or products that may be used to
4-21 repair the motor vehicle;
4-22 (2) require the use of any specific parts in the
4-23 repair of a motor vehicle; or
4-24 (3) require any repair person or facility to specify
4-25 on any damage report, estimate, or appraisal the brand, type, kind,
4-26 age, vendor, supplier, or condition of a part or product that may
4-27 be used to repair the motor vehicle.
5-1 (h) The commissioner may exercise the rule-making authority
5-2 under Article 21.21-2 of this code with respect to any fraudulent
5-3 activity of any party under [to an agreement described by
5-4 Subsection (c) of] this article.
5-5 (i) The [Any] rules adopted by the commissioner to implement
5-6 this article shall include, but not be limited to, requirements
5-7 that:
5-8 (1) any limitation described in Subsection (a) of this
5-9 article [section] is clearly and prominently displayed on the face
5-10 of the policy or certificate in lieu of a policy; and
5-11 (2) the insured give written consent to such a
5-12 limitation, following both oral and written notification of any
5-13 limitation at the time the policy is purchased.
5-14 (j) The commissioner may not adopt a rule that allows an
5-15 insurer to specify a non-original equipment manufacturer part as
5-16 the basis for a damage report, estimate, or appraisal as a limit to
5-17 the cost of a repair to a part damaged in an accident in a case in
5-18 which:
5-19 (1) the beneficiary's or third-party claimant's
5-20 vehicle is still under the manufacturer's original warranty;
5-21 (2) the part lacks a warranty that is at least equal
5-22 to the warranty provided by the original equipment manufacturer for
5-23 the same part;
5-24 (3) the use of that part would reduce the market value
5-25 of the beneficiary's vehicle once repairs are completed to a
5-26 greater extent than would the use of an aftermarket part made by
5-27 the original equipment manufacturer;
6-1 (4) the use of that part would lessen the safety of
6-2 the vehicle in any respect; or
6-3 (5) a person subject to this article cannot
6-4 satisfactorily demonstrate the suitability for use of the part to
6-5 the commissioner.
6-6 (k) A person subject to this article who uses or references
6-7 survey data to directly or indirectly determine reasonable costs
6-8 for damage repairs or costs shall:
6-9 (1) ensure that the survey data was obtained by
6-10 statistically sound survey and research methods;
6-11 (2) publish a report that:
6-12 (A) contains the results of the survey;
6-13 (B) contains the complete and factual criteria
6-14 used for the survey; and
6-15 (C) divides the results of the survey by each
6-16 market surveyed;
6-17 (3) provide a copy of the report to the commissioner;
6-18 and
6-19 (4) upon request, provide a copy of the report to:
6-20 (A) a repair person or facility that
6-21 participated in the survey; and
6-22 (B) any person whose claim is decided or
6-23 influenced by the results of the survey.
6-24 (l) This article applies to:
6-25 (1) an insurer;
6-26 (2) an insurance holding company;
6-27 (3) an investment vehicle to which an insurer belongs;
7-1 (4) an affiliate corporation of an insurer;
7-2 (5) a person described by Subdivisions (1) through (4)
7-3 of this subsection who owns, controls, or has a significant
7-4 interest in the business of a person who is engaged in the
7-5 collision repair of motor vehicles;
7-6 (6) an employee or agent of a person described by
7-7 Subdivisions (1) through (4) of this subsection;
7-8 (7) a solicitor of insurance for a person described by
7-9 Subdivisions (1) through (4) of this subsection;
7-10 (8) an insurance adjuster or a person who employs an
7-11 insurance adjuster; or
7-12 (9) an appraiser.
7-13 (m) A person commits an unfair and deceptive act or practice
7-14 in the business of insurance if the person violates this article
7-15 and is subject to each penalty or other sanction provided by
7-16 Article 21.21 of this code for that violation.
7-17 (n) In this article:
7-18 (1) "Communicate" means to infer, imply, or state a
7-19 proposition or idea, either directly or indirectly, orally or in
7-20 writing.
7-21 (2) "Survey data" means data that:
7-22 (A) results from a survey, evaluation, or other
7-23 determination of market pricing for:
7-24 (i) labor, parts, or other items relating
7-25 to collision repair of a motor vehicle;
7-26 (ii) the quality or quantity of parts or
7-27 materials used for collision repair of a motor vehicle; or
8-1 (iii) the rates charged for collision
8-2 repair of a motor vehicle; and
8-3 (B) is used to determine or to influence,
8-4 directly or indirectly, prevailing market pricing or practice in
8-5 specific markets.
8-6 SECTION 2. This Act takes effect September 1, 2001.