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.