By Burnam H.B. No. 956
77R1167 MXM-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to requiring certain facilities 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 an insurer
1-11 may not, directly or indirectly, limit its coverage under a policy
1-12 covering damage to a motor vehicle by specifying the brand, type,
1-13 kind, age, vendor, supplier, or condition of parts or products that
1-14 may be used to repair the vehicle.
1-15 (b) Under an auto insurance policy that is delivered, issued
1-16 for delivery, or renewed in this state, a person subject to this
1-17 article may not directly or indirectly limit [or by limiting] the
1-18 beneficiary of the policy or a third-party claimant from selecting
1-19 a repair person or facility to repair damage to the motor vehicle
1-20 covered under the policy.
1-21 (c) [(b)] In connection with the repair of damage to a motor
1-22 vehicle covered under an auto insurance policy, a person subject to
1-23 this article [an insurer, an employee of an insurer, an agent of an
1-24 insurer, a solicitor of insurance for an insurer, an insurance
2-1 adjuster, or an entity that employs an insurance adjuster] may not:
2-2 (1) solicit or accept a referral fee, [or] gratuity,
2-3 discount, or other form of compensation in exchange for referring a
2-4 beneficiary of a policy or third-party claimant to one or more [a]
2-5 repair persons [person] or facilities [facility] to repair the
2-6 damage;
2-7 (2) communicate [state or suggest, either orally or in
2-8 writing,] to a beneficiary of a policy or a third-party claimant
2-9 that, for the damage repair or parts replacement to be covered by
2-10 the policy, a beneficiary of a policy or a third-party claimant is
2-11 required to use one or more [a specific] repair persons [person] or
2-12 facilities;
2-13 (3) communicate to a beneficiary of a policy or a
2-14 third-party claimant that one or more [facility or a] repair
2-15 persons [person] or facilities [facility] identified on a
2-16 [preferred] list of repair persons and facilities maintained by or
2-17 compiled by a person subject to this article is preferred or
2-18 recommended [an insurer must be used by a beneficiary in order for
2-19 the damage repair or parts replacement to be covered by the
2-20 policy]; [or]
2-21 (4) [(3)] restrict a beneficiary's or third-party
2-22 claimant's right to choose a repair person or facility;
2-23 (5) require [by requiring] the beneficiary of a policy
2-24 or third-party claimant to travel an unreasonable distance to
2-25 repair the damage;
2-26 (6) threaten to remove the beneficiary's or claimant's
2-27 motor vehicle from a repair person or facility selected by the
3-1 beneficiary or claimant for any reason;
3-2 (7) communicate to a beneficiary of a policy or a
3-3 third-party claimant that repairs, including parts, materials, or
3-4 labor, are guaranteed by a person other than the repair person or
3-5 facility that performs the damage repairs;
3-6 (8) communicate to a beneficiary of a policy or a
3-7 third-party claimant that alternative direct billed transportation
3-8 coverage is allowed following the filing of a claim only if the
3-9 damaged motor vehicle is repaired by a repair person or facility
3-10 selected or recommended by the insurer or an agent of the insurer;
3-11 or
3-12 (9) provide any other incentive to induce the
3-13 beneficiary of a policy or a third-party claimant to waive the
3-14 right to select the repair person or facility to repair damage to
3-15 the beneficiary's or the claimant's motor vehicle.
3-16 [(c) A contract between an insurer and a repair person or
3-17 facility, including an agreement under which the repair person or
3-18 facility agrees to extend discounts for parts or labor to the
3-19 insurer in exchange for referrals by the insurer, may not result in
3-20 a reduction of coverage under the insured's auto insurance policy.]
3-21 (d) A person subject to this article [An insurer] may not
3-22 prohibit a repair person or facility from providing a beneficiary
3-23 or third-party claimant with information that states the
3-24 description, manufacturer, or source of the parts used and the
3-25 amounts charged to the insurer for the parts and related labor.
3-26 (e) At the time the vehicle is presented to a person subject
3-27 to this article [an insurer or an insurance adjuster or other
4-1 person in connection with a claim for damage repair], the [insurer
4-2 or insurance adjuster or other] person shall provide to the
4-3 beneficiary or third-party claimant notice of the provisions of
4-4 this article. The commissioner shall adopt a rule establishing the
4-5 method or methods insurers shall use to comply with the notice
4-6 provisions in this subsection.
4-7 (f) Any beneficiary, third-party claimant, consumer group,
4-8 representative of a consumer, insurer, [or] repair person, or
4-9 repair facility may submit a written, documented complaint to the
4-10 department with respect to an alleged violation of this article.
4-11 (g) In the settlement of liability claims by a third party
4-12 against an insured for property damage claimed by the third party,
4-13 a person subject to this article [an insurer] may not communicate
4-14 to a third-party claimant that:
4-15 (1) in order for repairs to be covered, the claimant
4-16 is required to use:
4-17 (A) a specific [require the third-party claimant
4-18 to have repairs made by a particular] repair person or facility; or
4-19 (B) [to use] a particular brand, type, kind,
4-20 age, vendor, supplier, or condition of parts or products; or
4-21 (2) the person prefers or recommends that the claimant
4-22 use a repair person or facility identified on a list of repair
4-23 persons and facilities maintained by or compiled by a person
4-24 subject to this article.
4-25 (h) The commissioner may exercise the rule-making authority
4-26 under Article 21.21-2 of this code with respect to any fraudulent
4-27 activity of any party under [to an agreement described by
5-1 Subsection (c) of] this article.
5-2 (i) The [Any] rules adopted by the commissioner to implement
5-3 this article shall include, but not be limited to, requirements
5-4 that:
5-5 (1) any limitation described in Subsection (a) of this
5-6 article [section] is clearly and prominently displayed on the face
5-7 of the policy or certificate in lieu of a policy; and
5-8 (2) the insured give written consent to such a
5-9 limitation, following both oral and written notification of any
5-10 limitation at the time the policy is purchased.
5-11 (j) This article applies to:
5-12 (1) an insurer;
5-13 (2) an insurance holding company;
5-14 (3) an investment vehicle to which an insurer belongs;
5-15 (4) an affiliate corporation of an insurer;
5-16 (5) a person described by Subdivisions (1) through (4)
5-17 of this subsection who owns, controls, or has a significant
5-18 interest in the business of a person who is engaged in the
5-19 collision repair of motor vehicles;
5-20 (6) an employee or agent of a person described by
5-21 Subdivisions (1) through (4) of this subsection;
5-22 (7) a solicitor of insurance for a person described by
5-23 Subdivisions (1) through (4) of this subsection;
5-24 (8) an insurance adjuster or a person who employs an
5-25 insurance adjuster; or
5-26 (9) an appraiser.
5-27 (k) A person commits an unfair and deceptive act or practice
6-1 in the business of insurance if the person violates this article
6-2 and is subject to each penalty or other sanction provided by
6-3 Article 21.21 of this code for that violation.
6-4 (l) In this article, "communicate" means to infer, imply, or
6-5 state a proposition or idea, either directly or indirectly, orally
6-6 or in writing.
6-7 SECTION 2. This Act takes effect September 1, 2001.
6-8 COMMITTEE AMENDMENT NO. 1
6-9 Amend H.B. 956 as follows:
6-10 1. On page 2, lines 17-18, strike "or recommended".
6-11 2. On page 4, line 21, strike "or recommends".
6-12 Lewis of Tarrant