By: Bivins, Lucio, Nelson S.B. No. 1329
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of insurance and to requirements
1-3 regarding motor vehicle insurance; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 ARTICLE 1. FINANCIAL RESPONSIBILITY REQUIREMENTS
1-6 SECTION 1.01. Chapter 601, Transportation Code, is amended
1-7 by adding Subchapter N to read as follows:
1-8 SUBCHAPTER N. VERIFICATION OF COMPLIANCE WITH AND ENFORCEMENT
1-9 OF FINANCIAL RESPONSIBILITY REQUIREMENTS
1-10 Sec. 601.501. DEFINITIONS. In this subchapter:
1-11 (1) "Department" means the Texas Department of
1-12 Transportation.
1-13 (2) "Verification date" means the date on which the
1-14 department mails a written request to an owner of a motor vehicle
1-15 requiring the owner to state whether the owner has established
1-16 financial responsibility in accordance with Section 601.051(a).
1-17 Sec. 601.502. VERIFICATION OF ESTABLISHMENT OF FINANCIAL
1-18 RESPONSIBILITY THROUGH RANDOM SAMPLING. (a) The department or an
1-19 agent of the department shall randomly select samples of
1-20 registrations of motor vehicles subject to this chapter, or samples
1-21 of owners of motor vehicles subject to this chapter, to verify
1-22 whether the owner has established financial responsibility in
1-23 accordance with Section 601.051(a). The Department of Public
1-24 Safety shall provide the department access to any information that
1-25 will allow the department to comply with this subsection.
2-1 (b) A sample selected under this section may not be
2-2 classified on the basis of the owner's race, color, religion, sex,
2-3 national origin, age, marital status, physical or mental
2-4 disability, economic status, or geographic location.
2-5 (c) In addition to the general random sampling of motor
2-6 vehicle registrations, the department may randomly select other
2-7 persons who own a registered motor vehicle to verify that the
2-8 person has established financial responsibility, including:
2-9 (1) a person who, during the four years preceding the
2-10 date of selection, has been convicted of a violation of Section
2-11 601.191, 601.195, 601.196, as it existed before repeal, or 601.508,
2-12 including a violation that occurred while the person was operating
2-13 a motor vehicle owned by another person;
2-14 (2) a person whose motor vehicle registration has been
2-15 the subject of a deferred suspension under Section 601.505(a)
2-16 during the preceding four years; or
2-17 (3) a person whose driver's license or motor vehicle
2-18 registration has been suspended during the preceding four years.
2-19 (d) The department shall send to the owner of a randomly
2-20 selected motor vehicle, or to a randomly selected motor vehicle
2-21 owner, a request for information about the motor vehicle and the
2-22 owner's method of establishing financial responsibility. The
2-23 request must require the owner to state whether the owner has, as
2-24 of the verification date, established financial responsibility in
2-25 accordance with Section 601.051(a).
2-26 (e) The department:
3-1 (1) shall adopt rules as necessary to implement this
3-2 chapter; and
3-3 (2) by rule shall:
3-4 (A) establish the frequency of sample selection;
3-5 and
3-6 (B) prescribe:
3-7 (i) the methods employed for the random
3-8 selection of samples and the procedures necessary for
3-9 implementation of the verification process, including the method of
3-10 sending the verification request, which may include certified mail,
3-11 return receipt requested;
3-12 (ii) the form for verification of
3-13 financial responsibility; and
3-14 (iii) the information to be requested in
3-15 the prescribed form.
3-16 (f) The department may require the information provided by
3-17 the owner to include a statement by the owner that the owner had,
3-18 as of the verification date, established financial responsibility:
3-19 (1) through liability insurance under Subchapter D,
3-20 including:
3-21 (A) the name and address of the insurer;
3-22 (B) the number of the insurance policy; and
3-23 (C) the expiration date of the insurance
3-24 coverage;
3-25 (2) by filing a surety bond with the Department of
3-26 Public Safety under Section 601.121, including:
4-1 (A) the name and address of the company issuing
4-2 the bond;
4-3 (B) the identification number of the bond; and
4-4 (C) the expiration date of the bond;
4-5 (3) by depositing cash or securities with the
4-6 comptroller under Section 601.122, including a copy of the
4-7 certificate issued by the comptroller showing compliance;
4-8 (4) by depositing cash or a cashier's check with the
4-9 county judge of the county in which the motor vehicle is registered
4-10 under Section 601.123, including a copy of the certificate issued
4-11 by the county judge showing compliance; or
4-12 (5) through self-insurance under Section 601.124,
4-13 including a copy of the certificate of self-insurance issued by the
4-14 Department of Public Safety.
4-15 (g) Not later than the 30th day after the verification date,
4-16 the owner to whom the notice is sent shall furnish the requested
4-17 information to the department in the form prescribed by the
4-18 department, accompanied by the owner's signed affirmation that the
4-19 information is true and correct.
4-20 (h) An owner whose response indicates that the owner had not
4-21 established financial responsibility in accordance with Section
4-22 601.051(a), or who fails to respond to the request, is subject to
4-23 suspension of the owner's motor vehicle registration in the manner
4-24 provided by Section 601.505.
4-25 (i) If the owner responds to the request for information by
4-26 asserting that the owner had, as of the verification date,
5-1 established financial responsibility in accordance with a method
5-2 authorized by Section 601.051(a), the department may conduct a
5-3 verification investigation as provided by Section 601.503.
5-4 Sec. 601.503. VERIFICATION INVESTIGATION. (a) To verify a
5-5 response received from an owner under Section 601.502, the
5-6 department or an agent of the department may furnish necessary
5-7 information to the insurer, surety, or officer named in the
5-8 response. Not later than the 30th day after the date of receipt of
5-9 the information, the insurer, surety, or officer shall inform the
5-10 department whether, as of the verification date, financial
5-11 responsibility had been established for the affected motor vehicle
5-12 in accordance with Section 601.051(a). An insurer who does not
5-13 comply with this subsection is subject to an administrative penalty
5-14 under Chapter 84, Insurance Code.
5-15 (b) If the response received from an owner under Section
5-16 601.502 states that financial responsibility has been established
5-17 through self-insurance, the department shall examine the records of
5-18 the Department of Public Safety to verify that a certificate of
5-19 self-insurance has been issued in accordance with Section 601.124.
5-20 Sec. 601.504. WARNING NOTICE. If an owner responds under
5-21 Section 601.502 that the owner has not established financial
5-22 responsibility or the owner fails to respond in a timely manner, or
5-23 if the department otherwise determines that an owner has registered
5-24 or maintained the registration of a motor vehicle without
5-25 establishing financial responsibility in accordance with Section
5-26 601.051(a), the department by certified mail shall issue a warning
6-1 notice to the owner that informs the owner that the owner is not in
6-2 compliance with Section 601.051(a) and that the owner's motor
6-3 vehicle registration will be suspended on the 45th day after the
6-4 date on which the warning notice is mailed unless the owner, not
6-5 later than the 30th day after the date of the mailing of the
6-6 warning notice, establishes financial responsibility in the manner
6-7 prescribed by Section 601.505(e) or mails to the department a
6-8 written request for a hearing.
6-9 Sec. 601.505. SUSPENSION; REINSTATEMENT; EXCEPTION.
6-10 (a) Unless the owner requests a hearing under Subsection (b), the
6-11 department shall suspend the registration of an owner to whom a
6-12 warning notice is issued under Section 601.504 on the 45th day
6-13 after the date of the mailing of the notice.
6-14 (b) An owner who receives a warning notice under Section
6-15 601.504 may request a hearing on or before the 30th day after the
6-16 date of the mailing of the notice. The department shall adopt
6-17 rules governing a hearing under this subsection. The department
6-18 shall suspend the registration of an owner who requests a hearing
6-19 if on or before the date of the hearing the owner does not present
6-20 proof of financial responsibility that:
6-21 (1) complies with Section 601.051(a); and
6-22 (2) was in effect on the verification date of the
6-23 request for information.
6-24 (c) If the department suspends an owner's motor vehicle
6-25 registration under this section, the department shall notify the
6-26 owner of the suspension by certified mail.
7-1 (d) For a first violation, the department shall terminate
7-2 the suspension on payment by the owner of a $100 reinstatement fee
7-3 and submission of proof of financial responsibility in the manner
7-4 prescribed by the department. For a second or subsequent violation
7-5 within the four years that follow the first violation or for a
7-6 violation of Section 601.507, the department shall terminate the
7-7 suspension on the 120th day after the effective date of the
7-8 suspension on payment by the owner of a $200 reinstatement fee and
7-9 submission of proof of financial responsibility in a manner
7-10 prescribed by the department.
7-11 (e) For a first violation, the department shall defer the
7-12 suspension if the owner submits to the department, not later than
7-13 the 30th day after the date of the mailing of the warning notice
7-14 under Section 601.504 or on or before the date of a hearing
7-15 requested by the owner under Subsection (b), proof of financial
7-16 responsibility evidenced by a motor vehicle insurance policy that
7-17 complies with Subchapter D, the premiums for which have been
7-18 prepaid for a term of at least six months. On the earlier of the
7-19 180th day after the date of the mailing of the warning notice or
7-20 the expiration date of the insurance policy described by this
7-21 subsection, the owner shall submit to the department evidence of
7-22 renewal of the motor vehicle insurance policy, the premiums for
7-23 which have been prepaid for a term of at least six months. If the
7-24 owner fails to submit the required evidence of renewal, the
7-25 department shall impose the suspension and reinstatement fee.
7-26 (f) Notwithstanding any other provision of this subchapter,
8-1 the department may reinstate the suspended motor vehicle
8-2 registration of an owner who:
8-3 (1) received a request for information under Section
8-4 601.502; and
8-5 (2) presents proof of financial responsibility that:
8-6 (A) complies with Section 601.051(a); and
8-7 (B) was in effect on the verification date of
8-8 the request for information.
8-9 (g) An owner whose vehicle registration has been suspended
8-10 under this section may not:
8-11 (1) transfer the registration unless the transfer is
8-12 authorized under Subsection (h); or
8-13 (2) register in another name the motor vehicle to
8-14 which the registration applies.
8-15 (h) The department may authorize the transfer of vehicle
8-16 registration if the department is satisfied that the transfer is
8-17 proposed in good faith and not to defeat the purposes of this
8-18 subchapter.
8-19 (i) Subsection (g) does not affect the rights of a
8-20 conditional vendor or lessor of, or a person with a security
8-21 interest in, a motor vehicle owned by a person whose vehicle
8-22 registration has been suspended under this section if the vendor,
8-23 lessor, or secured party is not the registered owner of the
8-24 vehicle.
8-25 Sec. 601.506. SUBMISSION OF FALSE PROOF. If the department
8-26 determines that the proof of financial responsibility submitted by
9-1 a motor vehicle owner under Section 601.502 is false, and that the
9-2 owner had knowledge that the proof of financial responsibility was
9-3 false, the department shall suspend the owner's motor vehicle
9-4 registration. The department shall terminate the suspension on or
9-5 after the 180th day after the effective date of the suspension on
9-6 payment by the owner of a $500 reinstatement fee and submission of
9-7 proof of financial responsibility as prescribed by the department.
9-8 Sec. 601.507. OPERATION OF MOTOR VEHICLE WHILE REGISTRATION
9-9 SUSPENDED FOR FAILURE TO ESTABLISH FINANCIAL RESPONSIBILITY.
9-10 (a) A person who operates a motor vehicle while the registration
9-11 of the motor vehicle is suspended under this subchapter commits an
9-12 offense.
9-13 (b) An offense under this section is punishable by a fine of
9-14 not less than $1,000 or more than $2,000.
9-15 (c) It is a defense to prosecution under this section that
9-16 the person charged with an offense produces in court satisfactory
9-17 evidence that, at the time of the alleged offense, the owner or
9-18 operator had established financial responsibility in accordance
9-19 with Section 601.051(a).
9-20 Sec. 601.508. DISPLAY OF FALSE PROOF OF FINANCIAL
9-21 RESPONSIBILITY; CRIMINAL PENALTY. (a) A person commits an offense
9-22 if the person provides evidence of financial responsibility to a
9-23 peace officer, as defined by Article 2.12, Code of Criminal
9-24 Procedure, court, or officer of the court knowing that financial
9-25 responsibility has not been established as required under Section
9-26 601.051(a) or that the evidence of financial responsibility is
10-1 illegally altered, counterfeit, or otherwise invalid.
10-2 (b) If a peace officer issues a citation to a motor vehicle
10-3 operator for displaying invalid evidence of financial
10-4 responsibility, the officer shall confiscate the invalid evidence
10-5 of financial responsibility for presentation in court.
10-6 (c) An offense under this section is punishable by a fine of
10-7 not less than $500 or more than $750.
10-8 Sec. 601.509. DISPOSITION OF FEES. From the reinstatement
10-9 fees collected under this subchapter, the department shall recover
10-10 its costs in implementing and administering the verification
10-11 program under this subchapter. The department shall deposit any
10-12 amounts collected that exceed the administrative costs of the
10-13 department under this subchapter to the credit of the state highway
10-14 fund.
10-15 Sec. 601.510. USE OF AGENTS BY DEPARTMENT. The department
10-16 may submit requests for proposals for contracts with private
10-17 vendors to perform the random sampling and the verification
10-18 investigations required under this subchapter as an agent of the
10-19 department. The department may enter into contracts as necessary
10-20 to implement this section.
10-21 SECTION 1.02. Section 601.051, Transportation Code, is
10-22 amended to read as follows:
10-23 Sec. 601.051. REQUIREMENT OF FINANCIAL RESPONSIBILITY.
10-24 (a) A person may not operate, register, or maintain registration
10-25 of a motor vehicle in this state unless financial responsibility is
10-26 established for that vehicle through:
11-1 (1) a motor vehicle liability insurance policy that
11-2 complies with Subchapter D;
11-3 (2) a surety bond filed under Section 601.121;
11-4 (3) a deposit under Section 601.122;
11-5 (4) a deposit under Section 601.123; or
11-6 (5) self-insurance under Section 601.124.
11-7 (b) an owner of a motor vehicle may not permit another
11-8 person to operate the motor vehicle in this state unless financial
11-9 responsibility is established for that vehicle and evidenced
11-10 through a method described by Subsection (a).
11-11 SECTION 1.03. Section 601.191, Transportation Code, is
11-12 amended to read as follows:
11-13 Sec. 601.191. OPERATION OF MOTOR VEHICLE IN VIOLATION OF
11-14 FINANCIAL RESPONSIBILITY REQUIREMENTS [MOTOR VEHICLE LIABILITY
11-15 INSURANCE REQUIREMENT; OFFENSE]. (a) A person commits an offense
11-16 if the person operates a motor vehicle or permits another person to
11-17 operate a motor vehicle in violation of Section 601.051.
11-18 (b) Except as provided by Subsection [Subsections (c) and]
11-19 (d), an offense under this section is [a misdemeanor] punishable by
11-20 a fine of not less than $500 [$175] or more than $1,000 [$350].
11-21 (c) It is a defense to prosecution under this section that
11-22 the person charged with an offense produces in court satisfactory
11-23 evidence that, at the time of the alleged offense, the owner or
11-24 operator had established financial responsibility in accordance
11-25 with Section 601.051(a). [If a person has been previously
11-26 convicted of an offense under this section, an offense under this
12-1 section is a misdemeanor punishable by a fine of not less than $350
12-2 or more than $1,000.]
12-3 (d) If the court determines that a person who has not been
12-4 previously convicted of an offense under this section is
12-5 economically unable to pay the fine, the court may reduce the fine
12-6 to less than $500 [$175].
12-7 SECTION 1.04. Section 601.195, Transportation Code, is
12-8 amended by adding Subsection (c) to read as follows:
12-9 (c) It is a defense to prosecution under this section that
12-10 the person charged with an offense produces in court satisfactory
12-11 evidence that, at the time of the alleged offense, the owner or
12-12 operator had established financial responsibility in accordance
12-13 with Section 601.051(a).
12-14 SECTION 1.05. In performing sample selection under Section
12-15 601.502, Transportation Code, as added by this Act, the Texas
12-16 Department of Transportation shall ensure that at least 500,000
12-17 samples are selected on or before September 1, 2003.
12-18 SECTION 1.06. (a) In cooperation with the Texas Department
12-19 of Insurance and the Department of Public Safety of the State of
12-20 Texas, the Texas Department of Transportation shall conduct an
12-21 evaluation of the implementation and operation of the verification
12-22 program adopted under Subchapter N, Chapter 601, Transportation
12-23 Code, as added by this Act, and of the effectiveness of the
12-24 verification program in increasing compliance with the financial
12-25 responsibility requirements established under Subchapter C, Chapter
12-26 601, Transportation Code. The evaluation must include:
13-1 (1) a computation, by year, of the number of persons
13-2 determined by the Texas Department of Transportation through the
13-3 application of the verification program to be driving without
13-4 compliance with the financial responsibility requirements
13-5 established under Subchapter C, Chapter 601, Transportation Code;
13-6 and
13-7 (2) the annual effect of the program, as determined by
13-8 the Texas Department of Insurance, on the rate for uninsured
13-9 motorist insurance coverage under Article 5.06--1, Insurance Code.
13-10 (b) The Texas Department of Transportation shall enter into
13-11 contracts, memoranda of understanding, or interagency agreements as
13-12 necessary to implement this section.
13-13 (c) The Texas Department of Transportation shall report the
13-14 results of the evaluation conducted under this section to the 81st
13-15 Legislature not later than February 1, 2009. The department shall
13-16 provide written copies of the report to the governor, the
13-17 lieutenant governor, and the speaker of the house of
13-18 representatives.
13-19 ARTICLE 2. SHORT-TERM MOTOR VEHICLE
13-20 LIABILITY INSURANCE FOR CERTAIN MOTORISTS
13-21 SECTION 2.01. Subchapter A, Chapter 5, Insurance Code, is
13-22 amended by adding Article 5.01C to read as follows:
13-23 Art. 5.01C. SHORT-TERM LIABILITY INSURANCE FOR
13-24 NON-TEXAS-RESIDENT MOTORISTS VISITING THIS STATE
13-25 Sec. 1. DEFINITIONS. In this article:
13-26 (1) "Insurer" means an insurance company,
14-1 interinsurance exchange, mutual, capital stock company, county
14-2 mutual, reciprocal association, Lloyd's plan insurer, or other
14-3 entity authorized to write motor vehicle insurance in this state.
14-4 (2) "Motor vehicle" means any private passenger
14-5 vehicle or utility type vehicle that has a gross weight of 25,000
14-6 pounds or less.
14-7 (3) "Short-term liability insurance policy" means an
14-8 insurance policy that:
14-9 (A) provides coverage for at least 24 hours but
14-10 not for more than one week;
14-11 (B) meets the requirements of Chapter 601,
14-12 Transportation Code; and
14-13 (C) covers liability for bodily injury, death,
14-14 and property damage arising from the use or operation of a motor
14-15 vehicle.
14-16 Sec. 2. RULES. (a) The commissioner by rule may establish
14-17 a program to provide for the sale of short-term liability insurance
14-18 policies to non-Texas-resident motorists visiting this state.
14-19 (b) The commissioner may negotiate an agreement with any
14-20 insurer under which the insurer will sell policies described by
14-21 Subsection (a) of this section.
14-22 Sec. 3. LICENSE REQUIRED. A person representing an insurer
14-23 in selling short-term liability insurance policies under this
14-24 article must be licensed under Subchapter A, Chapter 21, of this
14-25 code.
14-26 Sec. 4. FORMS. An insurer selling short-term liability
15-1 insurance policies under this article must use the policy forms
15-2 adopted by the commissioner under Article 5.06 of this code unless
15-3 the insurer is exempt from using those forms.
15-4 ARTICLE 3. UNINSURED AND UNDERINSURED MOTORIST COVERAGE
15-5 SECTION 3.01. Article 5.06--1, Insurance Code, is amended to
15-6 read as follows:
15-7 Art. 5.06--1. UNINSURED OR UNDERINSURED MOTORIST COVERAGE.
15-8 (a) [(1)] No automobile liability insurance, [(]including
15-9 insurance issued through the Texas Automobile Insurance Plan
15-10 Association [pursuant to an Assigned Risk Plan established under
15-11 authority of Section 35 of the Texas Motor Vehicle
15-12 Safety-Responsibility Act)], covering liability arising out of the
15-13 ownership, maintenance, or use of any motor vehicle shall be
15-14 delivered or issued for delivery in this state unless coverage is
15-15 provided therein or supplemental thereto, [in at least the limits
15-16 described in the Texas Motor Vehicle Safety-Responsibility Act,]
15-17 under provisions prescribed by the commissioner [Board], for the
15-18 protection of persons insured thereunder who are legally entitled
15-19 to recover damages from owners or operators of uninsured or
15-20 underinsured motor vehicles because of bodily injury, sickness, or
15-21 disease, including death, or property damage resulting therefrom.
15-22 The coverages required under this Article shall not be applicable
15-23 where any insured named in the policy shall reject the coverage in
15-24 writing; provided that unless the named insured thereafter requests
15-25 such coverage in writing, such coverage need not be provided in or
15-26 supplemental to a renewal policy where the named insured has
16-1 rejected the coverage in connection with a policy previously issued
16-2 to the named insured [him] by the same insurer or by an affiliated
16-3 insurer.
16-4 (b) [(2)] For the purpose of these coverages:
16-5 (1) "Exemplary damages" has the meaning assigned by
16-6 Section 41.001, Civil Practice and Remedies Code.
16-7 (2) "Noneconomic damages" means damages other than
16-8 compensatory damages for pecuniary loss. The term includes damages
16-9 for physical pain and mental anguish, loss of consortium,
16-10 disfigurement, physical impairment, or loss of companionship and
16-11 society. The term does not include exemplary damages.
16-12 (3) "Uninsured [(a) the term "uninsured] motor
16-13 vehicle" shall, subject to the terms and conditions of such
16-14 coverage, be deemed to include an insured motor vehicle where the
16-15 liability insurer thereof is unable to make payment with respect to
16-16 the legal liability of its insured within the limits specified
16-17 therein because of insolvency.
16-18 (4) "Underinsured [(b) The term "underinsured] motor
16-19 vehicle" means an insured motor vehicle on which there is valid and
16-20 collectible liability insurance coverage with limits of liability
16-21 for the owner or operator which were originally lower than, or have
16-22 been reduced by payment of claims arising from the same accident
16-23 to, an amount less than the limit of liability stated in the
16-24 underinsured coverage of the insured's policy.
16-25 (c) The commissioner [Board] may, in the policy forms
16-26 adopted under Article 5.06 of this code, define "uninsured motor
17-1 vehicle" to exclude certain motor vehicles whose operators are in
17-2 fact uninsured.
17-3 (d) The portion of a policy form adopted under Article 5.06
17-4 of this code to provide coverage under this article shall include
17-5 provisions that, regardless of the number of persons insured,
17-6 policies or bonds applicable, vehicles involved, or claims made,
17-7 the total aggregate limit of liability to any one person who
17-8 sustains bodily injury or property damage as the result of any one
17-9 occurrence shall not exceed the limit of liability for these
17-10 coverages as stated in the policy and the total aggregate limit of
17-11 liability to all claimants, if more than one, shall not exceed the
17-12 total limit of liability per occurrence as stated in the policy;
17-13 and shall provide for the exclusion of the recovery of damages for
17-14 bodily injury or property damage or both resulting from the
17-15 intentional acts of the insured. The portion of a policy form
17-16 adopted under Article 5.06 of this code to provide coverage under
17-17 this article shall require that in order for the insured to recover
17-18 under the uninsured motorist coverages where the owner or operator
17-19 of any motor vehicle which causes bodily injury or property damage
17-20 to the insured is unknown, actual physical contact must have
17-21 occurred between the motor vehicle owned or operated by such
17-22 unknown person and the person or property of the insured.
17-23 (e) Except as provided by Subsection (f) of this article,
17-24 the [(3) The] limits of liability for bodily injury, sickness, or
17-25 disease, including death, shall be offered to the insured in
17-26 amounts not less than those prescribed in Chapter 601,
18-1 Transportation Code, [the Texas Motor Vehicle Safety-Responsibility
18-2 Act] and such higher available limits as may be desired by the
18-3 insured, but not greater than the limits of liability specified in
18-4 the bodily injury liability provisions of the insured's policy.
18-5 (f) The named insured may elect to waive coverage under this
18-6 article for recovery of noneconomic and exemplary damages resulting
18-7 from bodily injury, sickness, or disease, including death. If an
18-8 insured elects to waive coverage under this subsection, Subsection
18-9 (e) of this article does not apply to the limits of liability that
18-10 are applicable to the coverage provided under the policy issued to
18-11 the named insured for damages resulting from bodily injury,
18-12 sickness, or disease, including death. The commissioner by rule
18-13 may adopt minimum limits of liability applicable to those damages.
18-14 Waiver of coverage under this subsection does not affect the
18-15 insured's right to bring an action for noneconomic and exemplary
18-16 damages against a responsible party. No written rejection of
18-17 coverage for noneconomic and exemplary damages shall be effective
18-18 unless the insurer provides the insured with a written notice,
18-19 acknowledged in writing by the insured at the time of the
18-20 rejection, disclosing the amount of potential coverage that is
18-21 available, the types of damages that would be covered, and the
18-22 amount of premium saved because the coverage is rejected.
18-23 (g) [(4)(a)] Coverage for property damage shall be offered
18-24 to the insured in amounts not less than those prescribed in Chapter
18-25 601, Transportation Code, [the Texas Motor Vehicle
18-26 Safety-Responsibility Act] and such higher available limits as may
19-1 be desired by the insured, but not greater than limits of liability
19-2 specified in the property damage liability provisions of the
19-3 insured's policy, subject to a deductible amount of $250.
19-4 (h) [(b)] If the insured has collision coverage and
19-5 uninsured or underinsured property damage liability coverage, the
19-6 insured may recover under the policy coverage chosen by the
19-7 insured. In the event neither coverage is sufficient alone to
19-8 cover all damage resulting from a single occurrence, the insured
19-9 may recover under both coverages. When recovering under both
19-10 coverages, the insured shall designate one coverage as the primary
19-11 coverage and pay the deductible applicable to that coverage. The
19-12 primary coverage must be exhausted before any recovery is made
19-13 under the secondary coverage. If both coverages are utilized in
19-14 the payment of damages from a single occurrence, the insured shall
19-15 not be required to pay the deductible applicable to the secondary
19-16 coverage when the amount of the deductible otherwise applicable to
19-17 the secondary coverage is the same as or less than the amount of
19-18 the deductible applicable to the primary coverage. If both
19-19 coverages are utilized in the payment of damages from a single
19-20 occurrence and the amount of the deductible otherwise applicable to
19-21 the secondary coverage is greater than the amount of the deductible
19-22 applicable to the primary coverage, the insured shall be required
19-23 to pay in respect of the secondary coverage only the difference
19-24 between the amount of the two deductibles. In no event shall the
19-25 insured recover under both coverages more than the actual damages
19-26 suffered.
20-1 (i) [(5)] The underinsured motorist coverage shall provide
20-2 for payment to the insured of all sums which the insured [he] shall
20-3 be legally entitled to recover as damages from owners or operators
20-4 of underinsured motor vehicles because of bodily injury or property
20-5 damage in an amount up to the limit specified in the policy,
20-6 reduced by the amount recovered or recoverable from the insurer of
20-7 the underinsured motor vehicle. If the named insured has waived
20-8 coverage under Subsection (f) of this article for recovery of
20-9 noneconomic and exemplary damages, the amount paid to the insured
20-10 may not include any amount attributable to noneconomic and
20-11 exemplary damages.
20-12 (j) [(6)] In the event of payment to any person under any
20-13 coverage required by this article [Section] and subject to the
20-14 terms and conditions of such coverage, the insurer making such
20-15 payment shall, to the extent thereof, be entitled to the proceeds
20-16 of any settlement or judgment resulting from the exercise of any
20-17 rights of recovery of such person against any person or
20-18 organization legally responsible for the bodily injury, sickness or
20-19 disease, or death for which such payment is made, including the
20-20 proceeds recoverable from the assets of the insolvent insurer;
20-21 provided, however, whenever an insurer shall make payment under a
20-22 policy of insurance issued pursuant to this article [Act], which
20-23 payment is occasioned by the insolvency of an insurer, the insured
20-24 of said insolvent insurer shall be given credit in any judgment
20-25 obtained against the insured [him], with respect to the insured's
20-26 [his] legal liability for such damages, to the extent of such
21-1 payment, but, subject to Section 12 of Article 21.28-C of this
21-2 code, such paying insurer shall have the right to proceed directly
21-3 against the insolvent insurer or its receiver, and in pursuance of
21-4 such right such paying insurer shall possess any rights which the
21-5 insured of the insolvent company might otherwise have had if the
21-6 insolvent insurer had made the payment.
21-7 (k) [(7)] If a dispute exists as to whether a motor vehicle
21-8 is uninsured, the burden of proof as to that issue shall be upon
21-9 the insurer.
21-10 (l) [(8)] Notwithstanding Section 15.032, Civil Practice and
21-11 Remedies Code, an action against an insurer in relation to the
21-12 coverage provided under this article, including an action to
21-13 enforce that coverage, may be brought only:
21-14 (1) [(a)] in the county in which the policyholder or
21-15 beneficiary instituting the suit resided at the time of the
21-16 accident; or
21-17 (2) [(b)] in the county in which the accident
21-18 involving the uninsured or underinsured motor vehicle occurred.
21-19 ARTICLE 4. PROOF OF INSURANCE CARDS
21-20 SECTION 4.01. Subchapter A, Chapter 5, Insurance Code, is
21-21 amended by adding Article 5.06-7 to read as follows:
21-22 Art. 5.06-7. FORM AND APPEARANCE OF PROOF OF MOTOR VEHICLE
21-23 LIABILITY INSURANCE. (a) The commissioner shall prescribe by rule
21-24 a standard appearance and form for a card issued by an insurer as
21-25 proof of motor vehicle liability insurance prescribed by Section
21-26 601.081, Transportation Code.
22-1 (b) In prescribing the appearance of a proof of motor
22-2 vehicle liability insurance card under Subsection (a) of this
22-3 article, the commissioner shall require an appearance that is:
22-4 (1) difficult to alter, duplicate, or counterfeit; and
22-5 (2) not cost-prohibitive for consumers.
22-6 (c) A card issued as proof of motor vehicle liability
22-7 insurance issued in this state by an insurer must conform to the
22-8 form and appearance prescribed under Subsection (a) of this
22-9 article.
22-10 SECTION 4.02. (a) The commissioner of insurance shall
22-11 prescribe the standard appearance and form of proof of motor
22-12 vehicle liability insurance cards as required by Article 5.06-7,
22-13 Insurance Code, as added by this Act, not later than December 1,
22-14 2001.
22-15 (b) A card issued by an insurer as proof of motor vehicle
22-16 liability insurance that is issued on or after January 1, 2002,
22-17 must conform with rules established by the commissioner of
22-18 insurance under Article 5.06-7, Insurance Code, as added by this
22-19 Act. Proof of motor vehicle liability insurance that is issued
22-20 before January 1, 2002, is governed by the law as it existed
22-21 immediately before the effective date of this Act, and that law is
22-22 continued in effect for that purpose.
22-23 ARTICLE 5. CONDUCT THAT CONSTITUTES THE BUSINESS OF INSURANCE
22-24 SECTION 5.01. Subsection (b), Section 101.051, Insurance
22-25 Code, is amended to read as follows:
22-26 (b) The following acts in this state constitute the business
23-1 of insurance in this state:
23-2 (1) making or proposing to make, as an insurer, an
23-3 insurance contract;
23-4 (2) making or proposing to make, as guarantor or
23-5 surety, a guaranty or suretyship contract as a vocation and not
23-6 merely incidental to another legitimate business or activity of the
23-7 guarantor or surety;
23-8 (3) taking or receiving an insurance application;
23-9 (4) receiving or collecting any consideration for
23-10 insurance, including:
23-11 (A) a premium;
23-12 (B) a commission;
23-13 (C) a membership fee;
23-14 (D) an assessment; or
23-15 (E) dues;
23-16 (5) issuing or delivering an insurance contract to:
23-17 (A) a resident of this state; or
23-18 (B) a person authorized to do business in this
23-19 state;
23-20 (6) directly or indirectly acting as an agent for or
23-21 otherwise representing or assisting an insurer or other person in:
23-22 (A) soliciting, negotiating, procuring, or
23-23 effectuating insurance or a renewal of insurance;
23-24 (B) disseminating information relating to
23-25 coverage or rates;
23-26 (C) forwarding an insurance application;
24-1 (D) delivering an insurance policy or contract;
24-2 (E) inspecting a risk;
24-3 (F) setting a rate;
24-4 (G) investigating or adjusting a claim or loss;
24-5 (H) transacting a matter after the effectuation
24-6 of the contract that arises out of the contract; or
24-7 (I) representing or assisting an insurer or
24-8 other person in any other manner in the transaction of insurance
24-9 with respect to a subject of insurance that is resident, located,
24-10 or to be performed in this state;
24-11 (7) contracting to provide [in this state]
24-12 indemnification or expense reimbursement for a medical expense by
24-13 direct payment, reimbursement, or otherwise [to a person domiciled
24-14 in this state or for a risk located in this state], whether as an
24-15 insurer, agent, administrator, trust, or funding mechanism or by
24-16 another method;
24-17 (8) doing any kind of insurance business specifically
24-18 recognized as constituting insurance business within the meaning of
24-19 statutes relating to insurance;
24-20 (9) doing or proposing to do any insurance business
24-21 that is in substance equivalent to conduct described by
24-22 Subdivisions (1)-(8) in a manner designed to evade statutes
24-23 relating to insurance; or
24-24 (10) any other transaction of business in this state
24-25 by an insurer.
25-1 ARTICLE 6. REPEALER
25-2 SECTION 6.01. Section 601.193, Transportation Code, is
25-3 repealed.
25-4 ARTICLE 7. TRANSITION; EFFECTIVE DATE
25-5 SECTION 7.01. The change in law made by this Act to Chapter
25-6 601, Transportation Code, applies only to punishment for an offense
25-7 committed on or after the effective date of this Act. For purposes
25-8 of this section, an offense is committed before the effective date
25-9 of this Act if any element of the offense occurs before that date.
25-10 SECTION 7.02. Article 5.06--1, Insurance Code, as amended by
25-11 this Act, applies only to a motor vehicle liability insurance
25-12 policy that is delivered, issued for delivery, or renewed on or
25-13 after January 1, 2002. A policy that is delivered, issued for
25-14 delivery, or renewed before January 1, 2002, is governed by the law
25-15 as it existed immediately before the effective date of this Act,
25-16 and that law is continued in effect for that purpose.
25-17 SECTION 7.03. (a) Except as provided by Subsection (b) of
25-18 this section, this Act takes effect September 1, 2001.
25-19 (b) Article 1 of this Act takes effect January 1, 2003.