1-1 By: Bivins, Lucio S.B. No. 1329
1-2 (In the Senate - Filed March 8, 2001; March 13, 2001, read
1-3 first time and referred to Committee on Business and Commerce;
1-4 April 9, 2001, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 7, Nays 0; April 9, 2001,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1329 By: Lucio
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the regulation of insurance and to requirements
1-11 regarding motor vehicle insurance; providing penalties.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 ARTICLE 1. FINANCIAL RESPONSIBILITY REQUIREMENTS
1-14 SECTION 1.01. Chapter 601, Transportation Code, is amended
1-15 by adding Subchapter N to read as follows:
1-16 SUBCHAPTER N. VERIFICATION OF COMPLIANCE WITH AND ENFORCEMENT
1-17 OF FINANCIAL RESPONSIBILITY REQUIREMENTS
1-18 Sec. 601.501. DEFINITIONS. In this subchapter:
1-19 (1) "Department" means the Texas Department of
1-20 Transportation.
1-21 (2) "Verification date" means the date on which the
1-22 department mails a written request to an owner of a motor vehicle
1-23 requiring the owner to state whether the owner has established
1-24 financial responsibility in accordance with Section 601.051(a).
1-25 Sec. 601.502. VERIFICATION OF ESTABLISHMENT OF FINANCIAL
1-26 RESPONSIBILITY THROUGH RANDOM SAMPLING. (a) The department or an
1-27 agent of the department shall randomly select samples of
1-28 registrations of motor vehicles subject to this chapter, or samples
1-29 of owners of motor vehicles subject to this chapter, to verify
1-30 whether the owner has established financial responsibility in
1-31 accordance with Section 601.051(a). The Department of Public
1-32 Safety shall provide the department access to any information that
1-33 will allow the department to comply with this subsection.
1-34 (b) A sample selected under this section may not be
1-35 classified on the basis of the owner's race, color, religion, sex,
1-36 national origin, age, marital status, physical or mental
1-37 disability, economic status, or geographic location.
1-38 (c) In addition to the general random sampling of motor
1-39 vehicle registrations, the department may randomly select other
1-40 persons who own a registered motor vehicle to verify that the
1-41 person has established financial responsibility, including:
1-42 (1) a person who, during the four years preceding the
1-43 date of selection, has been convicted of a violation of Section
1-44 601.191, 601.195, 601.196, as it existed before repeal, or 601.508,
1-45 including a violation that occurred while the person was operating
1-46 a motor vehicle owned by another person;
1-47 (2) a person whose motor vehicle registration has been
1-48 the subject of a deferred suspension under Section 601.505(a)
1-49 during the preceding four years; or
1-50 (3) a person whose driver's license or motor vehicle
1-51 registration has been suspended during the preceding four years.
1-52 (d) The department shall send to the owner of a randomly
1-53 selected motor vehicle, or to a randomly selected motor vehicle
1-54 owner, a request for information about the motor vehicle and the
1-55 owner's method of establishing financial responsibility. The
1-56 request must require the owner to state whether the owner has, as
1-57 of the verification date, established financial responsibility in
1-58 accordance with Section 601.051(a).
1-59 (e) The department:
1-60 (1) shall adopt rules as necessary to implement this
1-61 chapter; and
1-62 (2) by rule shall:
1-63 (A) establish the frequency of sample selection;
1-64 and
2-1 (B) prescribe:
2-2 (i) the methods employed for the random
2-3 selection of samples and the procedures necessary for
2-4 implementation of the verification process, including the method of
2-5 sending the verification request, which may include certified mail,
2-6 return receipt requested;
2-7 (ii) the form for verification of
2-8 financial responsibility; and
2-9 (iii) the information to be requested in
2-10 the prescribed form.
2-11 (f) The department may require the information provided by
2-12 the owner to include a statement by the owner that the owner had,
2-13 as of the verification date, established financial responsibility:
2-14 (1) through liability insurance under Subchapter D,
2-15 including:
2-16 (A) the name and address of the insurer;
2-17 (B) the number of the insurance policy; and
2-18 (C) the expiration date of the insurance
2-19 coverage;
2-20 (2) by filing a surety bond with the Department of
2-21 Public Safety under Section 601.121, including:
2-22 (A) the name and address of the company issuing
2-23 the bond;
2-24 (B) the identification number of the bond; and
2-25 (C) the expiration date of the bond;
2-26 (3) by depositing cash or securities with the
2-27 comptroller under Section 601.122, including a copy of the
2-28 certificate issued by the comptroller showing compliance;
2-29 (4) by depositing cash or a cashier's check with the
2-30 county judge of the county in which the motor vehicle is registered
2-31 under Section 601.123, including a copy of the certificate issued
2-32 by the county judge showing compliance; or
2-33 (5) through self-insurance under Section 601.124,
2-34 including a copy of the certificate of self-insurance issued by the
2-35 Department of Public Safety.
2-36 (g) Not later than the 30th day after the verification date,
2-37 the owner to whom the notice is sent shall furnish the requested
2-38 information to the department in the form prescribed by the
2-39 department, accompanied by the owner's signed affirmation that the
2-40 information is true and correct.
2-41 (h) An owner whose response indicates that the owner had not
2-42 established financial responsibility in accordance with Section
2-43 601.051(a), or who fails to respond to the request, is subject to
2-44 suspension of the owner's motor vehicle registration in the manner
2-45 provided by Section 601.505.
2-46 (i) If the owner responds to the request for information by
2-47 asserting that the owner had, as of the verification date,
2-48 established financial responsibility in accordance with a method
2-49 authorized by Section 601.051(a), the department may conduct a
2-50 verification investigation as provided by Section 601.503.
2-51 Sec. 601.503. VERIFICATION INVESTIGATION. (a) To verify a
2-52 response received from an owner under Section 601.502, the
2-53 department or an agent of the department may furnish necessary
2-54 information to the insurer, surety, or officer named in the
2-55 response. Not later than the 30th day after the date of receipt of
2-56 the information, the insurer, surety, or officer shall inform the
2-57 department whether, as of the verification date, financial
2-58 responsibility had been established for the affected motor vehicle
2-59 in accordance with Section 601.051(a). An insurer who does not
2-60 comply with this subsection is subject to an administrative penalty
2-61 under Chapter 84, Insurance Code.
2-62 (b) If the response received from an owner under Section
2-63 601.502 states that financial responsibility has been established
2-64 through self-insurance, the department shall examine the records of
2-65 the Department of Public Safety to verify that a certificate of
2-66 self-insurance has been issued in accordance with Section 601.124.
2-67 Sec. 601.504. WARNING NOTICE. If an owner responds under
2-68 Section 601.502 that the owner has not established financial
2-69 responsibility or the owner fails to respond in a timely manner, or
3-1 if the department otherwise determines that an owner has registered
3-2 or maintained the registration of a motor vehicle without
3-3 establishing financial responsibility in accordance with Section
3-4 601.051(a), the department by certified mail shall issue a warning
3-5 notice to the owner that informs the owner that the owner is not in
3-6 compliance with Section 601.051(a) and that the owner's motor
3-7 vehicle registration will be suspended on the 45th day after the
3-8 date on which the warning notice is mailed unless the owner, not
3-9 later than the 30th day after the date of the mailing of the
3-10 warning notice, establishes financial responsibility in the manner
3-11 prescribed by Section 601.505(e) or mails to the department a
3-12 written request for a hearing.
3-13 Sec. 601.505. SUSPENSION; REINSTATEMENT; EXCEPTION.
3-14 (a) Unless the owner requests a hearing under Subsection (b), the
3-15 department shall suspend the registration of an owner to whom a
3-16 warning notice is issued under Section 601.504 on the 45th day
3-17 after the date of the mailing of the notice.
3-18 (b) An owner who receives a warning notice under Section
3-19 601.504 may request a hearing on or before the 30th day after the
3-20 date of the mailing of the notice. The department shall adopt
3-21 rules governing a hearing under this subsection. The department
3-22 shall suspend the registration of an owner who requests a hearing
3-23 if on or before the date of the hearing the owner does not present
3-24 proof of financial responsibility that:
3-25 (1) complies with Section 601.051(a); and
3-26 (2) was in effect on the verification date of the
3-27 request for information.
3-28 (c) If the department suspends an owner's motor vehicle
3-29 registration under this section, the department shall notify the
3-30 owner of the suspension by certified mail.
3-31 (d) For a first violation, the department shall terminate
3-32 the suspension on payment by the owner of a $100 reinstatement fee
3-33 and submission of proof of financial responsibility in the manner
3-34 prescribed by the department. For a second or subsequent violation
3-35 within the four years that follow the first violation or for a
3-36 violation of Section 601.507, the department shall terminate the
3-37 suspension on the 120th day after the effective date of the
3-38 suspension on payment by the owner of a $200 reinstatement fee and
3-39 submission of proof of financial responsibility in a manner
3-40 prescribed by the department.
3-41 (e) For a first violation, the department shall defer the
3-42 suspension if the owner submits to the department, not later than
3-43 the 30th day after the date of the mailing of the warning notice
3-44 under Section 601.504 or on or before the date of a hearing
3-45 requested by the owner under Subsection (b), proof of financial
3-46 responsibility evidenced by a motor vehicle insurance policy that
3-47 complies with Subchapter D, the premiums for which have been
3-48 prepaid for a term of at least six months. On the earlier of the
3-49 180th day after the date of the mailing of the warning notice or
3-50 the expiration date of the insurance policy described by this
3-51 subsection, the owner shall submit to the department evidence of
3-52 renewal of the motor vehicle insurance policy, the premiums for
3-53 which have been prepaid for a term of at least six months. If the
3-54 owner fails to submit the required evidence of renewal, the
3-55 department shall impose the suspension and reinstatement fee.
3-56 (f) Notwithstanding any other provision of this subchapter,
3-57 the department may reinstate the suspended motor vehicle
3-58 registration of an owner who:
3-59 (1) received a request for information under Section
3-60 601.502; and
3-61 (2) presents proof of financial responsibility that:
3-62 (A) complies with Section 601.051(a); and
3-63 (B) was in effect on the verification date of
3-64 the request for information.
3-65 (g) An owner whose vehicle registration has been suspended
3-66 under this section may not:
3-67 (1) transfer the registration unless the transfer is
3-68 authorized under Subsection (h); or
3-69 (2) register in another name the motor vehicle to
4-1 which the registration applies.
4-2 (h) The department may authorize the transfer of vehicle
4-3 registration if the department is satisfied that the transfer is
4-4 proposed in good faith and not to defeat the purposes of this
4-5 subchapter.
4-6 (i) Subsection (g) does not affect the rights of a
4-7 conditional vendor or lessor of, or a person with a security
4-8 interest in, a motor vehicle owned by a person whose vehicle
4-9 registration has been suspended under this section if the vendor,
4-10 lessor, or secured party is not the registered owner of the
4-11 vehicle.
4-12 Sec. 601.506. SUBMISSION OF FALSE PROOF. If the department
4-13 determines that the proof of financial responsibility submitted by
4-14 a motor vehicle owner under Section 601.502 is false, the
4-15 department shall suspend the owner's motor vehicle registration.
4-16 The department shall terminate the suspension on or after the 180th
4-17 day after the effective date of the suspension on payment by the
4-18 owner of a $500 reinstatement fee and submission of proof of
4-19 financial responsibility as prescribed by the department.
4-20 Sec. 601.507. OPERATION OF MOTOR VEHICLE WHILE REGISTRATION
4-21 SUSPENDED FOR FAILURE TO ESTABLISH FINANCIAL RESPONSIBILITY.
4-22 (a) A person who operates a motor vehicle while the registration
4-23 of the motor vehicle is suspended under this subchapter commits an
4-24 offense.
4-25 (b) An offense under this section is punishable by a fine of
4-26 not less than $1,000 or more than $2,000.
4-27 (c) It is a defense to prosecution under this section that
4-28 the person charged with an offense produces in court satisfactory
4-29 evidence that, at the time of the alleged offense, the owner or
4-30 operator had established financial responsibility in accordance
4-31 with Section 601.051 (a).
4-32 Sec. 601.508. DISPLAY OF FALSE PROOF OF FINANCIAL
4-33 RESPONSIBILITY; criminal penalty. (a) A person commits an offense
4-34 if the person provides evidence of financial responsibility to a
4-35 peace officer, as defined by Article 2.12, Code of criminal
4-36 Procedure, court, or officer of the court knowing that financial
4-37 responsibility has not been established as required under Section
4-38 601.051 (a) or that the evidence of financial responsibility is
4-39 illegally altered, counterfeit, or otherwise invalid.
4-40 (b) If a peace officer issues a citation to a motor vehicle
4-41 operator for displaying invalid evidence of financial
4-42 responsibility, the officer shall confiscate the invalid evidence
4-43 of financial responsibility for presentation in court.
4-44 (c) An offense under this section is punishable by a fine of
4-45 not less than $500 or more than $750.
4-46 Sec. 601.509. DISPOSITION OF FEES. From the reinstatement
4-47 fees collected under this subchapter, the department shall recover
4-48 its costs in implementing and administering the verification
4-49 program under this subchapter. The department shall deposit any
4-50 amounts collected that exceed the administrative costs of the
4-51 department under this subchapter to the credit of the state highway
4-52 fund.
4-53 Sec. 601.510. USE OF AGENTS BY DEPARTMENT. The department
4-54 may submit requests for proposals for contracts with private
4-55 vendors to perform the random sampling and the verification
4-56 investigations required under this subchapter as an agent of the
4-57 department. The department may enter into contracts as necessary
4-58 to implement this section.
4-59 SECTION 1.02. Section 601.051, Transportation Code, is
4-60 amended to read as follows:
4-61 Sec. 601.051. REQUIREMENT OF FINANCIAL RESPONSIBILITY.
4-62 (a) A person may not operate, register, or maintain registration
4-63 of a motor vehicle in this state unless financial responsibility is
4-64 established for that vehicle through:
4-65 (1) a motor vehicle liability insurance policy that
4-66 complies with Subchapter D;
4-67 (2) a surety bond under Section 601.121;
4-68 (3) a deposit under Section 601.122;
4-69 (4) a deposit under Section 601.123; or
5-1 (5) self-insurance under Section 601.124.
5-2 (b) an owner of a motor vehicle may not permit another
5-3 person to operate the motor vehicle in this state unless financial
5-4 responsibility is established for that vehicle and evidenced
5-5 through a method described by Subsection (a).
5-6 SECTION 1.03. Section 601.191, Transportation Code, is
5-7 amended to read as follows:
5-8 Sec. 601.191. OPERATION OF MOTOR VEHICLE IN VIOLATION OF
5-9 FINANCIAL RESPONSIBILITY REQUIREMENTS [MOTOR VEHICLE LIABILITY
5-10 INSURANCE REQUIREMENT; OFFENSE]. (a) A person commits an offense
5-11 if the person operates a motor vehicle or permits another person to
5-12 operate a motor vehicle in violation of Section 601.051.
5-13 (b) Except as provided by Subsection [Subsections (c) and]
5-14 (d), an offense under this section is [a misdemeanor] punishable by
5-15 a fine of not less than $500 [$175] or more than $1,000 [$350].
5-16 (c) It is a defense to prosecution under this section that
5-17 the person charged with an offense produces in court satisfactory
5-18 evidence that, at the time of the alleged offense, the owner or
5-19 operator had established financial responsibility in accordance
5-20 with Section 601.051(a). [If a person has been previously
5-21 convicted of an offense under this section, an offense under this
5-22 section is a misdemeanor punishable by a fine of not less than $350
5-23 or more than $1,000.]
5-24 (d) If the court determines that a person who has not been
5-25 previously convicted of an offense under this section is
5-26 economically unable to pay the fine, the court may reduce the fine
5-27 to less than $500 [$175].
5-28 SECTION 1.04. Section 601.195, Transportation Code, is
5-29 amended by adding Subsection (c) to read as follows:
5-30 (c) It is a defense to prosecution under this section that
5-31 the person charged with an offense produces in court satisfactory
5-32 evidence that, at the time of the alleged offense, the owner or
5-33 operator had established financial responsibility in accordance
5-34 with Section 601.051(a).
5-35 SECTION 1.05. In performing sample selection under Section
5-36 601.502, Transportation Code, as added by this Act, the Texas
5-37 Department of Transportation shall ensure that at least 500,000
5-38 samples are selected on or before September 1, 2003.
5-39 SECTION 1.06. (a) In cooperation with the Texas Department
5-40 of Insurance and the Department of Public Safety of the State of
5-41 Texas, the Texas Department of Transportation shall conduct an
5-42 evaluation of the implementation and operation of the verification
5-43 program adopted under Subchapter N, Chapter 601, Transportation
5-44 Code, as added by this Act, and of the effectiveness of the
5-45 verification program in increasing compliance with the financial
5-46 responsibility requirements established under Subchapter C, Chapter
5-47 601, Transportation Code. The evaluation must include:
5-48 (1) a computation, by year, of the number of persons
5-49 determined by the Texas Department of Transportation through the
5-50 application of the verification program to be driving without
5-51 compliance with the financial responsibility requirements
5-52 established under Subchapter C, Chapter 601, Transportation Code;
5-53 and
5-54 (2) the annual effect of the program, as determined by
5-55 the Texas Department of Insurance, on the rate for uninsured
5-56 motorist insurance coverage under Article 5.06-1, Insurance Code.
5-57 (b) The Texas Department of Transportation shall enter into
5-58 contracts, memoranda of understanding, or interagency agreements as
5-59 necessary to implement this section.
5-60 (c) The Texas Department of Transportation shall report the
5-61 results of the evaluation conducted under this section to the 81st
5-62 Legislature not later than February 1, 2009. The department shall
5-63 provide written copies of the report to the governor, the
5-64 lieutenant governor, and the speaker of the house of
5-65 representatives.
5-66 ARTICLE 2. SHORT-TERM MOTOR VEHICLE
5-67 LIABILITY INSURANCE FOR CERTAIN MOTORISTS
5-68 SECTION 2.01. Subchapter A, Chapter 5, Insurance Code, is
5-69 amended by adding Article 5.01C to read as follows:
6-1 Art. 5.01C. SHORT-TERM LIABILITY INSURANCE FOR NON-TEXAS
6-2 RESIDENT MOTORISTS VISITING THIS STATE
6-3 Sec. 1. DEFINITIONS. In this article:
6-4 (1) "Insurer" means an insurance company,
6-5 interinsurance exchange, mutual, capital stock company, county
6-6 mutual, reciprocal association, Lloyd's plan insurer, or other
6-7 entity authorized to write motor vehicle insurance in this state.
6-8 (2) "Motor vehicle" means any private passenger
6-9 vehicle or utility type vehicle that has a gross weight of 25,000
6-10 pounds or less.
6-11 (3) "Short-term liability insurance policy" means an
6-12 insurance policy that:
6-13 (A) provides coverage for at least 24 hours but
6-14 not for more than one week;
6-15 (B) meets the requirements of Chapter 601,
6-16 Transportation Code; and
6-17 (C) covers liability for bodily injury, death,
6-18 and property damage arising from the use or operation of a motor
6-19 vehicle.
6-20 Sec. 2. RULES. (a) The commissioner by rule may establish
6-21 a program to provide for the sale of short-term liability insurance
6-22 policies to non-Texas-resident motorists visiting this state.
6-23 (b) The commissioner may negotiate an agreement with any
6-24 insurer under which the insurer will sell policies described by
6-25 Subsection (a) of this section.
6-26 Sec. 3. LICENSE REQUIRED. A person representing an insurer
6-27 in selling short-term liability insurance policies under this
6-28 article must be licensed under Subchapter A, Chapter 21, of this
6-29 code.
6-30 Sec. 4. FORMS. An insurer selling short-term liability
6-31 insurance policies under this article must use the policy forms
6-32 adopted by the commissioner under Article 5.06 of this code unless
6-33 the insurer is exempt from using those forms.
6-34 ARTICLE 3. UNINSURED AND UNDERINSURED MOTORIST COVERAGE
6-35 SECTION 3.01. Article 5.06--1, Insurance Code, is amended to
6-36 read as follows:
6-37 Art. 5.06--1. UNINSURED OR UNDERINSURED MOTORIST COVERAGE.
6-38 (a) [(1)] No automobile liability insurance, [(]including
6-39 insurance issued through the Texas Automobile Insurance Plan
6-40 Association [pursuant to an Assigned Risk Plan established under
6-41 authority of Section 35 of the Texas Motor Vehicle
6-42 Safety-Responsibility Act)], covering liability arising out of the
6-43 ownership, maintenance, or use of any motor vehicle shall be
6-44 delivered or issued for delivery in this state unless coverage is
6-45 provided therein or supplemental thereto, [in at least the limits
6-46 described in the Texas Motor Vehicle Safety-Responsibility Act,]
6-47 under provisions prescribed by the commissioner [Board], for the
6-48 protection of persons insured thereunder who are legally entitled
6-49 to recover damages from owners or operators of uninsured or
6-50 underinsured motor vehicles because of bodily injury, sickness, or
6-51 disease, including death, or property damage resulting therefrom.
6-52 The coverages required under this Article shall not be applicable
6-53 where any insured named in the policy shall reject the coverage in
6-54 writing; provided that unless the named insured thereafter requests
6-55 such coverage in writing, such coverage need not be provided in or
6-56 supplemental to a renewal policy where the named insured has
6-57 rejected the coverage in connection with a policy previously issued
6-58 to the named insured [him] by the same insurer or by an affiliated
6-59 insurer.
6-60 (b) [(2)] For the purpose of these coverages:
6-61 (1) "Exemplary damages" has the meaning assigned by
6-62 Section 41.001, Civil Practice and Remedies Code.
6-63 (2) "Noneconomic damages" means damages other than
6-64 compensatory damages for pecuniary loss. The term includes damages
6-65 for physical pain and mental anguish, loss of consortium,
6-66 disfigurement, physical impairment, or loss of companionship and
6-67 society. The term does not include exemplary damages.
6-68 (3) "Uninsured [(a) the term "uninsured] motor
6-69 vehicle" shall, subject to the terms and conditions of such
7-1 coverage, be deemed to include an insured motor vehicle where the
7-2 liability insurer thereof is unable to make payment with respect to
7-3 the legal liability of its insured within the limits specified
7-4 therein because of insolvency.
7-5 (4) "Underinsured [(b) The term "underinsured] motor
7-6 vehicle" means an insured motor vehicle on which there is valid and
7-7 collectible liability insurance coverage with limits of liability
7-8 for the owner or operator which were originally lower than, or have
7-9 been reduced by payment of claims arising from the same accident
7-10 to, an amount less than the limit of liability stated in the
7-11 underinsured coverage of the insured's policy.
7-12 (c) The commissioner [Board] may, in the policy forms
7-13 adopted under Article 5.06 of this code, define "uninsured motor
7-14 vehicle" to exclude certain motor vehicles whose operators are in
7-15 fact uninsured.
7-16 (d) The portion of a policy form adopted under Article 5.06
7-17 of this code to provide coverage under this article shall include
7-18 provisions that, regardless of the number of persons insured,
7-19 policies or bonds applicable, vehicles involved, or claims made,
7-20 the total aggregate limit of liability to any one person who
7-21 sustains bodily injury or property damage as the result of any one
7-22 occurrence shall not exceed the limit of liability for these
7-23 coverages as stated in the policy and the total aggregate limit of
7-24 liability to all claimants, if more than one, shall not exceed the
7-25 total limit of liability per occurrence as stated in the policy;
7-26 and shall provide for the exclusion of the recovery of damages for
7-27 bodily injury or property damage or both resulting from the
7-28 intentional acts of the insured. The portion of a policy form
7-29 adopted under Article 5.06 of this code to provide coverage under
7-30 this article shall require that in order for the insured to recover
7-31 under the uninsured motorist coverages where the owner or operator
7-32 of any motor vehicle which causes bodily injury or property damage
7-33 to the insured is unknown, actual physical contact must have
7-34 occurred between the motor vehicle owned or operated by such
7-35 unknown person and the person or property of the insured.
7-36 (e) Except as provided by Subsection (f) of this article,
7-37 the [(3) The] limits of liability for bodily injury, sickness, or
7-38 disease, including death, shall be offered to the insured in
7-39 amounts not less than those prescribed in Chapter 601,
7-40 Transportation Code, [the Texas Motor Vehicle Safety-Responsibility
7-41 Act] and such higher available limits as may be desired by the
7-42 insured, but not greater than the limits of liability specified in
7-43 the bodily injury liability provisions of the insured's policy.
7-44 (f) The named insured may elect to waive coverage under this
7-45 article for recovery of noneconomic and exemplary damages resulting
7-46 from bodily injury, sickness, or disease, including death. If an
7-47 insured elects to waive coverage under this subsection, Subsection
7-48 (e) of this article does not apply to the limits of liability that
7-49 are applicable to the coverage provided under the policy issued to
7-50 the named insured for damages resulting from bodily injury,
7-51 sickness, or disease, including death. The commissioner by rule
7-52 may adopt minimum limits of liability applicable to those damages.
7-53 Waiver of coverage under this subsection does not affect the
7-54 insured's right to bring an action for noneconomic and exemplary
7-55 damages against a responsible party.
7-56 (g) [(4)(a)] Coverage for property damage shall be offered
7-57 to the insured in amounts not less than those prescribed in Chapter
7-58 601, Transportation Code, [the Texas Motor Vehicle
7-59 Safety-Responsibility Act] and such higher available limits as may
7-60 be desired by the insured, but not greater than limits of liability
7-61 specified in the property damage liability provisions of the
7-62 insured's policy, subject to a deductible amount of $250.
7-63 (h) [(b)] If the insured has collision coverage and
7-64 uninsured or underinsured property damage liability coverage, the
7-65 insured may recover under the policy coverage chosen by the
7-66 insured. In the event neither coverage is sufficient alone to
7-67 cover all damage resulting from a single occurrence, the insured
7-68 may recover under both coverages. When recovering under both
7-69 coverages, the insured shall designate one coverage as the primary
8-1 coverage and pay the deductible applicable to that coverage. The
8-2 primary coverage must be exhausted before any recovery is made
8-3 under the secondary coverage. If both coverages are utilized in
8-4 the payment of damages from a single occurrence, the insured shall
8-5 not be required to pay the deductible applicable to the secondary
8-6 coverage when the amount of the deductible otherwise applicable to
8-7 the secondary coverage is the same as or less than the amount of
8-8 the deductible applicable to the primary coverage. If both
8-9 coverages are utilized in the payment of damages from a single
8-10 occurrence and the amount of the deductible otherwise applicable to
8-11 the secondary coverage is greater than the amount of the deductible
8-12 applicable to the primary coverage, the insured shall be required
8-13 to pay in respect of the secondary coverage only the difference
8-14 between the amount of the two deductibles. In no event shall the
8-15 insured recover under both coverages more than the actual damages
8-16 suffered.
8-17 (i) [(5)] The underinsured motorist coverage shall provide
8-18 for payment to the insured of all sums which the insured [he] shall
8-19 be legally entitled to recover as damages from owners or operators
8-20 of underinsured motor vehicles because of bodily injury or property
8-21 damage in an amount up to the limit specified in the policy,
8-22 reduced by the amount recovered or recoverable from the insurer of
8-23 the underinsured motor vehicle. If the named insured has waived
8-24 coverage under Subsection (f) of this article for recovery of
8-25 noneconomic and exemplary damages, the amount paid to the insured
8-26 may not include any amount attributable to noneconomic and
8-27 exemplary damages.
8-28 (j) [(6)] In the event of payment to any person under any
8-29 coverage required by this article [Section] and subject to the
8-30 terms and conditions of such coverage, the insurer making such
8-31 payment shall, to the extent thereof, be entitled to the proceeds
8-32 of any settlement or judgment resulting from the exercise of any
8-33 rights of recovery of such person against any person or
8-34 organization legally responsible for the bodily injury, sickness or
8-35 disease, or death for which such payment is made, including the
8-36 proceeds recoverable from the assets of the insolvent insurer;
8-37 provided, however, whenever an insurer shall make payment under a
8-38 policy of insurance issued pursuant to this article [Act], which
8-39 payment is occasioned by the insolvency of an insurer, the insured
8-40 of said insolvent insurer shall be given credit in any judgment
8-41 obtained against the insured [him], with respect to the insured's
8-42 [his] legal liability for such damages, to the extent of such
8-43 payment, but, subject to Section 12 of Article 21.28-C of this
8-44 code, such paying insurer shall have the right to proceed directly
8-45 against the insolvent insurer or its receiver, and in pursuance of
8-46 such right such paying insurer shall possess any rights which the
8-47 insured of the insolvent company might otherwise have had if the
8-48 insolvent insurer had made the payment.
8-49 (k) [(7)] If a dispute exists as to whether a motor vehicle
8-50 is uninsured, the burden of proof as to that issue shall be upon
8-51 the insurer.
8-52 (l) [(8)] Notwithstanding Section 15.032, Civil Practice and
8-53 Remedies Code, an action against an insurer in relation to the
8-54 coverage provided under this article, including an action to
8-55 enforce that coverage, may be brought only:
8-56 (1) [(a)] in the county in which the policyholder or
8-57 beneficiary instituting the suit resided at the time of the
8-58 accident; or
8-59 (2) [(b)] in the county in which the accident
8-60 involving the uninsured or underinsured motor vehicle occurred.
8-61 ARTICLE 4. PROOF OF INSURANCE CARDS
8-62 SECTION 4.01. Subchapter A, Chapter 5, Insurance Code, is
8-63 amended by adding Article 5.06-7 to read as follows:
8-64 Art. 5.06-7. FORM AND APPEARANCE OF PROOF OF MOTOR VEHICLE
8-65 LIABILITY INSURANCE. (a) The commissioner shall prescribe by rule
8-66 a standard appearance and form for a card issued by an insurer as
8-67 proof of motor vehicle liability insurance prescribed by Section
8-68 601.081, Transportation Code.
8-69 (b) In prescribing the appearance of a proof of motor
9-1 vehicle liability insurance card under Subsection (a) of this
9-2 article, the commissioner shall require an appearance that is:
9-3 (1) difficult to alter, duplicate, or counterfeit; and
9-4 (2) not cost-prohibitive for consumers.
9-5 (c) A card issued as proof of motor vehicle liability
9-6 insurance issued in this state by an insurer must conform to the
9-7 form and appearance prescribed under Subsection (a) of this
9-8 article.
9-9 SECTION 4.02. (a) The commissioner of insurance shall
9-10 prescribe the standard appearance and form of proof of motor
9-11 vehicle liability insurance cards as required by Article 5.06-7,
9-12 Insurance Code, as added by this Act, not later than December 1,
9-13 2001.
9-14 (b) A card issued by an insurer as proof of motor vehicle
9-15 liability insurance that is issued on or after January 1, 2002,
9-16 must conform with rules established by the commissioner of
9-17 insurance under Article 5.06-7, Insurance Code, as added by this
9-18 Act. Proof of motor vehicle liability insurance that is issued
9-19 before January 1, 2002, is governed by the law as it existed
9-20 immediately before the effective date of this Act, and that law is
9-21 continued in effect for that purpose.
9-22 ARTICLE 5. CONDUCT THAT CONSTITUTES THE BUSINESS OF INSURANCE
9-23 SECTION 5.01. Subsection (b), Section 101.051, Insurance
9-24 Code, is amended to read as follows:
9-25 (b) The following acts in this state constitute the business
9-26 of insurance in this state:
9-27 (1) making or proposing to make, as an insurer, an
9-28 insurance contract;
9-29 (2) making or proposing to make, as guarantor or
9-30 surety, a guaranty or suretyship contract as a vocation and not
9-31 merely incidental to another legitimate business or activity of the
9-32 guarantor or surety;
9-33 (3) taking or receiving an insurance application;
9-34 (4) receiving or collecting any consideration for
9-35 insurance, including:
9-36 (A) a premium;
9-37 (B) a commission;
9-38 (C) a membership fee;
9-39 (D) an assessment; or
9-40 (E) dues;
9-41 (5) issuing or delivering an insurance contract to:
9-42 (A) a resident of this state; or
9-43 (B) a person authorized to do business in this
9-44 state;
9-45 (6) directly or indirectly acting as an agent for or
9-46 otherwise representing or assisting an insurer or other person in:
9-47 (A) soliciting, negotiating, procuring, or
9-48 effectuating insurance or a renewal of insurance;
9-49 (B) disseminating information relating to
9-50 coverage or rates;
9-51 (C) forwarding an insurance application;
9-52 (D) delivering an insurance policy or contract;
9-53 (E) inspecting a risk;
9-54 (F) setting a rate;
9-55 (G) investigating or adjusting a claim or loss;
9-56 (H) transacting a matter after the effectuation
9-57 of the contract that arises out of the contract; or
9-58 (I) representing or assisting an insurer or
9-59 other person in any other manner in the transaction of insurance
9-60 with respect to a subject of insurance that is resident, located,
9-61 or to be performed in this state;
9-62 (7) contracting to provide [in this state]
9-63 indemnification or expense reimbursement for a medical expense by
9-64 direct payment, reimbursement, or otherwise [to a person domiciled
9-65 in this state or for a risk located in this state], whether as an
9-66 insurer, agent, administrator, trust, or funding mechanism or by
9-67 another method;
9-68 (8) doing any kind of insurance business specifically
9-69 recognized as constituting insurance business within the meaning of
10-1 statutes relating to insurance;
10-2 (9) doing or proposing to do any insurance business
10-3 that is in substance equivalent to conduct described by
10-4 Subdivisions (1)-(8) in a manner designed to evade statutes
10-5 relating to insurance; or
10-6 (10) any other transaction of business in this state
10-7 by an insurer.
10-8 ARTICLE 6. REPEALER
10-9 SECTION 6.01. Section 601.193, Transportation Code, is
10-10 repealed.
10-11 ARTICLE 7. TRANSITION; EFFECTIVE DATE
10-12 SECTION 7.01. The change in law made by this Act to Chapter
10-13 601, Transportation Code, applies only to punishment for an offense
10-14 committed on or after the effective date of this Act. For purposes
10-15 of this section, an offense is committed before the effective date
10-16 of this Act if any element of the offense occurs before that date.
10-17 SECTION 7.02. Article 5.06--1, Insurance Code, as amended by
10-18 this Act, applies only to a motor vehicle liability insurance
10-19 policy that is delivered, issued for delivery, or renewed on or
10-20 after January 1, 2002. A policy that is delivered, issued for
10-21 delivery, or renewed before January 1, 2002, is governed by the law
10-22 as it existed immediately before the effective date of this Act,
10-23 and that law is continued in effect for that purpose.
10-24 SECTION 7.03. (a) Except as provided by Subsection (b) of
10-25 this section, this Act takes effect September 1, 2001.
10-26 (b) Article 1 of this Act takes effect January 1, 2003.
10-27 * * * * *