SRC-LBB S.B. 422 78(R) BILL ANALYSIS
Senate Research Center S.B. 422
78R2290 DWS-FBy: Bivins
Business & Commerce
4/2/2003
As Filed
DIGEST AND PURPOSE
Currently, 17 to 26 percent of Texas drivers are uninsured. As proposed,
S.B. 422 provides methods to enhance enforcement of the state's laws
requiring motorists to possess current liability insurance; requires
standard appearance and form for proof of insurance cards; and permits the
insured to waive coverage for noneconomic and exemplary damages.
RULEMAKING AUTHORITY
Rulemaking authority is expressly granted to the Texas Department of
Transportation in SECTION 1.01 (Sections 601.502 and 601.505,
Transportation Code) and to the commissioner of insurance in SECTION 2.01
(Article 5.06-1, Insurance Code) and SECTION 3.01 (Article 5.06-7,
Insurance Code) of this bill.
SECTION BY SECTION ANALYSIS
ARTICLE 1. FINANCIAL RESPONSIBILITY REQUIREMENTS
SECTION 1.01. Amends Chapter 601, Transportation Code, by adding
Subchapter N, as follows:
SUBCHAPTER N. VERIFICATION OF COMPLIANCE WITH AND ENFORCEMENT OF
FINANCIAL RESPONSIBILITY REQUIREMENTS
Sec. 601.501. DEFINITION. Defines "verification date."
Sec. 601.502. VERIFICATION OF ESTABLISHMENT OF FINANCIAL RESPONSIBILITY
THROUGH RANDOM SAMPLING. (a) Requires the Texas Department of
Transportation (TxDOT) or an agent of that department to verify whether an
owner who is selected or whose motor vehicle is selected has established
financial responsibility through a process of random selection of samples
of registrations of motor vehicles and owners of motor vehicles. Requires
the Department of Public Safety (DPS) to provide the TxDOT access to
certain information.
(b) Prohibits a sample from being selected by any discriminatory method.
(c) Authorizes TxDOT to select other certain registered motor vehicle
owners, in addition to the general random sampling of motor vehicle
registrations, to verify that the person has established financial
responsibility.
(d) Requires TxDOT to send a request for information about the motor
vehicle and the owner's method of establishing financial responsibility.
Provides that the request must require the owner to state whether
financial responsibility has been established as of the verification date.
(e) Requires TxDOT to adopt rules as necessary to implement this
subchapter and requires TxDot to establish the frequency of sample
selection and prescribe certain methods, a particular form, and
information to be requested in the form.
(f) Authorizes TxDOT to require an owner to include a statement that the
owner had established financial responsibility as of the verification
date, through certain methods.
(g) Requires the owner, to whom the notice is sent to furnish requested
information to TxDOT in the prescribed form, accompanied by a signed
affirmation that the information is true and correct by a certain date.
(h) Provides that an owner who does not establish financial
responsibility or who fails to respond to the request, is subject to
suspension of the owner's motor vehicle registration.
(i) Authorizes TxDOT to conduct a verification investigation if the owner
asserts in the request for information that the owner had, as of the
verification date, established financial responsibility.
Sec. 601.503. VERIFICATION INVESTIGATION. (a) Authorizes TxDOT or an
agent of that department to verify a response received from an owner under
Section 601.502 by furnishing necessary information to the insurer,
surety, or officer named in the response. Requires the insurer, surety, or
officer to inform TxDOT by a certain date, after the date of receipt of
the information, whether financial responsibility had been established for
the affected motor vehicle. Provides that an insurer is subject to an
administrative penalty for not complying with this subsection.
(b) Requires TxDOT to examine DPS records to verify that a certificate of
selfinsurance has been issued if an owner has stated that financial
responsibility has been established through self-insurance.
Sec. 601.504. WARNING NOTICE. Requires TxDOT to issue a warning to the
owner by certified mail if TxDOT in any way determines that an owner has
registered or maintained the registration of a motor vehicle without
establishing financial responsibility and to inform the owner that
registration will be suspended on a certain date unless certain procedures
are followed.
Sec. 601.505. SUSPENSION; REINSTATEMENT; EXCEPTION. (a) Requires
TxDOT to suspend the registration of an owner to whom a warning notice is
issued, after a certain time frame, unless the owner requests a hearing.
(b) Provides that an owner who receives a warning notice may request a
hearing during a certain time. Requires TxDOT to adopt rules governing a
hearing under this subsection. Requires TxDOT to suspend the registration
of an owner who requests a hearing if on or before the date of the hearing
the owner does not present certain proof of financial responsibility.
(c) Requires TxDOT to notify the owner by certified mail if TxDOT
suspends an owner's motor vehicle registration under this section.
(d) Requires TxDOT to follow certain guidelines relating to the
reinstatement of suspended motor vehicle registrations.
(e) Requires TxDOT to defer the suspension for a first violation if the
owner submits certain information in a certain time frame. Requires TxDOT
to impose the suspension and reinstatement fee if the owner fails to
submit the required evidence of renewal.
(f) Authorizes TxDOT to reinstate the suspended motor vehicle
registration of an owner who received a request for information and
presents proof of financial responsibility.
(g) Prohibits an owner whose vehicle registration has been suspended
from transferring the registration under certain conditions or registering
the motor vehicle in another name.
(h) Provides that TxDOT may authorize the transfer of a vehicle
registration if the transfer is proposed in good faith and not to defeat
the purposes of this subchapter.
(i) Provides that Subsection (g) does not affect the rights of a
conditional vendor or lessor of, or a person with a security interest in,
a motor vehicle owned by a person whose vehicle registration has been
suspended if the vendor, lessor, or secured party is not the registered
owner of the vehicle.
Sec. 601.506. SUBMISSION OF FALSE PROOF. Authorizes TxDOT to suspend
the owner's motor vehicle registration if the owner knowingly submits
false proof of financial responsibility. Authorizes TxDOT to terminate
the suspension under certain requirements.
Sec. 601.507. OPERATION OF MOTOR VEHICLE WHILE REGISTRATION SUSPENDED
FOR FAILURE TO ESTABLISH FINANCIAL RESPONSIBILITY; OFFENSE. (a) Provides
that a person who operates a motor vehicle while the registration of the
motor vehicle is suspended commits an offense.
(b) Provides that an offense under this section is punishable by a fine
of not less than $1,000 or more than $2,000.
(c) Provides that it is a defense to prosecution that the person charged
with an offense under this section produces satisfactory evidence of
established financial responsibility in accordance with certain
requirements in court.
Sec. 601.508. DISPLAY OF FALSE PROOF OF FINANCIAL RESPONSIBILITY;
OFFENSE. (a) Provides that a person commits an offense if the person
knowingly provides false proof of financial responsibility or evidence of
financial responsibility that is illegally altered, counterfeit, or
otherwise invalid, to certain officers of the court.
(b) Requires a peace officer to confiscate invalid evidence of financial
responsibility for presentation in court if the officer issues a citation
to a motor vehicle operator for displaying invalid evidence of financial
responsibility.
(c) Provides that an offense under this section is punishable by a fine
of not less than $500 or more than $750.
Sec. 601.509. DISPOSITION OF FEES. Requires TxDOT to recover its costs
in implementing and administering the verification program from the
reinstatement fees collected under this subchapter. Requires TxDOT to
deposit excess funds to the credit of the state highway fund.
Sec. 601.510. USE OF AGENTS. Authorizes TxDOT to submit requests for
proposals for contracts with private vendors to perform the random
sampling and the verification investigations as an agent of that
department. Authorizes TxDOT to enter into contracts as necessary to
implement the use of agents.
SECTION 1.02. Amends Section 601.051, Transportation Code, as follows:
(a) Creates this subsection from existing text. Provides that a person
may not operate, register, or maintain registration of a motor vehicle in
this state unless financial responsibility is established through certain
means.
(b) Adds this subsection to prohibit an owner of a motor vehicle from
allowing another person to operate the motor vehicle in this state unless
financial responsibility is established and evidenced.
SECTION 1.03. Amends Section 601.191, Transportation Code, as follows:
Sec. 601.191. New Heading: OPERATION OF MOTOR VEHICLE IN VIOLATION OF
FINANCIAL RESPONSIBILITY REQUIREMENTS; OFFENSE. (a) Provides that a
person commits an offense if the person operates a motor vehicle or
permits another person to operate a motor vehicle in violation of Section
601.051.
(b) Increases the fine for an offense under this section from not less
than $175 or more than $350 to not less than $500 or more than $1,000,
except as provided by Subsection (d).
(c) Provides that it is a defense to prosecution under this section that
the owner or operator charged with an offense produces satisfactory
evidence in court that at the time of the alleged offense, the owner or
operator had established financial responsibility. Deletes reference to
previous convictions of an offense under this section and the related
fines.
(d) Increases the amount by which a court may reduce a fine from $175
to $500.
SECTION 1.04. Amends Section 601.195, Transportation Code, by adding
Subsection (c) to make a conforming change.
SECTION 1.05. Requires TxDOT, in performing sample selection under
Section 601.502, Transportation Code, as added by this Act, to ensure that
at least 500,000 samples are selected on or before September 1, 2005.
SECTION 1.06. (a) Requires TxDOT, in cooperation with the Texas
Department of Insurance and the Department of Public Safety of the State
of Texas, to conduct an evaluation of the implementation and operation of
the verification program adopted under Chapter 601N, Transportation Code,
as added by this Act, and of the effectiveness of the verification program
in increasing compliance with the financial responsibility requirements
established under Chapter 601C, Transportation Code. Requires the
evaluation to include certain information.
(b) Requires TxDOT to enter into contracts, memoranda of understanding,
or interagency agreements as necessary to implement this section.
(c) Requires TxDOT to report the results of the evaluation conducted
under this section to the legislature not later than February 1, 2011.
Requires TxDOT to provide written copies of the report to the governor,
the lieutenant governor, and the speaker of the house of representatives.
ARTICLE 2. UNINSURED AND UNDERINSURED MOTORIST COVERAGE
SECTION 2.01. Amends Article 5.06-1, Insurance Code, as follows:
(a) Redesignated from Subdivision (1). Deletes language referring to an
Assigned Risk Plan established under Section 35 of the Texas Motor Vehicle
Safety-Responsibility Act and inserts the Texas Automobile Insurance Plan
Association. Replaces "Board" with "commissioner of insurance
(commissioner)" and "him" with "the named insured." Makes conforming and
nonsubstantive changes.
(b) Redesignated from Subdivision (2). Defines "exemplary damages" and
"noneconomic damages." Makes nonsubstantive and conforming changes.
(c) Makes a conforming change.
(e) Provides that this subsection applies except as provided by
Subsection (f) of this article. Replaces the Texas Motor Vehicle
Safety-Responsibility Act with Chapter 601, Transportation Code. Makes a
conforming change.
(f) Authorizes the named insured to elect to waive coverage under this
article for recovery of noneconomic and exemplary damages resulting from
bodily injury, sickness, or disease, including death. Provides that if an
insured elects to waive coverage under this subsection, Subsection (e) of
this article does not apply to the limits of liability that are applicable
to the coverage provided under the policy issued to the insured for
damages resulting from bodily injury, sickness, or disease, including
death. Authorizes the commissioner by rule to adopt minimum limits of
liability applicable to those damages. Provides that waiver of coverage
under this subsection does not affect the insured's right to bring an
action for noneconomic and exemplary damages against a responsible party.
Provides that written rejection of coverage for noneconomic and exemplary
damages is not effective unless the insurer provides the insured with a
written notice, acknowledged in writing by the insured at the time of the
rejection, disclosing the amount of potential coverage that is available,
the types of damages that would be covered, and the amount of premium
saved because the coverage is rejected.
(g) Redesignated from Subdivision (4)(a). Makes a conforming change.
(h) Redesignated from Subdivision (4)(b).
(i) Redesignated from Subdivision (5). Provides that if the named
insured has waived coverage under Subsection (f) of this
article for recovery of noneconomic and exemplary damages, the amount
paid to the insured may not include any amount attributable to noneconomic
and exemplary damages.
(j) Redesignated from Subdivision (6) to make conforming and
nonsubstantive changes.
(k) Redesignated from Subdivision (7).
(l) Redesignated from Subdivision (8) to make nonsubstantive changes.
ARTICLE 3. PROOF OF INSURANCE CARDS
SECTION 3.01. Amends Subchapter A, Chapter 5, Insurance code, by adding
Article 5.06-7.
Article 5.06-7. FORM AND APPEARANCE OF PROOF OF MOTOR VEHICLE LIABILITY
INSURANCE. (a) Requires the commissioner of insurance (commissioner) to
prescribe by rule a standard appearance and form for a proof of motor
vehicle liability insurance card.
(b) Requires the commissioner to require an appearance of the card that
is difficult to alter, duplicate, or counterfeit and not cost-prohibitive
for consumers.
ARTICLE 4. REPEALER
SECTION 4.01. Repealer: Section 601.193 ( Defense: Financial
Responsibility in Effect at Time of Alleged Offense), Transportation Code.
ARTICLE 5. TRANSITION; EFFECTIVE DATE
SECTION 5.01. Makes application of the change in law made by this Act to
Chapter 601, Transportation Code, prospective.
SECTION 5.02. Makes application of amendments to Article 5.06-1,
Insurance Code, prospective to January 1, 2004.
SECTION 5.03. (a) Effective date: September 1, 2003, except as
provided by Subsection (b) of this section.
(b) Article 1 of this Act takes effect January 1, 2005.