78R1479 PB-D
By: Burnam H.B. No. 120
A BILL TO BE ENTITLED
AN ACT
relating to required procedures for certain third-party claims
under motor vehicle liability insurance policies; providing an
administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter E, Chapter 21, Insurance Code, is
amended by adding Article 21.56A to read as follows:
Art. 21.56A. THIRD-PARTY CLAIMS PROCEDURES UNDER MOTOR
VEHICLE INSURANCE COVERAGE
Sec. 1. DEFINITIONS. In this article:
(1) "Claimant" means a third-party claimant under a
motor vehicle insurance policy.
(2) "Insurer" means a person who delivers, issues for
delivery, or renews a motor vehicle liability insurance policy in
this state. The term includes a reciprocal or interinsurance
exchange, a county mutual insurance company, or a Lloyd's plan.
(3) "Motor vehicle" means a private passenger or
commercial motor vehicle, including a motorcycle.
Sec. 2. APPLICATION. This article applies only to a
third-party claim for property damage to the claimant's motor
vehicle.
Sec. 3. INSURER RESPONSE TO NOTICE OF CLAIM. (a) On
notification by a claimant to an insurer of a claim against a
policyholder of the insurer for property damage to the claimant's
motor vehicle, the insurer shall respond to the claimant as
provided by this article. Except as provided by Subsection (c) of
this section, not later than the 15th business day after the date on
which the insurer is notified of the claim by the claimant and
receives all items, statements, and forms required by the insurer,
the insurer must respond to the claimant in writing and must state:
(1) whether the insurer admits or denies liability for
the claim or why the insurer cannot admit or deny liability for the
claim; and
(2) if the insurer does admit liability for the claim,
the percentage share of liability that the insurer does admit.
(b) If the insurer denies all or a percentage of liability
for the claim, the insurer shall state in writing the factual bases
under which it denies liability.
(c) On notification in writing to a claimant of the specific
reason for the delay, an insurer may extend the 15-day period
imposed under Subsection (a) of this section for an additional
period not to exceed 45 days.
Sec. 4. APPRAISAL OF PROPERTY DAMAGE. (a) The insurer shall
provide for an appraisal of the property damage to the claimant's
motor vehicle. Unless the claimant requests a delay in writing, the
appraisal required under this subsection must be completed not
later than the seventh business day after the applicable date under
Section 3(a) or (c) of this article.
(b) An appraisal provided under this section must specify
the amount necessary to repair the property damage to the vehicle.
Sec. 5. STATEMENT OF RIGHTS. (a) On receipt of notification
of a claim by a claimant, the insurer shall send the claimant a
written statement of the claimant's rights under this article. The
insurer must send the statement not later than the seventh business
day after the date on which the insurer is notified by the claimant.
(b) The commissioner by rule shall specify the form of the
statement required under this section.
Sec. 6. VIOLATION; ADMINISTRATIVE PENALTY. (a) An insurer
commits a violation of this code if the insurer fails or refuses to
comply with the requirements imposed under this article.
(b) The commissioner may impose an administrative penalty
under Chapter 84 for a violation under this section.
Sec. 7. CIVIL ACTION; DAMAGES. (a) A claimant may bring an
action for a violation of this article if the insurer:
(1) fails to comply with the requirements imposed
under Section 3 or 4 of this article;
(2) denies all or a percentage of liability for the
claim without a reasonable basis for the denial of liability; or
(3) appraises the property damage to the motor vehicle
in an amount insufficient to repair that damage without a
reasonable basis for the amount of the appraisal.
(b) A claimant who prevails in a cause of action brought
under this section is entitled to recover:
(1) the amount necessary to repair the property damage
to the motor vehicle without regard to whether the insurer would
otherwise be obligated to pay the claim;
(2) a penalty equal to 12 percent of the amount
recovered under Subdivision (1) of this subsection; and
(3) reasonable attorney's fees.
Sec. 8. EFFECT ON FIDUCIARY DUTIES. This article does not
create new fiduciary relationships or duties or affect fiduciary
relationships or duties in effect on September 1, 2003.
SECTION 2. Article 21.56A, Insurance Code, as added by this
Act, applies only to a claim brought under a motor vehicle insurance
policy that is delivered, issued for delivery, or renewed on or
after January 1, 2004. A claim brought under a policy that is
delivered, issued for delivery, or renewed before January 1, 2004,
is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 3. This Act takes effect September 1, 2003.