79R3854 KCR-D

By:  Castro                                                       H.B. No. 704



A BILL TO BE ENTITLED

AN ACT

relating to requiring certain coverage under motor vehicle 
liability insurance policies.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter A, Chapter 5, Insurance Code, is 
amended by adding Article 5.07-2 to read as follows:
	Art. 5.07-2.  COVERAGE FOR COST OF CERTAIN RENTAL VEHICLES              
	Sec. 1.  DEFINITIONS.  In this article:                                 
		(1)  "Insurer" means an insurance company, reciprocal 
or interinsurance exchange, mutual, capital stock company, 
fraternal benefit society, local mutual aid association, county 
mutual, association, Lloyd's plan, or other entity writing motor 
vehicle insurance in this state.  The term includes a company 
affiliated with an insurer.
		(2)  "Third-party claimant" means any person who makes 
a claim on a motor vehicle liability insurance policy who is not the 
policyholder of the motor vehicle liability insurance on which the 
claim is made.
	Sec. 2.  COVERAGE REQUIRED.  (a)  An insurer that delivers or 
issues for delivery a liability insurance policy on a motor vehicle 
shall indemnify a third-party claimant who requests a substitute 
motor vehicle equivalent to the third-party claimant's damaged 
motor vehicle in size and quality for reasonable rental costs for 
the requested substitute motor vehicle if the third-party 
claimant's motor vehicle:
		(1)  sustains damage for which the third-party claimant 
may recover under the policy; and
		(2)  cannot be operated because of the damage 
sustained.             
	(b)  An insurer is liable under Subsection (a) of this 
section for rental costs incurred by a third-party claimant 
beginning on the date on which the motor vehicle is damaged and 
ending on:
		(1)  the date on which the insurer could reasonably 
expect the third-party claimant's motor vehicle to be fully 
repaired and operable; or
		(2)  if the third-party claimant's motor vehicle is a 
total loss, the earlier of:
			(A)  the date on which the third-party claimant 
obtains a replacement vehicle for the damaged vehicle; or
			(B)  the date on which the insurer indemnifies the 
third-party claimant for the total loss of the damaged vehicle.
	(c)  On receipt of a claim from a third party, an insurer 
shall notify the third-party claimant in writing that, on request, 
the insurer will indemnify the third-party claimant for reasonable 
rental costs for a substitute motor vehicle equivalent to the 
third-party claimant's damaged motor vehicle in size and quality as 
required by this section.
	SECTION 2.  The change in law made by this Act applies only 
to a motor vehicle liability insurance policy that is delivered, 
issued for delivery, or renewed after January 1, 2006.  A motor 
vehicle liability insurance policy that is delivered, issued for 
delivery, or renewed before January 1, 2006, is governed by the law 
as it existed immediately before the effective date of this Act, and 
the former law is continued in effect for that purpose.
	SECTION 3.  This Act takes effect September 1, 2005.