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.