79R4826 DLF-D

By:  Talton                                                       H.B. No. 1219



A BILL TO BE ENTITLED

AN ACT

relating to settlement of certain claims under an auto insurance 
policy.    
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Article 5.07-1(b), Insurance Code, is amended to 
read as follows:
	(b)  In connection with the repair of damage to a motor 
vehicle covered under an auto insurance policy, an insurer, an 
employee of an insurer, an agent of an insurer, a solicitor of 
insurance for an insurer, an insurance adjuster, or an entity that 
employs an insurance adjuster may not:
		(1)  solicit or accept a referral fee or gratuity in 
exchange for referring a beneficiary or third-party claimant to a 
repair person or facility to repair the damage;
		(2)  state or suggest, either orally or in writing, to a 
beneficiary that a specific repair person or facility or a repair 
person or facility identified on a preferred list compiled by an 
insurer [must] be used by a beneficiary in order for the damage 
repair or parts replacement to be covered by the policy; or
		(3)  restrict a beneficiary's or third-party claimant's 
right to choose a repair person or facility by requiring the 
beneficiary or third-party claimant to travel an unreasonable 
distance to repair the damage.
	SECTION 2.  Subchapter A, Chapter 5, Insurance Code, is 
amended by adding Article 5.07-2 to read as follows:
	Art. 5.07-2.  PENALTY FOR CERTAIN VIOLATIONS.  (a)  A 
third-party claimant who has incurred actual damages as a result of 
an insurer's violation of Article 5.07-1(g) of this code may file a 
complaint with the department setting forth a claim for the 
damages.
	(b)  Not later than the 90th day after the date the complaint 
is filed, the department shall:
		(1)  require the insurer to pay the claimant's actual 
damages, not to exceed $5,000; or
		(2)  find that the insurer did not violate Article 
5.07-1(g) of this code or that actual damages were not incurred by 
the claimant.
	(c)  If the department does not act under Subsection (b) 
before the 91st day after the date the complaint is filed, the 
claimant may bring an action to recover the damages.
	(d)  The limitation period applicable to the action is tolled 
from the date the complaint is filed until the 91st day after that 
date.
	(e)  A claimant who prevails in an action under Subsection 
(c) is entitled to recover:
		(1)  the claimant's actual damages, not to exceed 
$5,000;            
		(2)  attorney's fees in the manner described by Chapter 
38, Civil Practice and Remedies Code; and
		(3)  court costs.                                                      
	SECTION 3.  Article 5.07-2, Insurance Code, as added by this 
Act, applies only to a violation of Article 5.07-1(g), Insurance 
Code, that occurs on or after the effective date of this Act. A 
violation of Article 5.07-1(g), Insurance Code, that occurs before 
the effective date of this Act 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 4.  Section 1 of this Act takes effect September 1, 
2005.            
	SECTION 5.  Except as otherwise provided by this Act, this 
Act takes effect immediately if it receives a vote of two-thirds of 
all the members elected to each house, as provided by Section 39, 
Article III, Texas Constitution.  If this Act does not receive the 
vote necessary for immediate effect, this Act takes effect 
September 1, 2005.