BILL ANALYSIS |
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C.S.H.B. 1733 |
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By: Smithee |
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Insurance |
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Committee Report (Substituted) |
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BACKGROUND AND PURPOSE
Interested parties observe that technological advances have driven major innovations in the vehicle-for-hire service sector, which has resulted in new transportation network companies (TNCs) now providing services in many cities across Texas. The rapid growth of this industry has revealed the need for innovation in both the automobile insurance market and insurance regulations in order to ensure public safety. According to the parties, under current law, drivers for TNCs are dependent on their personal automobile insurance policy as their primary insurance when they are driving and using a TNC application to search for riders. There are concerns that most insurers consider this a commercial activity and exclude coverage under a "livery exclusion" that is standard in most private passenger auto policies. C.S.H.B. 1733 seeks to address issues relating to automobile liability insurance coverage for TNC drivers.
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CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
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RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
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ANALYSIS
C.S.H.B. 1733 amends the Insurance Code to require a transportation network company driver, or transportation network company on the driver's behalf, to maintain primary automobile insurance as required by the bill's provisions. The bill requires insurance maintained for transportation network company drivers to allow a transportation network company driver to use a personal vehicle to transport transportation network company riders for compensation and cover the driver while the driver is logged on to the transportation network company's digital network or the driver is engaged in a prearranged ride.
C.S.H.B. 1733 requires insurance maintained for transportation network company drivers to comply with the law applicable to personal automobile insurance in Texas. The bill establishes that the bill's coverage requirements may be satisfied by automobile insurance maintained by the transportation network company driver, automobile insurance maintained by the transportation network company, or a combination of both. The bill authorizes insurance required under the bill's provisions to be placed with an automobile insurer authorized to engage in business in Texas or with an eligible surplus lines insurer.
C.S.H.B. 1733 sets the minimum amounts of automobile insurance coverage at the time a transportation network company driver is logged on to the transportation network company's digital network and is available to receive transportation network requests but is not engaged in a prearranged ride at $50,000 for bodily injury to or death for each person in an incident, $100,000 for bodily injury to or death of a person per incident, and $25,000 for damage to or destruction of property of others in an incident. The bill requires the automobile insurance policy, at the time a transportation network company driver is engaged in a prearranged ride, to provide, at minimum, coverage with a total aggregate limit of liability of $1 million for death, bodily injury, and property damage for each incident.
C.S.H.B. 1733 requires a transportation network company to provide the coverage required under the bill's provisions beginning with the first dollar of a claim against the driver if an insurance policy maintained by a transportation network company driver has lapsed or does not provide the required coverage. The bill establishes that coverage under an automobile insurance policy maintained by a transportation network company is not contingent on a transportation network company driver's personal automobile insurer initially denying a claim.
C.S.H.B. 1733 establishes that insurance satisfying the requirements of the bill's provisions satisfies the financial responsibility requirement for an automobile under the Texas Motor Vehicle Safety Responsibility Act. The bill requires a transportation network company driver to carry proof of insurance that satisfies the bill's insurance requirements between prearranged rides and insurance requirements during prearranged rides with the driver when the driver uses a vehicle in connection with a transportation network company's digital network. The bill requires a driver, in the event of an accident, to provide the proof of insurance to a directly interested person, automobile insurer, and investigating peace officer on request under Texas Motor Vehicle Safety Responsibility Act provisions relating to evidence of financial responsibility. The bill requires a driver, on request, to disclose to a directly interested person, automobile insurer, and investigating peace officer whether the driver, at the time of the accident, was logged on to the company's digital network or engaged in a prearranged ride.
C.S.H.B. 1733 requires a transportation network company, before a transportation network company driver is authorized to accept a request for a prearranged ride on a transportation network company's digital network, to disclose in writing the insurance policy that the company provides while a driver uses a personal vehicle in connection with the company's digital network and that the driver's personal automobile insurance policy may not provide coverage, depending on the policy's terms, while the driver is logged on to the company's digital network and is available to receive transportation requests or is engaged in a prearranged ride. The bill establishes that a transportation network company does not control, direct, or manage a personal vehicle or a transportation network company driver who connects to the company's digital network except as agreed by written contract.
C.S.H.B. 1733 authorizes an insurer to exclude from coverage under a personal automobile insurance policy issued to an owner or operator of a personal vehicle any loss or injury that occurs while a transportation network company driver using the personal vehicle is logged on to a transportation network company's digital network or is engaged in a prearranged ride. The bill makes such an authorized exclusion from coverage applicable to any coverage included in a personal automobile insurance policy. The bill makes such an authorized exclusion from coverage applicable notwithstanding a financial responsibility requirement under the Texas Motor Vehicle Safety Responsibility Act. The bill establishes that its provisions relating to personal automobile insurance may not be construed to invalidate or limit an exclusion contained in a policy form that excludes coverage for automobiles used to carry persons or property for compensation or available for hire by the public.
C.S.H.B. 1733 establishes that its provisions relating to personal automobile insurance do not require a personal automobile insurance policy to cover a transportation network company driver while the driver is logged on to a transportation network company's digital network, while the driver is engaged in a prearranged ride, or while the driver otherwise uses a vehicle to transport passengers for compensation. The bill establishes that such provisions do not prevent an insurer from providing coverage that may be excluded if the insurer elects to provide the coverage in the policy or by endorsement.
C.S.H.B. 1733 establishes that an automobile insurer that issues a personal automobile insurance policy that includes an exclusion from coverage authorized by the bill does not have a duty to defend or indemnify a claim arising from an event subject to the exclusion. The bill grants an automobile insurer that defends or indemnifies a claim against a transportation network company driver for which coverage is excluded under the terms of the policy as authorized by the bill's provisions relating to personal automobile insurance a right of contribution against another insurer that provides automobile insurance to the driver in satisfaction of the bill's insurance coverage requirements between prearranged rides and insurance coverage requirements during prearranged rides, as applicable.
C.S.H.B. 1733 requires a transportation network company and any insurer providing insurance coverage for transportation network company drivers, in an insurance claim investigation, to assist each insurer involved in the claim by providing information to directly interested persons and an insurer of the transportation network company driver. The bill requires such information to include the precise times that a driver logged on and off of the transportation network company's digital network in the 12-hour period immediately preceding and the 12-hour period immediately following the accident and a clear description of the coverage, exclusions, and limits provided under an automobile insurance policy maintained for transportation network company drivers.
C.S.H.B. 1733 applies to automobile insurance policies in Texas, including a policy issued by a Lloyd's plan, a reciprocal or interinsurance exchange, and a county mutual insurance company.
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EFFECTIVE DATE
September 1, 2015.
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COMPARISON OF ORIGINAL AND SUBSTITUTE
While C.S.H.B. 1733 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and formatted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.
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