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You are here: Home . orders . co-03-0730

Exempt Filing on Rental Car Amendment to Rule 141

CHAPTER 5, SUBCHAPTER L, ARTICLE 5.96

ADOPTION OF AMENDMENTS TO THE

TEXAS AUTOMOBILE RULES AND RATING MANUAL,

RULE 141, RENTAL CAR COMPANIES

The Commissioner of Insurance adopted amendments proposed by Staff to the Texas Automobile Rules and Rating Manual (the Manual), Rule 141, Rental Car Companies. Staff´s petition (Ref. No. A-0603-13-I) was published in the June 27, 2003 issue of the Texas Register (28 TexReg 4933).

Manual Rule 141 is amended to remove the requirement that an employee of a rental car company or its franchisee verbally inform a prospective renter that he or she may already have an insurance policy that duplicates the coverage that would be provided by the policy (automobile rental liability insurance) offered by the rental car company. The rule is also amended to eliminate the requirement that such an employee verbally inform the prospective renter that the purchase of automobile rental liability insurance is not required as a condition of renting an automobile. The rule´s requirements for written disclosures are not changed.

Former Insurance Code Article 21.07, Section 21(i) required a rental car company or franchisee licensed pursuant to that section to conduct a training program to be submitted to the Commissioner of Insurance for approval, and the program was required to meet certain minimum standards. One standard was that the trainee would be "instructed to acknowledge to a prospective renter" that the renter may have insurance policies that already provide the coverage being offered by the rental car company. The statute also provided that the trainee would be instructed "to acknowledge" that the purchase of automobile rental liability insurance is not required for renting a vehicle.

Former Insurance Code Article 21.07, Section 21(g)(2) set forth requirements for written disclosures at every rental car location. Those requirements included similar wording to that previously mentioned in Section 21(i), as well as numerous other provisions. Manual Rule 141, adopted effective May 30, 1998 by Commissioner´s Order No. 98-0513, currently requires verbal disclosure and written disclosure to a prospective customer that automobile rental liability insurance may duplicate existing coverage, and that it is not required for the rental transaction.

Former Insurance Code Article 21.07, Section 21 was repealed effective September 1, 1999 , and it was in essence replaced by Insurance Code Article 21.09, effective on that same date. Article 21.09, Section 1(d), contains some provisions similar to former Article 21.07, Section 21(i), such as the standard that "each trainee must be instructed to inform a prospective customer that...the purchase of insurance specified in this article is not required in order to complete the associated consumer transaction...." However, there is no longer a statutory requirement for disclosure regarding duplicate coverage, other than in Article 21.09(g), which specifically pertains to written disclosures only.

Insurance Code Article 21.09, Section 1(d) may be interpreted as not mandating verbal disclosure that the purchase of automobile rental liability insurance is optional in the rental transaction, provided that disclosure is made in writing, as required by Article 21.09, Section 1(g). That interpretation is possible because the requirement "to inform" in Article 21.09, Section 1(d)(2) may be construed to be satisfied by disclosure in writing.

Certain rental car companies on January 13, 2003 filed a petition with the Department (Ref. No. A-0103-02), asserting that the verbal disclosure requirements of Manual 141 "do not have any consumer benefit," that they "unnecessarily delay the rental transaction," and that they create problems with consistency. The petition also asserts that no other state requires both verbal and written disclosures of this nature, and that the other states require only written disclosures. Considering the foregoing factors, the verbal disclosure requirements are deleted from Manual Rule 141.

The amendments as adopted by the Commissioner of Insurance are shown in an exhibit on file with the Chief Clerk under Ref. A-0603-13-I, which is incorporated by reference into Commissioner´s Order No. 03-0730 .

The Commissioner of Insurance has jurisdiction over this matter pursuant to Insurance Code Articles 5.10, 5.96, 5.98, and 21.09.

IT IS THEREFORE THE ORDER of the Commissioner of Insurance that the Manual is amended as described herein, and the amendments are adopted to become effective on the 15 th day after publication of the notification of the Commissioner's action in the Texas Register


EXHIBIT

141. RENTAL CAR COMPANIES (Class Code___________)

A. Eligibility.

1. This rule applies to motor vehicles and vehicle equipment of the following type that are rented or leased to persons by a rental car company or its franchisee under a rental agreement executed in Texas for a rental period that does not exceed 30 consecutive days:

a . private passenger auto;

b . pick-up;

c . van;

d . utility type vehicle;

e . motor home;

f. motorcycle ;

g . trailer with a gross vehicle weight rating of 10,000 pounds or less; or

h. truck with a gross vehicle weight rating of 26,000 pounds or less, and the operation of which does not require a commercial driver's license; and

i . cartop carrier, tow bar, or tow dolly specifically designed for use with a vehicle.

2. Primary Insurance.

A rental car company or its franchisee may sell, subject to the disclosures in section E. of this rule, primary automobile rental liability insurance to a person who rents or leases a motor vehicle.

3. Excess Insurance.

A rental car company or its franchisee may sell excess automobile rental liability insurance to a person who rents or leases a motor vehicle, subject to the following conditions:

a . provision of the disclosures required under section E. of this rule;

b . the prospective renter represents that he already has an automobile liability policy in effect; and

c . the excess automobile rental liability insurance is excess over basic limits as specified in Rule 43.A. regardless of the limits of the renter's automobile policy.

4. Primary and Excess Insurance.

A rental car company or its franchisee may sell excess automobile rental liability insurance to a person who rents or leases a motor vehicle and who purchases primary automobile rental liability insurance from the rental car company or its franchisee subject to the following conditions:

a . provision of the disclosures required under section E. of this rule;

b . the primary automobile rental liability insurance limits are equal to the basic limits as specified in Rule 43.A.;

c . the excess automobile rental liability insurance is excess over basic limits as specified in Rule 43.A.; and

d . the sale of the excess policy may not be conditioned upon the purchase of the primary policy unless, the prospective renter does not have an automobile liability policy in effect.

B. Personal Injury Protection and Uninsured/Underinsured Motorists Coverage.

The policyholder may accept Personal Injury Protection and Uninsured/Underinsured Motorists Coverage on behalf of all renters who are insured under the Texas Automobile Rental Liability Policy. Acceptance by the policyholder constitutes acceptance by the renter.

If the policyholder does not accept the Personal Injury Protection and Uninsured/Underinsured Motorists Coverage for all renters then Personal Injury Protection Coverage and Uninsured/Underinsured Motorists Coverage shall be provided when liability coverage is written for the renter of an auto unless rejected in writing by the renter. The policyholder shall pre-determine the Personal Injury Protection and Uninsured/Underinsured Motorists limits to be provided.

If the renter rejects coverage through a contract or agreement which specifies in advance the insurance accepted on all rentals for the individual or the employees of a business, the coverage is not required under subsequent rentals by the same rental car company or its franchisee, unless requested by the renter in writing.

C. Evidence of Coverage.

1. The rental agreement may serve as evidence of coverage and must contain, at a minimum, the following if used as evidence of coverage:

a . name of the insurer issuing the Texas Automobile Rental Liability Policy or the Texas Automobile Rental Liability Excess Policy;

b . policy number;

c . that the person or organization renting or leasing the motor vehicle is identified to be a named insured under the policy;

d . the limits of liability; and

e . a description of the process for filing a claim.

2. Evidence of coverage, which contains, at a minimum, the information specified in items a. through e. in section C.1. of this rule, may be provided separate from the rental agreement.

D. Policy Contract. Neither the rental agreement nor the evidence of coverage may amend the policy contract.

E. Required Disclosures.

A rental car company or its franchisee may not offer to sell or sell primary or excess automobile rental liability insurance unless the rental car company or its franchisee provides at each location where rental car agreements are executed, the following:

1. brochures or other written materials that are prominently displayed and readily available to the prospective renter that clearly and correctly summarize the material terms of insurance coverage, including, at a minimum, name of the insurer, limits of liability, types of coverage (bodily injury, property damage, personal injury protection, uninsured/underinsured motorist), election of coverage choices, premium charges by coverage, who is insured under the policy, and claims processing procedures.

2. a written disclosure provided and verbally mentioned to the renter prior to any offer to sell automobile rental liability insurance, that the policy may provide a duplication of coverage already provided by the renter's automobile insurance policy. The disclosure must contain the following statements in at least 10-point bold type

"You may not need the automobile insurance offered by the
___________________________.

(insert rental car company name)

Your Texas automobile policy provides coverage for your liability while operating a rental vehicle. Automobile policies issued in other states or countries may also duplicate this coverage. The purchase of automobile rental liability insurance is not required as a condition of renting an automobile."

3. In addition to the disclosures required in item 2. in this section, written notice must be provided to the renter in at least 10-point bold type informing the renter of the following:

" This insurance does not apply to any bodily injury or property damage arising out of the use or permitting the use of a rental vehicle by any driver while under the influence of drugs or alcohol in violation of law."

F. Premium Computation: Refer to Rate Section VII.



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Last updated: 09/06/2014

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