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EXEMPT FILING NOTIFICATION PURSUANT TO THE INSURANCE CODE

CHAPTER 5, SUBCHAPTER L, ARTICLE 5.96

Notice is given that the Commissioner of Insurance will consider a proposal made in a staff petition which seeks amendments of the Texas Automobile Rules and Rating Manual (the Manual), and the Texas Standard Provisions for Automobile Policies (the Standard Provisions) to expand eligibility for personal auto coverage to certain utility vehicles that are currently ineligible because of their gross vehicle weight (G.V.W.). Staff´s petition (Ref. No. A-1002-39-I), was filed on October 30, 2002.

Staff proposes amendments to the Manual´s Rules 55 (Eligibility), and 71 (Definitions); Endorsement 583C (to be redesignated 583D), Miscellaneous Type Vehicle Endorsement; Endorsement 593D (to be redesignated 593E), Texas Personal Auto Policy ­ Amendatory Endorsement; Endorsement TE 00 40A (to be redesignated TE 00 40B), Amendatory Endorsement ­ Texas; Endorsement TE 23 20D (to be redesignated TE 23 20E), Truckers Endorsement; and Endorsement TE 99 17G (to be redesignated TE 99 17H), Individual Named Insured; as well as Endorsement 593D (to be redesignated 593E) and Endorsement TE 00 40A (to be redesignated TE 00 40B) in the Standard Provisions. The only substantive change would be to expand eligibility for personal auto coverage to certain utility vehicles that exceed the G.V.W. limitations, which are currently 10,000 pounds or less. The proposed expanded eligibility standard for personal auto coverage for certain utility vehicles is 25,000 pounds or less. The only other changes are editorial, and they would make Rules 55 and 71 consistent with each other, as well as making the endorsements and policy forms more consistent with each other.

Rule 55 currently contains a note at the end that reads:

Note: Utility type means vehicles (with a G.V.W. of 10,000 lbs. or less) of the pickup body, sedan delivery, panel truck, van type and multi-use type which includes Jeeps, Blazers, Rancheros, Broncos, and other similar type vehicles.

As amended, the note in Rule 55 would read:

Note: Utility type means vehicles (with a G.V.W. of 25,000 lbs. or less) of the pickup body, sedan delivery, panel truck, van type and multi-use type which includes, Jeeps, Blazers, Rancheros, Broncos, and other similar vehicles.

Rule 71.A.2. currently provides:

2. A motor vehicle that is a utility type vehicle shall be considered a private passenger auto, if it is:

a. owned or leased under written contract for a continuous period of at least six months;

(1) by an individual, or by two or more individuals who are residents of the same household, or

(2) by two or more individuals who are not residents of the same household, but are related by blood, marriage or adoption, including a ward or foster child; and

(b.) not used for the delivery or transportation of goods, materials or supplies other than samples, unless;

(1) the delivery of goods, materials or supplies is not the primary usage of the vehicle.

(2) for farming or ranching.

Utility type means vehicles (with a G.V.W. of 10,000 lbs. or less) of the pickup body, sedan delivery, panel truck, van type and multi-use type which includes Jeeps, Blazers, Rancheros, Broncos and other similar vehicles.

As amended, the last paragraph of Rule 71.A.2. would provide:

Utility type means vehicles (with a G.V.W. of 25,000 lbs. or less) of the pickup body, sedan delivery, panel truck, van type and multi-use type which includes Jeeps, Blazers, Rancheros, Broncos and other similar vehicles.

Endorsement 583C, Section I, in a portion of the definition of "your covered auto," Subsection 2.b. currently reads:

b. a pickup, panel truck or van with a G.V.W. of 10,000 lbs. or less not used for the delivery or transportation of goods, materials or supplies other than samples; unless, (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, (2) used for farming or ranching.

As amended, that portion of the definition in Endorsement 583D would read:

b. a utility type vehicle, with a G.V.W. of 25,000 lbs. or less, of the pickup body, sedan delivery, panel truck, van type and multi-use type, not used for the delivery or transportation of goods, materials or supplies other than samples; unless, (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, or (2) used for farming or ranching.

The Texas Personal Auto Policy, in a portion of the definition of "your covered auto," Section G.2.I.b. currently reads:

b. a pickup or van with a G.V.W. of 10,000 lbs. or less not used for the delivery or transportation of goods, materials or supplies other than samples; unless, (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, or (2) used for farming or ranching.

Staff proposes to amend that portion of the policy´s definition by replacing Endorsement 593D with Endorsement 593E, which would contain a new Section 5, providing:

5. DEFINITIONS ­ G.2 I. b. ­ is amended as follows:

b. a utility type vehicle, with a G.V.W. of 25,000 lbs. or less, of the pickup body, sedan delivery, panel truck, van type and multi-use type, not used for the delivery or transportation of goods, materials or supplies other than samples; unless, (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, or (2) used for farming or ranching.

The Truckers Coverage Form in Section VI ­ Definitions, Section H, contains the following definition:

H. Private passenger type means a private passenger auto or station wagon, and also includes a pickup or van with a G.V.W. of 10,000 lbs. or less not used for the delivery of transportation of goods, materials or supplies other than samples; unless, (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, or (2) used for farming or ranching.

Staff proposes to amend that definition in the Truckers Coverage Form by replacing Endorsement TE 00 40A with Endorsement TE 00 40B, which would have a new section at the end, providing:

CHANGE IN DEFINITION

TRUCKERS COVERAGE FORM ­ SECTION VI.H.

is amended as follows:

H. Private passenger type means a private passenger auto or station wagon, and also includes a utility type vehicle, with a G.V.W. of 25,000 lbs. or less, of the pickup body, sedan delivery, panel truck, van type and multi-use type, not used for the delivery or transportation of goods, materials or supplies other than samples; unless, (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, or (2) used for farming or ranching.

Endorsement TE 23 20D in Section E.2.a. currently contains the following definition:

a. "Private passenger type" means a private passenger auto or station wagon, and also includes a pickup, panel truck or van with a G.V.W. of 10,000 lbs. or less not used for the delivery or transportation of goods, materials or supplies other than samples; unless (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, or (2) used for farming or ranching.

Staff proposes to amend the definition through Endorsement TE 23 20E, which would read:

a. "Private passenger type" means a private passenger auto or station wagon, and also includes a utility type vehicle, with a G.V.W. of 25,000 lbs. or less, of the pickup body, sedan delivery, panel truck, van type and multi-use type, not used for the delivery or transportation of goods, materials or supplies other than samples; unless, (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, or (2) used for farming or ranching.

Endorsement TE 99 17G in Section A.2.c. currently reads:

c. "Utility type auto" means vehicles of the pickup body, sedan delivery or van type with a G.V.W. of 10,000 lbs. or less and multi-use type vehicles not used for the delivery or transportation of goods, materials or supplies other than samples; unless, (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, or (2) used for farming or ranching.

Staff proposes to change that definition through Endorsement TE 99 17H to read:

c. "Utility type auto" means a utility type vehicle, with a G.V.W. of 25,000 lbs. or less, of the pickup body, sedan delivery, panel truck, van type and multi-use type, not used for the delivery or transportation of goods, materials or supplies other than samples; unless, (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, or (2) used for farming or ranching.

As previously mentioned, "G.V.W." stands for gross vehicle weight. That term, as defined in the Manual by Rule 57.B.1.a., means "The maximum loaded weight for which a single automobile is designed, as specified by the manufacturer." When the 10,000 pound G.V.W. limitation was established for a utility vehicle´s eligibility for personal auto coverage in 1990 (Board Order No. 55717, effective May 1, 1990) there were no utility vehicles with such a high G.V.W. However, manufacturers in recent years have manufactured utility vehicles that exceed the 10,000 pound G.V.W. standard, and that could otherwise be "considered" private passenger autos under Manual rules under certain conditions. As a result many such vehicles, (even those not used in business) are ineligible for personal auto coverage.

An insured who owns one of these vehicles must pay a higher premium for a Business Auto Coverage Form than for a Personal Auto Policy. Further, such an insured does not get certain discounts that might otherwise apply under a Personal Auto Policy. By raising the G.V.W. limitation to 25,000 pounds for otherwise qualified utility vehicles not used in business, Staff´s proposal would achieve more fairness in rating these vehicles.

Additional support for Staff´s proposal is found in Insurance Code Article 5.01C, which became effective September 1, 2001, and pertains to short-term liability insurance for nonresidents visiting this state. This article defines "motor vehicle" to mean "any private passenger vehicle or utility type vehicle that has a gross weight of 25,000 pounds or less."

A copy of the petition is available for review in the office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas. For further information or to request copies of the petition, please contact Sylvia Gutierrez at (512) 463-6327; refer to (Ref. No. A-1002-39-I).

Comments on the proposed changes must be submitted in writing no later than 5:00 p.m. on December 9, 2002 to the Office of the Chief Clerk, Texas Department of Insurance, P. O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional copy of comments is to be submitted to Marilyn Hamilton, Associate Commissioner, Property & Casualty Program, Texas Department of Insurance, P. O. Box 149104, MC 104-PC, Austin, Texas 78714-9104.

A public hearing on this matter will not be held unless a separate request for a hearing is submitted to the Office of the Chief Clerk during the comment period defined above.

This notification is made pursuant to Insurance Code Article 5.96, which exempts it from the requirements of the Government Code, Chapter 2001 (Administrative Procedure Act).



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