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 an amendment to the Texas Automobile Rules and Rating Manual (the Manual). Staff´s petition (Ref. No. A-1104-21-I) was filed on November 10, 2004 .
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 as defined herein.
The purpose of this amendment is to more accurately inform renters regarding their personal automobile insurance policy liability coverage while operating a rental vehicle. The required disclosure will ensure compliance with Texas Insurance Code Article 21.09, §1(g) which requires, in part, that insurance may not be issued under Article 21.09 unless, at each location at which sales of insurance policies occur, brochures or other written materials are prominently displayed and readily available to the prospective consumer that disclose that the policies offered by the rental car company may provide a duplication of coverage already provided by a consumer´s personal automobile insurance policy.
Currently under Manual Rule 141 Subsection E, the required disclosure contains the statement, "Your Texas automobile policy provides coverage for your liability while operating a rental vehicle." Staff proposes an amendment to Manual Rule 141 Subsection A, "Eligibility," to re-state that this rule applies to automobile rental liability insurance that is issued on the Texas Automobile Rental Liability Policy and the Texas Automobile Rental Liability Excess Policy. Staff also proposes to amend Subsection E, "Required Disclosures," to revise the language that informs a prospective buyer of rental liability insurance in a rental car transaction that he or she may already have an insurance policy that duplicates the coverage that would be provided by a automobile rental liability insurance policy. Staff proposes to delete the portion of the current disclosure which states, "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." Staff proposes to replace the deleted language with "Your personal automobile insurance policy may provide coverage for your liability while operating a rental vehicle. "
When Manual Rule 141 was originally adopted, insurers providing automobile rental liability coverage and personal automobile coverage were required to use the prescribed automobile policies, including the Texas Automobile Rental Liability Policy, Texas Automobile Rental Liability Excess Policy and the Texas Personal Automobile Policy (PAP). The PAP provides coverage for a covered persons´ liability while operating a rental vehicle. However, pursuant to the legislative enactment of Senate Bill 14, effective June 11, 2003, Insurance Code Articles 5.13-2 and 5.145 now provide that the regulation of policy forms and endorsements for personal and commercial automobile are governed by the provisions of Article 5.13-2, §8. In accordance with this legislation, which was intended to promote competition and consumer choice, insurers may now file policy forms and endorsements for approval and use in Texas . Since insurers may offer individual company specific personal and commercial automobile policy forms and endorsements, coverage sold through their agents, including rental car companies or their franchisees, may vary by company and product. Insurer policy forms may or may not provide coverage for a covered persons´ liability while operating a rental vehicle.
Staff believes the language in the required disclosure should be amended to more accurately inform renters that their personal automobile insurance policy may provide coverage for their liability while operating a rental vehicle.
Texas Insurance Code Articles 5.10, 5.13-2, 5.96, 5.98, 5.101 and 21.09 and §36.001 authorize the filing of this notification and the action requested of the Commissioner.
A copy of the petition, including an exhibit with the full text of the proposed amendment to the Manual, 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 Angie Arizpe at 512-463-6326; refer to (Ref. No. A-1104-21-I).
Comments on the proposed changes must be submitted in writing no later than 5:00 p.m. on December 20, 2004 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 simultaneously submitted to Marilyn Hamilton , Associate Commissioner, Property and Casualty Program, Texas Department of Insurance, P. O. Box 149104 , MC 104-PC, Austin , Texas 78714-9104 .
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).
141. RENTAL CAR COMPANIES (Class Code________ )
A. Eligibility.
1. This rule applies to automobile rental liability insurance issued on the Texas Automobile Rental Liability Policy and/or the Texas Automobile Rental Liability Excess Policy for 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 personal automobile insurance policy may provide coverage for your liability while operating a rental vehicle.
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.