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Texas Department of Insurance
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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), Rule 141, Rental Car Companies. Staff’s petition (Ref. No. A-0603-13-I), was filed on June 13, 2003.

Staff proposes amending Manual Rule 141 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. Staff also proposes 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 would not be changed, and Staff’s proposal would eliminate only the verbal disclosure requirements.

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Former Insurance Code Article 21.07, Section 21 was repealed effective September 1, 1999, and it was in essence replaced by Insurance Code Article 21.09, effective on that same date.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.

Staff believes that 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, staff recommends deleting the verbal disclosure requirements from Manual Rule 141.

A copy of the petition, with the full text of the proposed amendments 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 Sylvia Gutierrez at 512-463-6327; refer to (Ref. No. A-0603-13-I).

Comments on the proposed changes must be submitted in writing no later than 5:00 p.m. on July 28, 2003 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 & 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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