HBA-TYH H.B. 1908 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1908 By: Chavez Insurance 4/12/1999 Introduced BACKGROUND AND PURPOSE Under current law, operators of motor vehicles are required to maintain proof of financial responsibility and show that proof in the event of an accident or upon the request of a peace officer. Consumers are required by the Insurance Code to buy a minimum term of 30 days. This provision has resulted in people buying one month of insurance coverage to satisfy requirements for vehicle inspection, drivers' license renewal, or registration renewal, only to allow the coverage to lapse following compliance. H.B. 1908 clarifies acceptable forms of proof of financial responsibility, incorporates additional information required as standard proof of financial responsibility, and increases the minimum policy term required from 30 days to 120 days. This bill also adds Section 4B, Insurance Code, regarding the cancellation of motor vehicle insurance policies. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in SECTION 4 (Article 21.49-2B, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 601.053(a), Transportation Code, to delete a motor vehicle liability insurance policy covering the vehicle and an insurance binder that confirms the operator is in compliance with this chapter (Motor Vehicle Safety Responsibility Act) from the list of documents that the operator of a motor vehicle is required to provide, as an evidence of financial responsibility, to a peace officer or a person involved in an accident with the operator. SECTION 2. Amends Section 601.081, Transportation Code, to provide that a standard proof of motor vehicle liability insurance form prescribed by the Texas Department of Insurance must evidence the existence of a motor vehicle liability insurance policy or a binder issued pending the issuance of a motor vehicle liability insurance policy and must include a statement that the proof evidences the existence of an insurance binder, the date on which the standard proof was issued, and the date on which the coverage under the policy expires. SECTION 3. Amends Articles 5.06(9) and (10), Insurance Code, to change reference to a term of a personal automobile insurance policy or binder from less than 30 to less than 120 days. Makes a conforming change. SECTION 4. Amends Article 21.49-2B, Insurance Code, by amending Section 2 and adding Section 4B, as follows: Sec. 2. APPLICATION. Provides that Section 4B of this article applies to any motor vehicle liability insurance policy issued to comply with the requirements of Chapter 601, Transportation Code. Makes a conforming change. Sec. 4B. CANCELLATION OF CERTAIN MOTOR VEHICLE INSURANCE POLICIES. (a) Prohibits a motor vehicle insurer that issues a standard proof of motor vehicle liability insurance to comply with the requirements of Chapter 601, Transportation Code, from canceling the policy for which the standard proof is issued for any reason, including a reason specified under Section 4 (Cancellation of Policies) of this article (Cancellation and Nonrenewal of Certain Property and Casualty Policies) and including an insured's request for cancellation, before the 120th day after the date stated on which the standard proof was issued. (b) Authorizes a motor vehicle insurer, notwithstanding Subsection (a) of this section, to cancel a motor vehicle liability insurance policy if each motor vehicle covered under the policy is no longer owned by or in the possession of the insured or is no longer operable as a motor vehicle. Requires the commissioner of insurance (commissioner), by rule, to prescribe the appropriate form of proof to be submitted to an insurer before a policy may be canceled under this subsection. (c) Authorizes an insurer to require advance payment of all premiums owed on a motor vehicle liability insurance policy for the period that a policy is not subject to cancellation under this section. (d) Authorizes the commissioner to adopt rules as necessary to implement this section. SECTION 5. Effective date: September 1, 1999. SECTION 6. Makes application of this Act prospective. SECTION 7. Emergency clause.