Office of House Bill AnalysisH.B. 956
By: Burnam


Under current law, consumers are protected from insurers limiting coverage
for the repair of an automobile by requiring the policyholder to have
repair work performed by a repair shop chosen by the insurer. Despite this
protection, substantial steering of business by insurance companies to
preferred repair shops still occurs.  Clarification of the limitations on
insurers and the rights of policyholders may reduce this illegal practice.
House Bill 956 expands the prohibitions on an insurer from directly or
indirectly limiting the beneficiary of a policy or a third-party claimant
from selecting a repair facility for repair of a claimant's vehicle.   


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


House Bill 956 amends the Insurance Code to prohibit a person in the
business of insurance (insurer) from directly or indirectly limiting the
beneficiary of a policy or a third-party claimant (claimant) from selecting
a repair person or facility (repair facility) for the repair of the
claimant's vehicle.   The bill prohibits an insurer from:  

 _accepting any form of compensation or discount from a repair facility in
exchange for referrals;  

 _restricting a claimant's or beneficiary's right to choose a repair
facility by communicating or providing incentive to a claimant that a
repair facility is required to be used or more or less preferable or
acceptable or inducing a claimant to waive the right to select a repair

 _communicating to a claimant that repairs, parts, materials, or labor are
guaranteed by a person other than the repair facility that performs the

 _communicating to a claimant that alternative transportation is allowed
only if the damaged vehicle is repaired by a repair facility selected or
recommended by the insurer or the insurer's agent; or  

 _threatening for any reason to remove a claimant's vehicle from the
claimant's selected repair facility.  The bill authorizes a consumer group,
representative of a consumer, or insurer to submit a written, documented
complaint relating to an alleged violation of these provisions to the Texas
Department of Insurance.  The bill also prohibits an insurer in the
settlement of a third party claim from communicating to a claimant that the
person recommends or prefers the claimant use a repair facility on a list
maintained or compiled by an insurer.  The bill provides that a person
commits an unfair and deceptive act or  practice in the business of
insurance if the person violates the above provisions and is subject to
penalties and sanctions.   


September 1, 2001.