TEXAS DEPARTMENT OF INSURANCE
EXEMPT FILING NOTIFICATION PURSUANT TO THE INSURANCE CODE
CHAPTER 5, SUBCHAPTER L, ARTICLE 5.96
ADOPTION OF AMENDMENTS TO
THE TEXAS AUTOMOBILE RULES AND RATING MANUAL,
ENDORSEMENTS 578 AND 579
The Commissioner of Insurance is adopting amendments proposed by Staff to the Texas Automobile Rules and Rating Manual (the Manual), regarding the definitions of an underinsured motor vehicle in Endorsements 578, Named Non-Owner Coverage and 579, Named Operator-Government Employees. Staff's petition (Ref. A-0402-13-I) was published in the April 26, 2002 issue of the Texas Register (27 TexReg 3587).
Amendments are made to the Manual´s Endorsements 578 (to be redesignated 578A) and 579 (to be redesignated 579A) in order to conform the definition of an underinsured motor vehicle to the definition in the Texas Personal Auto Policy. Each endorsement currently provides,
"An underinsured motor vehicle is one to which a liability bond or policy applies but its limit of liability:
- is less than the liability for this coverage; or
- has been reduced by payment of claims to an amount less than the limit of liability for this coverage."
Endorsement 578, Section II.C.4., subsections a and b; and Endorsement 579, Section IV.C.4., subsections a and b are amended to read as follows:
"a. is not enough to pay the full amount the covered person is legally entitled to recover as damages; or
b. has been reduced by the payment of claims to an amount which is not enough to pay the full amount the covered person is legally entitled to recover as damages."
The definition of an underinsured motor vehicle in the Texas Personal Auto Policy formerly was the same as the definitions currently contained in Endorsements 578 and 579. However, on September 13, 1989 the Supreme Court of Texas voided the policy´s definition, holding it not to be in compliance with Insurance Code Article 5.06-1 (Stracener vs. United Services Automobile Association, et al., 777 S.W.2d 378 (Tex. 1989)).
The Department made multiple revisions to the Texas Personal Auto Policy through Board Order No. 59369, for policies that became effective on and after March 1, 1992, including a revised definition of an underinsured motor vehicle consistent with the Supreme Court´s decision. The definitions in Endorsements 578 and 579 were not amended at that time. However, this inconsistency is now being remedied.
The Commissioner of Insurance has jurisdiction over this matter pursuant to Insurance Code Articles 5.06, 5.10, 5.96, and 5.98.
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).
Consistent with Insurance Code Article 5.96(h), the Department will notify all insurers writing automobile insurance of this adoption by letter summarizing the Commissioner's action.
This agency hereby certifies that the amendments as adopted have been reviewed by legal counsel and found to be a valid exercise of the agency's authority.
Issued in Austin, Texas on June 4, 2002.
__[Lynda H. Nesenholtz]______
Lynda H. Nesenholtz
General Counsel and Chief Clerk
IT IS THEREFORE THE ORDER of the Commissioner of Insurance that the Manual is amended as described herein, and the amendments are adopted to become effective on the 60 th day after publication of the notification of the Commissioner's action in the Texas Register.
__[José Montemayor]______
JOSÉ MONTEMAYOR
COMMISSIONER OF INSURANCE
ATTEST:
__[Lynda H. Nesenholtz]______
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
COMMISSIONER ORDER NO. 02-0573
Texas Department of InsuranceCreated/Updated 07-02-2002