The Commissioner of Insurance, by Commissioner's Order No. 98-0513, Docket No. 2303, has amended the Texas Automobile Rules and Rating Manual (the Manual) and the Texas Standard Provisions for Automobile Policies (the Standard Provisions).
The following items were adopted: (1) new forms in the Standard Provisions for the Texas Automobile Rental Liability Policy (the primary policy) and Texas Automobile Rental Liability Excess Policy (the excess policy); (2) amendments to Rule 134, Leasing or Rental Concerns, in Section VII of the policy rules part of the Manual; (3) new Rule 141, Rental Car Companies, in Section VII of the policy rules part of the Manual; and (4) new Rule 141, Rental Car Companies in Section VII of the rating rules part of the Manual. The new forms and rules are available on the Department's website at www.tdi.state.tx.us.
The primary and excess policies are designed to be issued by an authorized insurer to a rental car company or its franchisee, who will be the policyholder. The rental car company as the policyholder and as a licensee pursuant to Article 21.07 of the Insurance Code shall issue evidences of coverage for each of the policies to persons renting or leasing autos who purchase automobile rental liability insurance from the rental car company or its franchisee. Under the primary and excess policy, the rental customer will be a named insured under the policy. The rental car company is the policyholder and also an insured under both policies. Neither the primary policy nor the excess policy provide coverage for property damage to the rental vehicle. Both policy forms contain the statutory notice of settlement of liability claims required by Article 21.56 of the Insurance Code.
The primary policy provides liability coverage to a person who rents or leases a private passenger motor vehicle from a rental car company or its franchisee. The primary policy also extends coverage to any authorized driver specified in the rental agreement and provides that the insurer will pay all sums up to policy limits, that an insured legally must pay as damages because of bodily injury or property damage resulting from an accident involving a rental vehicle, except for damage to the rental vehicle.
The excess policy provides liability coverage on an excess basis to any person who rents or leases a private passenger motor vehicle from a rental car company or its franchisee and to any authorized drivers specified in the rental agreement. The excess policy provides that an insurer will pay all sums up to policy limits, that a renter or authorized driver becomes legally obligated to pay as damages in excess of the minimum financial responsibility liability limits for bodily injury and property damage that result from an accident involving a rental vehicle, except for damage to the rental vehicle.
An amendment to Rule 134, Leasing or Rental Concerns, in the policy rules Section VII-Special Types in the Manual was adopted (No amendments to Rate Rule 134 were proposed). Rule 134 is amended to provide that Rule 141, in lieu of Rule 134, shall apply to a rental car company or its franchisee that rents motor vehicles of the private passenger type, including passenger vans, minivans, and pick-up trucks that are primarily intended for the transport of persons, and that sells automobile rental liability insurance to renters or prospective renters of such vehicles.
New Rule 141, Rental Car Companies, is to be incorporated in the policy rules Section VII-Special Types in the Manual. This rule specifies eligibility criteria for the primary and excess liability policies, the requirements for the acceptance or rejection of PIP and UM/UIM coverage, the evidence of coverage, and the disclosures that must be provided by the rental car company or its franchisee.
The written disclosure requirement in Section E.2. of new Policy Rule 141, with respect to frequent renters and corporate accounts, applies only to agreements entered into or revised after the rule becomes effective.
New Rate Rule 141, Rental Car Companies, is to be incorporated into Rating Section VII-Special Types in the Manual. The rate rule sets base rates on a per day basis for the primary policy covering the minimum financial responsibility limits of liability for bodily injury liability, property damage liability, bodily injury/property damage liability combined single limit, uninsured/underinsured motorist bodily injury liability, uninsured/underinsured motorist property damage, uninsured/underinsured motorist bodily injury/property damage combined single limit, and personal injury protection. The rate rule also contains increased limits tables and instructions on calculating a rate for a policy with higher limits of liability and on calculating the rate for the excess policy.
Insurers desiring to write this coverage must make a rate filing using the standard filing forms required for benchmark rate filings. The required forms and instructions are available in the " Property and Casualty Filings Made Easy Manual", Edition 3-98.
All amendments were adopted to become effective May 30, 1998, which is the 15 th day after publication of the Commissioner's action in the Texas Register.
David P. Durden
Deputy Commissioner
Automobile And Homeowners Group