HBA-DMD, ATS H.B. 3091 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 3091 By: Siebert Business & Industry 7/30/1999 Enrolled BACKGROUND AND PURPOSE Prior to the 76th Legislature, Article 9026 (Automobile Rental Agreements), V.T.C.S., regulated private passenger automobile rental agreements by prohibiting rental companies from imposing certain liabilities on persons who rent automobiles, subject to certain stated exceptions. For example, a rental company was prohibited from offering for sale a loss damage waiver under which the rental company agrees to limit the amount of the renter's liability to the rental company unless the renter agrees to the loss damage waiver in writing at the time the rental agreement was executed. A "loss damage waiver" was statutorily defined as a rental car company's agreement not to hold a renter liable for all or any portion of any damage or loss related to the rented vehicle, any loss or use of the rented vehicle, or any storage, impound, towing, or administrative charges. Car rental companies offered loss damage waivers as an optional service. Because loss damage waivers limited the liability for damages caused to a rental car, some consumers may have believed a waiver is insurance. Article 9026 protected consumers who decide to purchase waivers by requiring a rental car agreement to conspicuously state that the purchase of a loss damage waiver is not mandatory and that the loss damage waiver is not insurance coverage. In recent years, a majority of states have adopted a model law regulating the sale of loss damage waivers to private passenger automobile renters. H.B. 3091 adopts the model law and repeals Article 9026. Although similar to the existing statute, the model law provides for disclosure of mandatory charges. Under this bill, an agreement containing a mandatory charge must prominently display and fully disclose the charge separately on the face of the agreement and in all of the rental company's price advertising, price displays, price quotes, and price offers. In addition, a rental company is prohibited from imposing or requiring the purchase of a waiver as a mandatory charge. Additionally, this bill prohibits a rental company from voiding a waiver except in certain enumerated circumstances. Under Article 9026, these enumerated circumstances were similar, but they were the basis for the only exclusions from a car rental company's loss damage waiver that the agreement could contain. RULEMAKING AUTHORITY 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. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 20, Title 132, V.T.C.S., by adding Article 9026c, as follows: ART. 9026c. RENTAL CAR DAMAGE WAIVER Sec. 1. DEFINITIONS. Defines "rental company," "renter," "rental agreement," "damage," "private passenger vehicle," "authorized driver," and "damage waiver." Sec. 2. PROHIBITED PRACTICES. (a) Prohibits a rental company from selling a damage waiver unless the renter agrees to the damage waiver (waiver) in writing at or before the time the rental agreement (agreement) is executed. (b) Prohibits a rental company from voiding a waiver except for one or more of the following reasons: _the damage is caused intentionally by an authorized driver or as a result of wilful and wanton misconduct of an authorized driver; _the damage arises out of the use of the vehicle while under the influence of alcohol, illegal drugs, a controlled substance, or any other intoxicant that impairs driving ability; _the rental company entered into the rental transaction based on fraudulent information supplied by the renter; _the damage arises out of the use of the vehicle while engaged in the commission of a crime other than a traffic infraction; _the damage arises out of the use of the vehicle to carry persons or property for hire, to push or tow anything, to engage in a speed contest, or for driver's training; _the damage arises out of the use of the vehicle by a person other than an authorized driver; or _the damage arises out of the use of the vehicle outside the continental United States and the use is not specifically authorized by the rental agreement. Sec. 3. DISCLOSURE NOTICE REQUIREMENTS. (a) Requires a rental company to provide each renter who purchases a waiver that is not included in the base rental rate a disclosure notice. Specifies that the notice must be in at least 10-point type and sets forth the content of the notice, which notifies the renter that the purchase of the waiver is not mandatory and that the waiver is not insurance. (b) Sets forth the language in a notice that a rental company is required to post in a conspicuous location where the waiver is being offered, in addition to the notice provided to each renter who purchases a damage waiver. Sec. 4. MANDATORY CHARGES. Defines "mandatory charge." Provides that an agreement containing a mandatory charge must prominently display and fully disclose the charge separately on the face of the agreement and in all of the rental company's price advertising, price displays, price quotes, and price offers. Prohibits a rental company from imposing or requiring the purchase of a waiver as a mandatory charge. Sec. 5. PROHIBITED REPRESENTATIONS. Provides that no oral or written representations shall be made by any employee or agent of the rental company which contradict the provisions of this article. Provides that no coercive language or action shall be used by any employee or agent of the rental company in an attempt to persuade a renter to purchase the damage waiver. Provides that for the purposes of this section, if the renter has declined the damage waiver, further statements or questions by an employee or agent of the rental company making reference to the damage waiver, other than a statement that the waiver has been declined made in conjunction with a review of the rental agreement, is required to be deemed coercive. Sec. 6. PENALTY. Sets forth that a rental company that violates this article is subject to a civil penalty in an amount of at least $500 and not to exceed $1,000 for each act of violation. Authorizes a county or district attorney or the attorney general to institute and conduct a suit to recover the civil penalty, injunctive relief, or both the civil penalty and injunctive relief. Authorizes any person or entity injured or threatened with injury by a violation of this article to seek injunctive relief against any company or person who violates or threatens to violate this article. SECTION 2. Repealer: Article 9026 (Automobile Rental Agreements), V.T.C.S. Article 9026 regulates private passenger automobile rental agreements by prohibiting rental companies from imposing certain liabilities on persons who rent automobiles, subject to certain stated exceptions. SECTION 3. Makes application of this Act prospective. SECTION 4. Effective date: September 1, 1999. SECTION 5. Emergency clause.