HBA-ATS C.S.H.B. 3091 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 3091
By: Siebert
Business & Industry
4/16/1999
Committee Report (Substituted)


 
BACKGROUND AND PURPOSE 

Article 9026 (Automobile Rental Agreements), V.T.C.S., regulates 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 is 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 is executed.  A "loss damage waiver" is 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 offer loss damage waivers as
an optional service.  Because loss damage waivers limit the liability for
damages caused to a rental car, some consumers may believe a waiver is
insurance.  Article 9026 protects 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.
C.S.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: 

ARTICLE 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 or as a result of wilful, wanton, or
reckless conduct; 
  _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 or materially false 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.  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. 

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.  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.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 3091 modifies the original bill in SECTION 1 by redefining "rental
company" in proposed Section 1, Article 9026c, V.T.C.S., to provide that
the term does not include an individual or other entity who holds a license
issued by the Motor Vehicle Board of the Texas Department of Transportation
under Article 4413(36) (Texas Motor Vehicle Commission Code), V.T.C.S., and
whose primary business activity is not the renting of private passenger
automobiles.