HBA-NRS H.B. 1620 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1620
By: Eiland
Licensing & Administrative Procedures
3/22/2001
Introduced



BACKGROUND AND PURPOSE 

There are a disturbing number of cases in Texas involving various
establishments irresponsibly serving alcoholic beverages to intoxicated
individuals who later injure or kill another person while driving under the
influence of alcohol. Dram shop liability laws are designed to hold servers
of alcoholic beverages responsible for harm that their intoxicated patrons
cause to other people. However, dram shop liability laws do not require an
establishment to carry liability insurance. Some of the establishments that
do carry such insurance do so under what is known as a "shell corporation,"
which holds few or no assets to satisfy a judgment. House Bill 1620
requires a person who holds a license or permit to sell alcoholic beverages
to maintain liability insurance for damages arising out of the operation of
the licensed or permitted premises. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Texas Alcoholic Beverage Commission
SECTION 1 (Section 11.13, Alcoholic Beverage Code), SECTION 2 (Section
61.15, Alcoholic Beverage Code), and SECTION 3 of this bill. 

ANALYSIS

House Bill 1620 amends the Alcoholic Beverage Code to prohibit a person
from holding a permit or a license allowing the person to sell alcoholic
beverages for on-premises consumption, including a permit or license that
is held in conjunction with a food and beverage certificate, unless the
person maintains a liability insurance policy issued by an insurance
company authorized to write liability insurance in this state that will
pay, on the person's behalf, amounts the person becomes obligated to pay as
damages arising out of the operation of the licensed or permitted premises.
The minimum amounts of required insurance coverage are $100,000 for each
person to whom damages covered by the policy are owed and $300,000 for each
single occurrence giving rise to damages covered by the policy. The bill
requires the Texas Alcoholic Beverage Commission (TABC) to adopt rules not
later than December 1, 2001 relating to standards for TABC's approval of
the form of a required liability insurance policy, the method for filing
proof of insurance and obtaining TABC's approval, and verification by TABC
of a license or permit holder's continued maintenance of the required
insurance coverage. 

EFFECTIVE DATE

September 1, 2001, and applies to a person who applies for or holds a
permit or license for the sale of alcoholic beverages for on-premises
consumption, including a permit or license that is held in conjunction with
a food and beverage certificate, on or after January 1, 2002.