Proposed Action on Rules
EXEMPT FILING NOTIFICATION PURSUANT TO THE INSURANCE CODE CHAPTER 5, SUBCHAPTER
L, ARTICLE 5.96
Notice is given that the Commissioner of Insurance will consider a proposal
made in a staff petition which seeks amendment of 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. No. A-0402-13-I), was
filed on April 12, 2002.
Staff proposes amendments 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:
a. is less than the liability for this coverage; or
b. has been reduced by payment of claims to an amount less than the limit
of liability for this coverage."
Under staff's proposal, Endorsement 578, Section II.C.4., subsections a
and b; and Endorsement 579, Section IV.C.4., subsections a and b would be
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 has
been brought to Staff's attention and needs to be remedied.
A copy of the petition, including an exhibit with the full text of the
proposed amendments to the Manual is available for review in the office of
the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street,
Austin, Texas. For further information or to request copies of the petition,
please contact Sylvia Gutierrez at (512) 463-6327; refer to (Ref. No. A-0402-13-I).
Comments on the proposed changes must be submitted in writing no later
than 5:00 p.m. on May 27, 2002 to the Office of the Chief Clerk, Texas Department
of Insurance, P. O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional
copy of comments is to be submitted to Marilyn Hamilton, Associate Commissioner,
Property & Casualty Program, Texas Department of Insurance, P. O. Box
149104, MC 104-PC, Austin, Texas 78714-9104.
A public hearing on this matter will not be held unless a separate request
for a hearing is submitted to the Office of the Chief Clerk during the comment
period defined above.
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).
TRD-200202364
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Filed: April 17, 2002