Final Action on Rules
Effective August 13, 2002
EXEMPT FILING NOTIFICATION PURSUANT TO THE INSURANCE CODE CHAPTER 5, SUBCHAPTER
L, ARTICLE 5.96 ADOPTION OF AMENDMENTS TO THE TEXAS AUTOMOBILE RULES AND RATING
MANUAL, ENDORSEMENTS 578 AND 579
The Commissioner of Insurance is adopting amendments proposed by Staff
to 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.
A-0402-13-I) was published in the April 26, 2002 issue of the
Texas Register
(27 TexReg 3587).
Amendments are made 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."
Endorsement 578, Section II.C.4., subsections a and b; and Endorsement
579, Section IV.C.4., subsections a and b are 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 is
now being remedied.
The Commissioner of Insurance has jurisdiction over this matter pursuant
to Insurance Code Articles 5.06, 5.10, 5.96, and 5.98. 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).
Consistent with Insurance Code Article 5.96(h), the Department will notify
all insurers writing automobile insurance of this adoption by letter summarizing
the Commissioner's action.
IT IS THEREFORE THE ORDER of the Commissioner of Insurance that the Manual
is amended as described herein, and the amendments are adopted to become effective
on the 60th day after publication of the notification of the Commissioner's
action in the
Texas Register
.
TRD-200203489
Lynda Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Filed: June 5, 2002