Docstoc

sb_749_bill_19990816_amended_asm

Document Sample
sb_749_bill_19990816_amended_asm Powered By Docstoc
					         AMENDED IN ASSEMBLY AUGUST 16, 1999
           AMENDED IN ASSEMBLY JUNE 8, 1999
            AMENDED IN SENATE APRIL 27, 1999
            AMENDED IN SENATE APRIL 14, 1999

SENATE BILL                                             No. 749


                 Introduced by Senator Hughes


                        February 24, 1999




  An act to add Article 17 16.6 (commencing with Section
1758.51) 1758.8) to Chapter 5 of Part 2 of Division 1 of the
Insurance Code, relating to rental car insurance.

                    LEGISLATIVE COUNSEL’S DIGEST
   SB 749, as amended, Hughes. Rental car insurance limited
licenses.
   Existing law governing insurance provides for the licensure
and regulation of production agencies, including, among
others, insurance agents, life agents, insurance brokers, travel
insurance agents, cargo shippers’ agents, and variable
contract agents. Existing law makes it a crime to act or assume
to act in a capacity for which a production agency license is
required without having that license.
   This bill would additionally create, as of July 1, 2000, a new
type of production agency license, called a rental car
insurance limited agent license, which would authorize a
rental car company or its franchisee, to offer to its customers
insurance to its customers of an authorized insurer for
specified types of insurance, if the insurance is offered by a

                                                               95
SB 749                       —2—
representative of the licensee, who is an endorsee on the
license and if the insurance is sold as part of a vehicle rental
transaction in which the insurance charges are itemized in the
rental agreement. It would require a licensee to maintain the
name of each rental car representative who is an endorsee on
the license, and to annually file all training materials used to
train those representatives, with the Insurance Commissioner
a certification of the number of endorsees, a statement that no
person other than an endorsee sells or offers insurance on its
behalf, and that all endorsees have completed training as
required. It would authorize the commissioner to take certain
remedial measures for violations of these provisions and to
adopt rules and regulations necessary to administer these
provisions.      The bill would require a rental car agent to
provide brochures to customers, as specified, relating to
insurance offered, and would specify both required and
prohibited conduct of a rental car agent.
   By creating a new category of production agency license,
this bill would expand the scope of activities for which a
license is required. Thus, the bill would expand the scope of
an existing crime, thereby imposing a state-mandated local
program.
   The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated
by the state. Statutory provisions establish procedures for
making that reimbursement.
   This bill would provide that no reimbursement is required
by this act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.

    The people of the State of California do enact as follows:

 1   SECTION 1. Article 17 16.6 (commencing with
 2 Section 1758.51) 1758.8) is added to Chapter 5 of Part 2 of
 3 Division 1 of the Insurance Code, to read:
 4




                                                                 95
                              —3—                          SB 749
 1         Article 17.   Rental Car Insurance Limited License
 2
 3      1758.51. The rental car insurance limited license is
 4   hereby created. No rental car company shall offer
 5   insurance to its customers unless all of the following
 6   apply:
 7      (a) The company has been issued a rental car
 8   insurance limited license.
 9      (b) The insurance is offered by a rental car
10   representative.
11      (c) The insurance is sold as part of a transaction for the
12   rental of a vehicle and the charges for insurance are
13   itemized in the rental agreement.
14      (d) The insurance is of the type authorized pursuant
15   to Section 1758.56.
16      1758.52. For purposes of this article:
17      (a) ‘‘Rental     agreement’’     means      any     written
18   agreement setting forth the terms and conditions
19   governing the use of a motor vehicle provided by a rental
20   car company for rental or lease.
21      (b) ‘‘Rental car company’’ is a person or entity that
22   rents motor vehicles, for periods of 90 days or less, as well
23   as for any renewals or extensions of those periods, of the
24   private passenger type, including passenger vans,
25   minivans, and sport utility vehicles, and of the cargo type,
26   including cargo vans, pickup trucks, and trucks with a
27   gross vehicle weight of 26,000 pounds or less. A franchisee
28   or a licensee of a rental car company is also a ‘‘rental car
29   company.’’
30      (c) ‘‘Rental car representative’’ is an employee or
31   agent of a licensee under this article who is 18 years of age
32   or older and who has successfully completed employee
33   training that shall be conducted pursuant to subdivision
34   (b) of Section 1758.55 by, or on behalf of the licensee,
35   using training materials that shall be filed by the licensee
36   with the department.
37      1758.53. (a) An applicant for a license under this
38   article is not required to pass a qualifying examination
39   and is not required to satisfy any prelicensing or
40   continuing education requirements. The fee for filing an

                                                                 95
SB 749                       —4—
 1   application for an original license is fifty-two dollars
 2   ($52).
 3      (b) An applicant shall be 18 years of age or older at the
 4   time the license is applied for.
 5      (c) (1) ‘‘License period’’ as used in this article means
 6   all of that two-year period beginning as described in
 7   subparagraph (A) or (B) of paragraph (2), as applicable,
 8   and ending the second succeeding year on the last
 9   calendar day of the month in which the initial license was
10   issued.
11      (2) A license period shall be determined for each
12   person as follows:
13      (A) Upon initial licensing, the license period starts on
14   the date the license is issued.
15      (B) Subsequently, the license period starts the first
16   day of the month following the month in which the initial
17   license was issued.
18      (d) A license is required to be renewed on or before
19   the expiration date of the license period. The fee for
20   issuance of the original license and any renewal thereof
21   is two hundred nine dollars ($209).
22      1758.54. A licensee may offer the insurance listed in
23   Section 1758.56 in each location in this state at which it
24   conducts business. The rental car company shall
25   prominently display at each location in this state at which
26   it conducts business, its license number and the number
27   of the department’s toll-free consumer hotline.
28      1758.55. (a) The         name    of    each  rental   car
29   representative shall be maintained by the company and
30   submitted to the department at the time of license
31   application and annually thereafter. The rental car
32   company assumes all responsibility for the actions of
33   employees, acting within the scope of their employment,
34   who sell the insurance products on its behalf in
35   conjunction with the rental of a vehicle pursuant to this
36   article.
37      (b) Each rental car company licensed pursuant to this
38   article shall provide for a training program for its rental
39   car representatives which shall meet the following
40   minimum standards:

                                                               95
                               —5—                           SB 749
 1      (1) Each rental car representative shall receive
 2   instruction about the types of insurance specified in
 3   subdivision (a) of Section 1758.56 that are offered for sale
 4   to prospective renters.
 5      (2) Each rental car representative shall receive
 6   training about sales practices.
 7      (3) Each rental car representative shall receive
 8   training about the disclosures to be given to prospective
 9   renters pursuant to Section 1758.58.
10      1758.56. (a) The holder of a license under this article
11   may offer and sell any or all of the following insurance
12   products:
13      (1) Personal accident insurance.
14      (2) Liability insurance which may include, at the
15   exclusive option of the licensee, uninsured and
16   underinsured motorist coverage.
17      (3) Personal effects insurance.
18      (4) Roadside assistance insurance.
19      (5) Emergency sickness insurance.
20      (6) Other insurance approved by the department.
21      (b) The insurance products listed in subdivision (a)
22   that are sold in conjunction with a vehicle rental are not
23   transferable and do not apply to any vehicle not listed in
24   the contract issued.
25      1758.57. Nothing in this code shall prohibit the
26   payment of a commission to licensees or rental car
27   representatives, or the payment of bonuses or other
28   rewards to rental car representatives, based in part on the
29   sale of insurance.
30      1758.58. (a) At         every     location      where   rental
31   agreements are executed, brochures or other written
32   materials concerning the types of rental car insurance
33   offered shall be provided to the renter who purchases
34   insurance as provided for by this article. The materials
35   shall do all of the following:
36      (1) Summarize clearly the material terms of coverages
37   offered to renters, including the identity of the insurer.
38      (2) Disclose that the coverage offered by the licensee
39   may provide a duplication of coverage already provided
40   by a renter’s personal insurance policies.

                                                                    95
SB 749                         —6—
 1      (3) Disclose that the purchase by the renter of the
 2   kinds of coverage specified in this article is not required
 3   in order to rent a vehicle.
 4      (4) Describe the process for filing a claim in the event
 5   that the renter elects to purchase coverage.
 6      (5) Disclose the name, address, telephone number,
 7   and license number of the rental car company.
 8      (6) Disclose the availability and telephone number of
 9   the toll-free consumer hotline of the Department of
10   Insurance.
11      (b) The information required to be provided by this
12   section shall be clear and conspicuous and easily
13   identifiable to car renters that purchase insurance as
14   provided for in this article.
15      (c) Car renters that purchase insurance as provided
16   for in this article shall initial a document acknowledging
17   receipt of the disclosures required by this section.
18      1758.59. A licensee shall not be required to treat
19   moneys collected from renters purchasing insurance
20   pursuant to this article as funds received in a fiduciary
21   capacity.
22      1758.60. (a) If a rental car company licensed under
23   this article violates any provision of this article, the
24   commissioner may, after notice and hearing, suspend the
25   company’s        license      or    suspend      the     company’s
26   authorization to transact insurance at specific rental
27   locations where violations of this article have occurred, as
28   the commissioner deems necessary to carry out the
29   provisions of this article.
30      (b) If any person sells insurance in connection with or
31   incidental to the rental of a vehicle or holds himself or
32   herself out as a licensed rental car company without
33   obtaining the license required under this article, the
34   commissioner may issue a cease and desist order without
35   notice or hearing against that person.
36      1758.61. The commissioner may adopt reasonable
37   rules and regulations necessary for the convenient,
38   efficient administration of the provisions of this article.
39      1758.62. This article shall become operative on July 1,
40   2000.

                                                                     95
                             —7—                         SB 749
 1                 Article 16.6.   Rental Car Agents
 2
 3      1758.8. (a) No rental car company shall offer or sell
 4   insurance unless it has complied with the requirements
 5   of this article and has been issued a license by the
 6   commissioner as provided in this article.
 7      (b) The commissioner may issue to a rental car
 8   company, or to a franchisee of a rental car company, that
 9   has complied with the requirements of this article, a
10   license that authorizes the rental car company or the
11   franchisee of a rental car company to act as a rental car
12   agent to offer or sell those types of insurance specified in
13   Section 1758.85, in connection with and incidental to
14   rental agreements, on behalf of any insurer authorized to
15   write those types of insurance in this state.
16      1758.81. (a) An applicant for a rental car agent
17   license under this article shall file both of the following
18   documents with the commissioner:
19      (1) A written application for licensure, signed by the
20   applicant or an officer of the applicant, in the form
21   prescribed by the commissioner.
22      (2) A certificate by the insurer that is to be named in
23   the rental car agent license, stating that the insurer has
24   satisfied itself that the named applicant is trustworthy
25   and competent to act as its insurance agent limited to this
26   purpose and that the insurer will appoint the applicant to
27   act as its agent in reference to doing the kind or kinds of
28   insurance that are permitted by this article, if the rental
29   car agent license applied for is issued by the
30   commissioner. The certification shall be subscribed by an
31   officer or managing agent of the insurer on a form
32   prescribed by the commissioner.
33      (b) Notwithstanding any other provision of law to the
34   contrary, Sections 1667, 1668, 1668.5, 1669, 1670, 1738, and
35   1739 apply to any application for or issuance of a license
36   pursuant to this article.
37      (c) Costs associated with any enforcement action or
38   investigation shall be paid for by the person or
39   organization licensed pursuant to this article.


                                                               95
SB 749                       —8—
 1      1758.82. (a) An employee of a rental car company
 2   that has been issued a rental car agent license pursuant
 3   to this article may be an endorsee on the license if all of
 4   the following conditions have been met:
 5      (1) The employee is 18 years of age or older.
 6      (2) The rental car company, at the time it submits its
 7   rental car agent license application pursuant to Section
 8   1758.81, also establishes a list of the names of all endorsees
 9   to its rental car agent license. The list shall be maintained
10   by the rental car company in a form prescribed by the
11   commissioner and updated annually. The list shall be
12   retained by the rental car company for three years and
13   made available to the commissioner for review and
14   inspection.
15      (3) The      rental    car    company    submits   to   the
16   commissioner with its initial rental car agent license
17   application and annually thereafter a certification,
18   subscribed by an officer of the company on a form
19   prescribed by the commissioner, stating all of the
20   following:
21      (A) The number of endorsees to its license for the
22   applicable period.
23      (B) A statement that no person other than an endorsee
24   sells or offers insurance on its behalf.
25      (C) That all endorsees have completed training as
26   required by this article.
27      (4) The applicant submits an application fee, and each
28   license period thereafter, a renewal fee, in an amount or
29   amounts determined by the department as sufficient to
30   defray the department’s actual costs of processing the
31   application or renewal and implementing this article.
32      (b) Each rental car company licensed pursuant to this
33   article shall provide for a training program for its rental
34   car representatives that shall meet the following
35   minimum standards:
36      (1) Each rental car representative shall receive
37   instruction about the types of insurance specified in
38   Section 1758.85 that are offered for sale to prospective
39   renters.


                                                                 95
                               —9—                           SB 749
 1      (2) Each rental car representative shall receive
 2   training about ethical sales practices.
 3      (3) Each rental car representative shall receive
 4   training about the disclosures to be given to prospective
 5   renters pursuant to subdivision (c) of Section 1758.86.
 6      (c) Training materials used by or on behalf of the
 7   rental car company to train its endorsees shall be
 8   submitted to the department at the time the rental car
 9   company applies for a license under this article, and
10   whenever        modified    thereafter.    Any      changes    to
11   previously      submitted    training    materials     shall   be
12   submitted      to   the    department     with     the    changes
13   highlighted 30 days prior to their use by the licensee. A
14   licensee is not required to have prior approval from the
15   department before using training materials submitted
16   pursuant to this subdivision. However, any training
17   materials are subject to disapproval by the department.
18      (d) The rental car company shall periodically retrain
19   its endorsees on the subject matter described in
20   subdivision (b), as prescribed by the commissioner.
21      1758.83. (a) The manager at each location of a rental
22   car company or a franchisee of a rental car company
23   licensed pursuant to this article, or direct a supervisor of
24   the company’s endorsees at each location or region shall
25   be an endorsee and shall be responsible for the
26   supervision of each additional endorsee at that location or
27   region. Each licensee shall identify the endorsee who is
28   the manager or supervisor at each location for the
29   purposes of this article.
30      (b) Any employee of a rental car agent who complies
31   with the requirements of Section 1758.82 may act on
32   behalf and under the supervision of the rental car agent
33   in matters relating to the conduct of business under that
34   agent’s license. The conduct of an employee or agent of
35   a rental car agent acting within the scope of employment
36   or agency shall be deemed the conduct of the rental car
37   agent for purposes of this article.
38      1758.84. (a) If a licensee violates any provision of this
39   article, the commissioner may do any of the following:


                                                                    95
SB 749                      — 10 —
 1      (1) After notice and hearing, revoke or suspend the
 2   licensee’s license.
 3      (2) After notice and hearing, impose other penalties,
 4   including suspending the transaction of insurance at
 5   specific rental locations where violations of this article
 6   have occurred, prohibiting individual endorsees or the
 7   manager or supervisor at each location responsible for the
 8   supervision and conduct of other endorsees from
 9   transacting insurance, that the commissioner deems to be
10   necessary or convenient to carry out the purpose of this
11   article.
12      (3) Impose fines and penalties on the licensee for its
13   conduct or that of its endorsees.
14      (b) If any person sells insurance in connection with, or
15   incidental to, rental car agreements or holds himself or
16   herself or an organization out as a rental car agent
17   without obtaining the license required by this article, or
18   as being an endorsee when that person is not an endorsee
19   or being licensed pursuant to Chapter 5 (commencing
20   with Section 1631) without obtaining that license, the
21   commissioner may issue a cease and desist order pursuant
22   to Section 12921.8.
23      (c) Notwithstanding any other provision of law to the
24   contrary, the provisions of Section 1748.5 are applicable
25   to both the rental car company or franchisee issued a
26   license pursuant to this article and any endorsee of that
27   licensee.
28      1758.85. A rental car company or franchisee licensed
29   under this article may act as a rental car agent for an
30   authorized insurer only in connection with the rental of
31   vehicles and only with respect to the following kinds of
32   insurance:
33      (a) Personal accident insurance for renters and other
34   rental vehicle occupants, for accidental death or
35   dismemberment, and for medical expenses resulting
36   from an accident that occurs with the rental vehicle
37   during the rental period.
38      (b) Liability insurance, which may include uninsured
39   motorist coverage, whether offered separately or in
40   combination with other liability insurance, that provides

                                                              95
                            — 11 —                       SB 749
 1   coverage to the renters and to other authorized drivers
 2   of a rental vehicle and is nonduplicative of any standard
 3   liability coverage or self-insurance limits provided by the
 4   rental company in its rental agreement, for liability
 5   arising from the negligent operation of the rental vehicle
 6   during the rental period.
 7      (c) Personal effects insurance that provides coverage
 8   to renters and other vehicle occupants for loss of, or
 9   damage to, personal effects in the rental vehicle during
10   the rental period.
11      (d) Roadside assistance insurance.
12      (e) Emergency sickness insurance.
13      1758.851. The insurance products listed in Section
14   1758.85 that are sold in conjunction with a vehicle rental
15   are not transferable and do not apply to any vehicle not
16   listed in the rental contract issued.
17      1758.86. A rental car agent shall not sell insurance
18   pursuant to this article unless all of the following
19   conditions are satisfied:
20      (a) The rental period of the rental agreement does not
21   exceed 30 consecutive days, except for any renewals or
22   extension of the original rental period.
23      (b) The rental car agent provides brochures or other
24   written materials to the prospective renter that do all of
25   the following:
26      (1) Summarize the material terms and conditions of
27   coverage offered to renters, including the identity of the
28   insurer.
29      (2) Describe the process for filing a claim, including a
30   toll-free telephone number to report a claim.
31      (3) Disclose any additional information on the price,
32   benefits, exclusions, conditions, or other limitations of
33   those policies that the commissioner may by rule
34   prescribe.
35      (4) Provide the licensee’s name, address, telephone
36   number, and license number, as well as the availability of
37   the department’s toll-free consumer hotline.
38      (c) The rental car agent or its endorsee makes all of the
39   following disclosures to the renter, which shall be
40   acknowledged in writing by the renter, or displayed by

                                                               95
SB 749                      — 12 —
 1   clear and conspicuous signs that are posted at every
 2   location where rental agreements are executed, such as
 3   the counter where the renter signs the rental agreement:
 4      (1) That the purchase by the renter of the kinds of
 5   insurance prescribed in this article is not required in
 6   order to rent a vehicle.
 7      (2) That the insurance policies offered by the rental
 8   car agent may provide a duplication of coverage already
 9   provided by a renter’s personal automobile insurance
10   policy or by another source of coverage.
11      (3) That the endorsee on the rental car agent’s license
12   is not qualified or authorized to evaluate the adequacy of
13   the purchaser’s existing insurance coverages.
14      (d) Evidence of coverage is stated on the face of the
15   rental agreement or evidence of coverages provided to
16   every renter who elects to purchase that coverage is
17   indicated to the renter.
18      (e) The insurance is provided under an individual, a
19   group, or master policy issued to the rental car company
20   by an insurer authorized to transact the applicable kinds
21   or types of insurance in this state.
22      1758.861. A licensee shall not be required to treat
23   moneys collected from renters purchasing insurance,
24   pursuant to this article, as funds received in a fiduciary
25   capacity if the insurer represented by the licensee has
26   provided in writing that the funds need not be segregated
27   from funds received by the rental car company on
28   account of vehicle rental and the charges for insurance
29   coverage are itemized and incorporated as part of the
30   rental agreement.
31      1758.87. A rental car agent shall not do any of the
32   following:
33      (a) Offer to sell insurance except in conjunction with,
34   and incidental to, authorized rental agreements.
35      (b) Advertise, represent, or otherwise portray itself or
36   its employees or endorsees as licensed insurers, insurance
37   agents, or insurance brokers.
38      (c) Pay an endorsee any compensation, fee, or
39   commission dependent on the placement of insurance
40   under the agent’s license. Nothing in this code shall

                                                              95
                              — 13 —                         SB 749
 1   prohibit     the    payment      of    a    ‘‘performance-related
 2   incentive.’’ For the purposes of this subdivision, a
 3   ‘‘performance-related incentive’’ is not a commission as
 4   otherwise defined. A ‘‘performance-related incentive’’ is
 5   money or other tangible or intangible item of value paid
 6   or given to any endorsee of the licensee which is not based
 7   solely on the offering or selling of the insurance products
 8   listed in Section 1758.85.
 9      1758.88. Any insurer that provides insurance to be
10   sold by a rental car company or franchisee of a rental car
11   company under this article shall file a copy of the policy
12   with the commissioner, who shall make that policy
13   available to the public.
14      1785.89. As used in this article, the following
15   definitions have the following meanings:
16      (a) (1) ‘‘License period,’’ as used in this article, means
17   all of that two-year period beginning as described in
18   subparagraph (A) or (B) of paragraph (2), as applicable,
19   and ending the second succeeding year on the last
20   calendar day of the month in which the initial license was
21   issued.
22      (2) A license period shall be determined for each
23   person as follows:
24      (A) Upon initial licensing, the license period starts on
25   the date the license is issued.
26      (B) Subsequently, the license period starts the first
27   day of the month following the month in which the initial
28   license was issued.
29      (3) A license is required to be renewed on or before
30   the expiration date of the license period.
31      (b) ‘‘Rental vehicle’’ or ‘‘vehicle’’ means a motor
32   vehicle operated by a driver who is not required to
33   possess a commercial driver’s license to operate the
34   motor vehicle and the motor vehicle is either of the
35   following:
36      (1) A private passenger motor vehicle, including a
37   passenger van, minivan, or sports utility vehicle.
38      (2) A cargo vehicle, including a cargo van, pickup
39   truck, or truck with a gross vehicle weight of less than
40   26,000 pounds.

                                                                    95
SB 749                      — 14 —
 1      (c) ‘‘Renter’’ means any person who obtains the use of
 2   a vehicle from a rental car company under the terms of
 3   a rental agreement.
 4      (d) ‘‘Rental car company’’ means any person in the
 5   business of renting vehicles to the public.
 6      (e) ‘‘Rental      agreement’’      means any     written
 7   agreement setting forth the terms and conditions
 8   governing the use of a vehicle provided by the rental car
 9   company.
10      (f) ‘‘Rental car agent’’ means a person or organization
11   licensed pursuant to this article to offer insurance in
12   connection with and incidental to rental car agreements
13   on behalf of an insurer authorized to write those types of
14   insurance in this state.
15      (g) ‘‘Endorsee’’ means an unlicensed employee of a
16   rental care agent who meets the requirements of this
17   article.
18      SEC. 2. No reimbursement is required by this act
19   pursuant to Section 6 of Article XIII B of the California
20   Constitution because the only costs that may be incurred
21   by a local agency or school district will be incurred
22   because this act creates a new crime or infraction,
23   eliminates a crime or infraction, or changes the penalty
24   for a crime or infraction, within the meaning of Section
25   17556 of the Government Code, or changes the definition
26   of a crime within the meaning of Section 6 of Article
27   XIII B of the California Constitution.




                               O

                                                              95

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:5
posted:7/2/2011
language:English
pages:14