Texas CDW Legislation Defeated

The Truck Renting and Leasing Association has released this bulletin regarding the defeat of Texas HB 3059:  

Texas legislation that would have imposed some unnecessarily strict requirements on vehicle rental companies that sell Collision Damage Waivers (CDWs) as part of vehicle rental contracts has been defeated by TRALA. Texas HB 3059 would have regulated the form used and the price that vehicle rental companies could charge when selling CDWs. It would have also required CDWs to be underwritten, which would have essentially treated CDWs as an insurance product and required higher licensing standards for vehicle rental company employees that sell CDWs.

TRALA representative John Esparza of the Texas Motor Transport Association (TMTA) met with the bill's sponsor, John Smithee, who is also the Chairman of the House Insurance Committee. Esparza also attended meetings between Chairman Smithee, legislators, and other industry representatives to discuss TRALA's opposition to HB 3059.  

TRALA's message conveyed at the Texas state house was that vehicle rental companies and their customers should be able to agree on the terms of a CDW in the rental contract, just as they always have been able to do under current Texas law, and that the state should not be dictating the form used and price charged for a CDW. HB 3059 would have effectively treated CDWs as an insurance product, but TRALA pointed out that under current Texas law, vehicle rental companies are required to inform customers who purchase CDWs in writing that "the waiver is not insurance."

TRALA stressed that a CDW is not a liability insurance product, just an agreement between the vehicle rental company and the customer which states that the customer would not be responsible for any potential costs to repair the rental vehicle in the case of an accident. Finally, TRALA explained the problems that vehicle rental companies would have faced when selling CDWs under the proposal outlined in HB 3059 and that because of the underwriting requirements, vehicle rental company employees would have been treated like insurance agents and faced high licensing standards in order to sell CDWs.

TRALA appreciates the work of John Esparza, President and CEO of TMTA, for his work as an effective TRALA representative at the Texas capitol on this issue. If you have any questions, please contact TRALA's Joe Sculley at [email protected] or by calling (703) 299-9120.

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