TIADA Celebrates: Named-Driver Polices Reform
The passage of HB 259 ushers in a new era for named-driver insurance policies. “This is a huge victory for our members”, said TIADA Executive Director Jeff Martin. “We formed a workgroup to focus on this issue in 2011 and have supported legislation authored by Rep. Thompson every session since”HB 259 by Rep. Ed Thompson (R-Pearland) which has passed the House and Senate will require insures who sell named-driver only policies specifically name each excluded driver and does not allow for an excluded class of drivers. This bill is awaiting the Governor's signature before it becomes law on September 1, 2019.
Since 2003, insurance companies in Texas have been permitted to sell policies with named driver exclusions, meaning the only household members covered to drive a car are those whose names are on the policy. If someone else from the residence happens to be behind the wheel during an accident, the insurance company would deny the claim—leaving both the consumer and the dealer/lienholder in the lurch.
This new law will stop that practice and give consumers more information clearly stating who is not covered if they are behind the wheel. Lienholders will also have better information about the policies their consumers are purchasing. If a lienholder sees a long list of exclusions they may want to ask more questions or simply not accept the policy.
Working to protect dealers from the financial losses associated with named-driver exclusions has long been a TIADA priority but it's a cause close to the heart of Rep. Ed Thompson (R–Pearland), whose close friend Walter Sullivan was killed in a 2011 automobile accident. The other vehicle's owner had a named driver policy, and the driver at the time of the accident was not named on the policy, so no coverage existed. Sullivan's family had taken financial precautions for such a situation, Thompson says, but if a family has not and the breadwinner is involved in such an accident, the results can be dire.
“As I did more research, I was appalled that companies were selling such policies,” says Thompson, who has been an insurance agent for 35 years. “I have spent hours trying to explain this to my peers. These policies are being sold to people who are not educated on what they're getting. People are truthfully just buying based on price. Auto dealers are put in the position where their loans are not protected. And small car dealers are losing large sums on an annual basis.”
“Every issue needs a champion and Ed Thompson was not doubt the champion on this issue”, said Martin.