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Changes in Texas Auto Insurance Coverage Laws for Loaner or Temporary Vehicles.

Does your dealership ever provide loaner vehicles for your customers?  Ever wonder which insurance covered the vehicle in the event of an accident? Was it your garage liability or the customer's personal automobile policy?  Prior the passage of HB 3420 by Representative Lambert the coverage was unclear as to liability, primary, excess, or no coverage.  TIADA supported this legislation during the 86th Legislature to help auto dealers that provide loaner vehicles to their customers.
The new provisions to the Texas Insurance Code, Chapter 1952, require that a personal automobile insurance policy must include in the policy's primary liability coverage, coverage for a “temporary” vehicle as a covered vehicle during the policy's term. Required coverage provides for primary coverage for the insured's legal liability for bodily injury and property damage and for damage to the “temporary” vehicle.

Temporary vehicle coverage is required for a vehicle that is:
I. A private passenger automobile; or,
2. A pickup, utility vehicle, or van with less that is not used for the delivery

The required coverage must insure:
1. The person named in the personal automobile insurance policy; and,
2. Any resident relative of the insured and licensed operator residing in the household except for an individual who is not covered in a “named driver policy.”
The personal automobile insurance policy's limits must be available for this required coverage.

When Effective?
Although the earliest effective date for the temporary vehicle coverage is September 1, 2019, if a customer's personal automobile policy is delivered, issued for delivery, or renewed prior to January 1, 2020, then the policy may, but is not required, to provide the temporary vehicle coverage until it is renewed after January 1, 2020.

Examples:
If a personal automobile policy is renewed annually and December 1,2019, is the renewal date, the insurer is not required to include the temporary vehicle coverage until the policy's next renewal, i.e., December, 2020.

If the policy is a shorter-term policy, such as a one-month or six month term, then the renewal policy is not required to include the temporary vehicle coverage until the policy's first renewal on or after January 1, 2020.

Please review the expiration of a customer's policy and verify if the new coverage is included in their personal automobile insurance policy when providing a ‘temporary” or “loaner” vehicle to a customer whose vehicle is at the dealership for service, repair, maintenance, damage, or to obtain an estimate.

To be codified at TEX. INS. CODE ANN. § 1952.060.
A “temporary vehicle” includes a vehicle that is loaned or proved to an insured by an automobile repair facility for the insured's use while the insured's vehicle is at the facility for service, repair, maintenance, or damage or to obtain an estimate and is: A. In the lawful possession or the insured or resident relative of the insured; B. Not owned by the insured, any resident relative of the insured, or any other person residing in the insured's household; and, C. Operated by or in the possession of the insured or resident relative of the insured until the vehicle is returned to the repair facility “Temporary' a GVW of 14,000 pounds or transportation of goods, materials, or supplies, other than samples, unless the delivery of the goods, materials, or supplies is not the primary use for which the vehicle is used; or, the vehicle is used for farming or ranching.

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