S.B. No. 1966

	AN ACT
	relating to debt cancellation agreements offered in connection with
	motor vehicle retail installment contracts.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 348.001, Finance Code, is amended by
	adding Subdivision (1-a) to read as follows:
	(1-a)  "Debt cancellation agreement" means a retail
	installment contract term or a contractual arrangement modifying a
	retail installment contract term under which a retail seller or
	holder agrees to cancel all or part of an obligation of the retail
	buyer to repay an extension of credit from the retail seller or
	holder on the occurrence of the total loss or theft of the motor
	vehicle that is the subject of the retail installment contract but
	does not include an offer to pay a specified amount on the total
	loss or theft of the motor vehicle.
	SECTION 2.  Section 348.005, Finance Code, is amended to
	read as follows:
	Sec. 348.005.  ITEMIZED CHARGE. An amount in a retail
	installment contract is an itemized charge if the amount is not
	included in the cash price and is the amount of:
	(1)  fees for registration, certificate of title, and
	license and any additional registration fees charged by a full
	service deputy under Section 502.114, Transportation Code;
	(2)  any taxes;
	(3)  fees or charges prescribed by law and connected
	with the sale or inspection of the motor vehicle; and
	(4)  charges authorized for insurance, service
	contracts, [or] warranties, or a debt cancellation agreement by
	Subchapter C.
	SECTION 3.  Subchapter B, Chapter 348, Finance Code, is
	amended by adding Section 348.124 to read as follows:
	Sec. 348.124.  DEBT CANCELLATION AGREEMENTS. (a)  In
	connection with a retail installment transaction under this
	chapter, a retail seller may offer to the retail buyer a debt
	cancellation agreement. The retail seller may not require that the
	purchase of a debt cancellation agreement by the retail buyer be
	made in order to enter into a retail installment transaction.
	(b)  A debt cancellation agreement is not considered an
	insurance product.
	(c)  The amount charged for a debt cancellation agreement
	made in connection with a retail installment contract must be
	reasonable.
	(d)  In addition to other disclosures required by state or
	federal law, the retail seller shall provide to the retail buyer a
	separate notice in connection with the retail installment contract
	stating that the retail buyer is not required to accept or provide a
	debt cancellation agreement in order to purchase the motor vehicle
	under a retail installment contract.
	SECTION 4.  Subsections (b) and (c), Section 348.208,
	Finance Code, are amended to read as follows:
	(b)  A retail installment contract may include as a separate
	charge an amount for:
	(1)  motor vehicle property damage or bodily injury
	liability insurance;
	(2)  mechanical breakdown insurance;
	(3)  participation in a motor vehicle theft protection
	plan;
	(4)  insurance to reimburse the retail buyer for the
	amount computed by subtracting the proceeds of the buyer's basic
	collision policy on the motor vehicle from the amount owed on the
	vehicle if the vehicle has been rendered a total loss; [or]
	(5)  a warranty or service contract relating to the
	motor vehicle; or
	(6)  a debt cancellation agreement if the agreement is
	included as a term of a retail installment contract under Section
	348.124.
	(c)  Notwithstanding any other law, service contracts and
	debt cancellation agreements sold by a retail seller of a motor
	vehicle to a retail buyer are not subject to Chapter 101 or 226,
	Insurance Code.
	SECTION 5.  This Act takes effect September 1, 2009.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 1966 passed the Senate on
	April 16, 2009, by the following vote: Yeas 31, Nays 0; and that
	the Senate concurred in House amendment on May 12, 2009, by the
	following vote: Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 1966 passed the House, with
	amendment, on April 30, 2009, by the following vote: Yeas 144,
	Nays 0, one present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor