AN ACT Relating to motor vehicle rentals; adding a new chapter to Title 48 RCW; prescribing penalties; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The ability to rent motor vehicles at a reasonable price is vital to promoting tourism and business in Washington. The public interest is adversely affected when consumers must agree to unreasonable terms or pay more than necessary to protect the interests of the rental vehicle owner from damage caused by the renter. The legislature recognizes that a collision damage waiver agreement is not insurance but notes that the insurance commissioner has experience in determining the fairness of both the price and content of contracts governing risk of loss to motor vehicles. This chapter shall be liberally construed to protect Washington consumers from unfair and deceptive practices in the sale and pricing of collision damage waiver agreements made in conjunction with the rental of a motor vehicle.

NEW SECTION. Sec. 2. Unless the context requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Collision damage waiver agreement" means any contract or contractual provision, whether separate from or a part of a motor vehicle rental agreement, whereby the lessor agrees for a charge, to waive claims against the lessee for damages to the rental motor vehicle during the term of the rental agreement.

(2) "Lessor" means any person or organization in the business of providing rental motor vehicles to the public.

(3) "Lessee" means any person or organization obtaining the use of a rental motor vehicle from a lessor under the terms of a rental agreement.

(4) "Rental agreement" means any written agreement setting forth the terms and conditions governing the use of the rental motor vehicle by the lessee.

(5) "Rental motor vehicle" means a private passenger type vehicle that, upon execution of a rental agreement, is made available to a lessee for the lessee's use.

NEW SECTION. Sec. 3. (1) No lessor may issue or offer to issue a collision damage waiver agreement in this state until a license has been granted by the commissioner as provided in this chapter. Application for a license shall be made in writing, in a form prescribed by the commissioner, and shall be accompanied by a fee established by the commissioner.

(2) A lessor of rental motor vehicles with one or more locations within this state shall not be required to obtain more than one license.

(3) Each license issued may be renewed according to a schedule determined by rule of the commissioner. No such renewal may be issued until the lessor has paid the renewal fee established by the commissioner.

(4) Fees for original and renewal licenses shall be determined by rule of the commissioner. The fees shall be reasonable in amount, deposited in the commissioner's regulatory account in the state treasury, and used to pay the costs, including overhead, of regulating those licensed under this chapter.

NEW SECTION. Sec. 4. (1) No lessor may enter into a collision damage waiver agreement unless the agreement form is filed with the commissioner at least thirty days before its effective date and the commissioner has not disapproved the agreement within thirty days after its filing. However, the commissioner may disapprove the collision damage waiver agreement at any time, for cause, by giving the lessor twenty days' advance notice setting forth the reason for the disapproval.

(2) No collision damage waiver agreement may be approved unless:

(a) It is written in simple and readable words with common meanings and is understandable;

(b) The terms of the collision damage waiver are prominently displayed including, but not limited to, any conditions and exclusions applicable to the collision damage waiver agreement;

(c) All restrictions, conditions, or provisions in or endorsed on a collision damage waiver agreement are printed in type as large as brevier or ten point type, or are written in pen and ink or typewritten in or on such agreement; but nothing contained in this section relates or applies to photographic copies or parts thereof, attached to or made a part of the agreement;

(d) It includes a complete statement of the total charge for the waiver; and

(e) It contains the following notice on the face of the agreement, set apart, and in boldface type and in no smaller print than ten point type:

@bcNotice: this contract offers, for an additional charge, a collision damage waiver to cover your responsibility for damage to the vehicle. Before deciding whether to buy the collision damage waiver, you may wish to determine whether your own automobile insurance covers damage to the rental vehicle and the amount of the deductible under your own insurance coverage. Buying the collision damage waiver is not required and may be refused by you.@ec

(3) The rental agreement shall clearly describe the consequences of the lessee's failure to enter into a collision damage waiver agreement.

(4) The collision damage waiver may exclude only the following circumstances:

(a) Damages caused intentionally by the lessee or as a result of his or her willful or wanton misconduct;

(b) Driving while intoxicated or under the influence of any drug, or the combined influence of alcohol and any drug;

(d) Use of the rental vehicle for any illegal purpose such as illegal transportation of persons, drugs, or contraband;

(e) Use of the rental vehicle to carry persons or property for hire;

(f) Use of the rental vehicle to teach driving;

(g) Use of the rental vehicle to carry persons outside the passenger compartment;

(h) Use of the rental vehicle in Mexico; and

(i) Such exclusions that, in the opinion of the commissioner, are fair and reasonable to protect the lessor from excessive risk of loss or damage to the rental vehicle.

(5) The commissioner shall disapprove any collision damage waiver agreement condition or provision that in the opinion of the commissioner unfairly limits the protection provided under the agreement.

NEW SECTION. Sec. 5. (1) Every lessor licensed in accordance with this chapter shall file with the commissioner, for approval, all rates and supplementary rate information and all charges for and amendments to rates made by the lessor for collision damage waivers for use in this state thirty days before use.

(2) The rates filed in accordance with this section shall not be excessive or unfairly discriminatory. The rates shall be made in accordance with the following provisions:

(a) Due consideration shall be given to past and prospective collision loss experience within and outside the particular locale;

(b) Consideration may be given to past and prospective collision loss experience of the private insurance industry for the locale;

(c) Expenses may include marginal expenses of the lessor attributable to the sale and direct administration of the collision damage waiver component, as well as a reasonable overhead expense; and

(d) A reasonable overhead expense shall be the total overhead for the covered location multiplied by the ratio of collision damage waiver revenues to the total revenue for the location. The cost of the vehicles to be rented shall not be considered an overhead expense.

(3) No lessor may make or issue a collision damage waiver except in accordance with the filings that are in effect for the lessor. No lessor or any officer, employee, or other representative of the lessor may charge or receive any fee, compensation, or consideration for the collision damage waiver that is not included in the rate in effect for the lessor.

NEW SECTION. Sec. 6. The following acts and practices are unfair and deceptive:

(1) Making any false or misleading statements either orally or in writing, in connection with the sale, offer to sell, or advertisement of a collision damage waiver;

(2) Omission of any material statement in connection with the sale, offer to sell, or advertisement of a collision damage waiver, that under the circumstances should have been made in order to make the statements that were made not misleading;

(3) Making any statement that the purchase of a collision damage waiver is mandatory;

(4) Failure to provide proper disclosure that the purchase of a collision damage waiver may be duplicative of the lessee's automobile insurance contract;

(5) Failure to release any credit or deposit of the lessee that the lessor has claimed to guarantee payment of collision damage when the lessee has given proof of insurance coverage and proof of a claim made with the insurer to pay for such damage; and

(6) Charging or collecting an amount in excess of the actual costs for the repair or replacement of a rental vehicle, or for the loss of use of a rental vehicle from any lessee or from any insurer of a lessee.

NEW SECTION. Sec. 7. Every property and casualty insurance company that offers private passenger motor vehicle collision and comprehensive coverage shall offer coverage for physical damage to and theft of a rental vehicle. The coverage need not be provided for a rental vehicle that is rented for a period greater than thirty days.

NEW SECTION. Sec. 8. Any lessor found by the commissioner to have violated or attempted to violate any provision of this chapter may be ordered to pay a penalty. Each issuance, procurement, or negotiation of a single collision damage waiver is a separate violation. A penalty not to exceed five hundred dollars may be imposed for each violation. The penalty imposed for a series of violation shall be no less than five hundred dollars and no greater than ten thousand dollars. An additional penalty, not to exceed two thousand five hundred dollars, my be imposed for each violation in which the commissioner finds that there was a knowing violation of this chapter. The commissioner may suspend, revoke, or refuse to renew the license of any lessor for violation of any of the provisions of this chapter. In addition, the commissioner may issue cease and desist orders to prohibit violations of this chapter or of rules adopted in accordance with this chapter.

NEW SECTION. Sec. 9. A violation of this chapter or of any rule adopted pursuant to this chapter constitutes a violation of RCW 19.86.020 and any person injured in his or her business or property shall be entitled to the remedies provided in RCW 19.86.090.

NEW SECTION. Sec. 10. The provisions of this chapter shall not affect the rights and remedies a lessee may have against the lessor under any other law.

NEW SECTION. Sec. 11. The commissioner may adopt all rules necessary to implement this chapter.

NEW SECTION. Sec. 12. Sections 1 through 11 of this act constitute a new chapter in Title 48 RCW.

NEW SECTION. Sec. 13. This act shall take effect July 1, 1988, and applies to all motor vehicle rental agreements and collision damage waivers made on or after January 1, 1989.