U-Haul Must Stop Selling Insurance, Still Working on TDI Licensure

U-Haul companies have agreed to stop selling insurance products in Texas until they are licensed by the Texas Department of Insurance.

The agreement with Attorney General John Cornyn’s office follows two suits filed against the truck rental company and their insurance company, Republic Western Insurance Co., regarding unlicensed and deceptive insurance practices. A final judgment and permanent injunction to settle the lawsuits was filed late last month in a Travis County District Court.

The U-Haul companies named in the two lawsuits involving the State agree to cease and desist from advertising and selling insurance products until properly licensed by TDI. U-Haul also agreed to change the way it sells and advertises its insurance and damage waiver products to consumers in Texas.

“Texas consumers have a right to know what they are buying when they purchase insurance,” said Attorney General Cornyn. “Furthermore, companies who sell insurance in Texas must follow the agent licensing laws of this state.”

For a period of time, U-Haul sold products to customers in Texas called “Safemove” and “Safetow” which included such coverages as medical, life and cargo insurance and damage waiver. U-Haul also sold a product called “Safestor,” an insurance product for the customer’s stored goods. U-Haul sold these products through unlicensed employees and dealers throughout Texas.

Cornyn’s lawsuit alleged that U-Haul sold these products to U-Haul customers in a misleading and deceptive way meant to disguise the limitations of the products, thus violating the Texas Deceptive Trade Practices- Consumer Protection Act and Texas Insurance Code.

The Texas Attorney General and TDI had previously obtained a temporary injunction against U-Haul prohibiting the sale of insurance in Texas until U-Haul was properly licensed. U-Haul is permitted to continue to sell damage waiver alone, but has not yet obtained a license to sell insurance in Texas.

According to TDI spokesperson Lee Jones, TDI turned the case over to the attorney general’s office because it was based on consumer complaints. “They have original jurisdiction in those cases,” Jones said.

He explained that Senate Bill 957, which became law during the 1999 legislative session, required U-Haul and other truck rental companies, along with car rental agencies and other similar businesses, to acquire specialty licenses from the department of insurance to sell insurance products. Jones said other dealers such as Ryder, Penske and Budget have been licensed with the department, but U-Haul failed to do so.

“There’s still some things to be worked out before they can be licensed,” Jones said. But the company is working on registering each of its business locations with the department, Jones said.

According to a press release from the attorney general’s office, stipulations of the agreement with Cornyn include:

• U-Haul will make available to inquiring customers an easy to read brochure that clearly describes all terms, conditions, exclusions, deductibles and limitations of the optional insurance or damage waiver, and deliver such brochure to the customer at or before the time of purchase;

• U-Haul will not charge customers for insurance or damage waiver unless the customer separately initials each coverage purchased in the rental agreement;

• U-Haul will not misrepresent the terms of the insurance or damage waiver being sold; and

• U-Haul will not represent that a customer, regardless of the circumstances of the damage or loss, is responsible in every instance for all damage or loss to the rented equipment or customer’s goods.

The judgment also requires U-Haul to pay attorney’s fees and investigative expenses.

Topics Texas