HB271 CD1

Report Title:

Rental Car Collision Waivers

 

Description:

Allows the payment or receipt of indirect commissions from the sale of collision damage waivers for rental vehicles; requires lessor to report to the director on its compensation plan for employees who assist or direct the sale of collision damage waivers. (HB271 CD1)

 

HOUSE OF REPRESENTATIVES	H.B. NO.	271
TWENTY-FIRST LEGISLATURE, 2001		H.D. 1
STATE OF HAWAII		S.D. 1
		C.D. 1

A BILL FOR AN ACT

 

RELATING TO MOTOR VEHICLE RENTAL INDUSTRY.

 

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

SECTION 1. In 1990, the legislature barred the payment of commissions on the sale of rental vehicle collision damage waivers because of lessee confusion about the nature of collision damage waivers and the potential for abuse relating to their sale. At the time there were over thirty-five rental companies operating in Hawaii, and related disclosure law in section 437D-5, Hawaii Revised Statutes, which required a boldface plain language description of the scope, optional nature, and cost of the collision damage waiver, as well as of the possibility that the lessee might already be covered by the lessee's personal automobile policy, had only been in existence since 1988.

At present, there are fewer than fifteen rental companies in Hawaii and, in part due to the disclosure law, there exists much less of a basis to regulate the rental car industry through the prohibition of commissions on the sale of collision damage waivers. In addition, the legislature finds that there are many segments of the tourism industry that pay commissions and evaluate or reward their employees based on their performance in selling the various packages and programs offered by the employer. Given this, the legislature believes that the motor vehicle rental industry should no longer be singled out by a law barring the payment of commissions calculated in part from the sale of collision damage waivers.

The purpose of this Act is to allow the motor vehicle rental industry to receive commissions calculated in part from the sale of collision damage waivers.

SECTION 2. Section 437D-8.5, Hawaii Revised Statutes, is amended to read as follows:

"§437D-8.5 Commissions. (a) No lessor or officer, employee, agent, or other representative of the lessor shall pay or receive a direct commission for selling collision damage waivers. Any violation of this section shall be an unfair or deceptive act or practice as provided in section 480-2.

(b) As used in this section, ["commission for selling collision damage waivers"] "direct commission for selling collision damage waivers" includes any compensation, bonus, award, or remuneration, [whether direct, indirect, or otherwise,] which is calculated by means of a formula, process, evaluation, or other [mechanisms which considers sales of collision damage waivers as a factor in any manner. "Commission for selling collision damage waivers" also includes any performance evaluation which could be used in determining promotions, raises, or other personnel decisions, or any other device which serves to encourage the sale of collision damage waivers.] mechanism by which a person is able to calculate the amount of any compensation, bonus, award, or remuneration based directly on the sales of collision damage waivers. Notwithstanding any law to the contrary, any compensation, commission, bonus, award, or remuneration to an employee based on the calculation of the overall gross receipts of a location which include the sale of collision damage waivers as one of many factors, shall not be prohibited."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect July 1, 2001, and shall be repealed on June 30, 2003; provided that section 437D-8.5, Hawaii Revised Statutes, shall be reenacted in the form in which it read on June 30, 2001.