Rent-A-Car Collision Waivers

Amends motor vehicle rental industry law to allow motor vehicle
lessors to receive commissions on an indirect basis for selling
collision damage waivers. (HB642 HD1)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  In 1990, the legislature barred the payment of
 2 commissions on the sale of rental vehicle collision damage
 3 waivers because of lessee confusion about the nature of collision
 4 damage waivers and the potential for abuse relating to their
 5 sale.  At the time there were over thirty-five rental companies
 6 operating in Hawaii, and related disclosure legislation in
 7 section 437D-5, Hawaii Revised Statutes, which required a
 8 boldface plain language description of the scope, optional
 9 nature, and cost of the collision damage waiver, as well as of
10 the possibility that the lessee might already be covered by the
11 lessee's personal automobile policy, had only been in existence
12 since 1988.
13      At present, there are fewer than fifteen rental companies in
14 Hawaii and, in part due to the disclosure law, there exists much
15 less of a basis to regulate the rental car industry through the
16 prohibition of commissions on the sale of collision damage
17 waivers.  In addition, the legislature finds that there are many
18 segments of the tourism industry that pay commissions and
19 evaluate or reward their employees based on their performance in
20 selling the various packages and programs offered by the

Page 2                                                     642
                                     H.B. NO.           H.D. 1        

 1 employer.  Given this, the legislature believes that the motor
 2 vehicle rental industry should no longer be singled out by a law
 3 barring the payment of commissions calculated in part from the
 4 sale of collision damage waivers.
 5      The purpose of this Act is to allow the motor vehicle rental
 6 industry to receive commissions calculated in part from the sale
 7 of collision damage waivers.
 8      SECTION 2.  Section 437D-8.5, Hawaii Revised Statutes, is
 9 amended to read as follows:
10      "437D-8.5  Commissions.  (a)  No lessor or officer,
11 employee, agent, or other representative of the lessor shall pay
12 or receive a direct commission for selling collision damage
13 waivers.  Any violation of this section shall be an unfair or
14 deceptive act or practice as provided in section 480-2.
15      (b)  As used in this section, ["commission for selling
16 collision damage waivers"] "direct commission for selling
17 collision damage waivers" includes any compensation, bonus,
18 award, or remuneration, [whether direct, indirect, or otherwise,]
19 which is calculated by means of a formula, process, evaluation,
20 or other [mechanisms which considers sales of collision damage
21 waivers as a factor in any manner.  "Commission for selling

Page 3                                                     642
                                     H.B. NO.           H.D. 1        

 1 collision damage waivers" also includes any performance
 2 evaluation which could be used in determining promotions, raises,
 3 or other personnel decisions, or any other device which serves to
 4 encourage the sale of collision damage waivers.] mechanism by
 5 which a person is able to calculate the amount of any
 6 compensation, bonus, award, or remuneration based directly on the
 7 sales of collision damage waivers."
 8      SECTION 3.  Statutory material to be repealed is bracketed.
 9 New statutory material is underscored.
10      SECTION 4.  This Act shall take effect upon its approval.