85R11348 MCK-D     By: Zaffirini S.B. No. 2036       A BILL TO BE ENTITLED   AN ACT   relating to liability insurance or other proof of financial   responsibility for persons holding certain alcoholic beverage   permits; authorizing a fee.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter A, Chapter 11, Alcoholic Beverage   Code, is amended by adding Sections 11.14 and 11.15 to read as   follows:          Sec. 11.14.  LIABILITY INSURANCE REQUIREMENT.  (a)  This   section does not apply to the holder of a food and beverage   certificate.          (b)  Except as provided by Section 11.15, a person may not   hold a permit allowing the person to sell alcoholic beverages for   on-premises consumption unless the person establishes financial   responsibility by maintaining a liability insurance policy:                (1)  issued by an insurance company authorized to write   liability insurance in this state or an eligible surplus lines   insurer; and                (2)  that, subject to Subsection (e), will pay, on   behalf of the permit holder or a person who sells or serves   alcoholic beverages under the authority of the permit holder's   permit, amounts the permit holder or person becomes obligated to   pay as damages arising out of the sale or service of alcoholic   beverages.          (c)  The commission shall adopt rules relating to:                (1)  subject to Subsection (d), the minimum amounts of   insurance coverage that are required under this section, which must   be at least:                      (A)  $500,000 for each occurrence; and                      (B)  $1 million for any annual aggregate limit;                (2)  the method for filing proof of insurance and   obtaining the commission's approval under this section; and                (3)  verification by the commission of a permit   holder's continued maintenance of the required insurance coverage.          (d)  The minimum amounts of insurance coverage required   under this section for a permit holder that is a governmental unit,   as defined by Section 101.001, Civil Practice and Remedies Code,   are the amounts of the liability limits applicable to the   governmental unit under Section 101.023, Civil Practice and   Remedies Code. A governmental unit subject to this section may   satisfy the insurance requirements of this section through a   self-insurance fund or program established under Section 2259.031,   Government Code, or Chapter 791, Government Code.          (e)  A person may not recover from the proceeds of an   insurance policy held by the permit holder for purposes of this   section damages arising out of the sale or service of an alcoholic   beverage to the person if, at the time of the sale or service, the   person was obviously intoxicated or a minor.          Sec. 11.15.  BOND IN LIEU OF INSURANCE. (a) A person may   establish financial responsibility for purposes of Section 11.14   without maintaining an insurance policy by filing with the   commission a bond:                (1)  with at least two individual sureties, each of   whom owns real property in this state that is not exempt from   execution under the constitution or laws of this state;                (2)  conditioned for payment in the amounts and under   the same circumstances as required under a liability insurance   policy sufficient to meet the requirements of Section 11.14;                (3)  that is not cancelable before the sixth day after   the date the commission receives written notice of the   cancellation;                (4)  accompanied by a fee prescribed by the commission;   and                (5)  approved by the commission.          (b)  The real property required by Subsection (a)(1) must be   described in the bond approved by a judge of a court of record. The   assessor-collector of the county in which the property is located   must certify the property as free of any tax lien. The sureties in   combination must have equity in the property in an amount equal to   at least twice the amount of the bond.          (c)  The bond is a lien in favor of the state on the real   property described in the bond. The lien exists in favor of a   person who holds a final judgment against the person who filed the   bond.          (d)  On the filing of a bond, the commission shall issue to   the person who filed the bond a certificate of compliance with this   section.          (e)  The commission shall file notice of the bond in the   office of the county clerk of the county in which the real property   is located. The notice must include a description of the property   described in the bond. The county clerk or the county clerk's   deputy, on receipt of the notice, shall acknowledge the notice and   record it in the lien records. The recording of the notice is   notice in accordance with statutes governing the recordation of a   lien on real property.          (f)  If a judgment rendered against the person who files a   bond under this section is not satisfied before the 61st day after   the date the judgment becomes final, the judgment creditor, for the   judgment creditor's own use and benefit and at the judgment   creditor's expense, may bring an action in the name of the state   against the sureties on the bond, including an action to foreclose a   lien on the real property of a surety. The foreclosure action must   be brought in the same manner as, and is subject to the law   applicable to, an action to foreclose a mortgage on real property.          (g)  Cancellation of a bond filed under this section does not   prevent recovery for a right or cause of action arising before the   date of the cancellation.          SECTION 2.  (a)  The changes in law made by this Act apply to   a person who applies for a permit for the sale of alcoholic   beverages for on-premises consumption on or after January 1, 2018,   and to a person who, on January 1, 2018, holds a permit for the sale   of alcoholic beverages for on-premises consumption regardless of   when the permit or license was issued.          (b)  The Texas Alcoholic Beverage Commission shall adopt all   rules necessary to implement the changes made by this Act not later   than December 31, 2017.          SECTION 3.  This Act takes effect September 1, 2017.