How much liability insurance could a Texas state agency buy for employees using agency vehicles, and what did the Attorney General review?

Texas AG Opinion JM-889: Limits and Review of State Agency Liability Insurance

Plain-English summary

The Texas Savings and Loan Department asked how article 6252-19a and the Texas Tort Claims Act affected liability insurance for agency officers and employees using state-owned motor vehicles, aircraft, or watercraft.

Article 6252-19a contained no minimum or maximum policy amount. The Attorney General modified an earlier opinion to clarify that Tort Claims Act liability caps were only a possible guide to reasonableness; they did not legally limit insurance purchased under the separate vehicle-insurance statute. The agency itself selected the coverage level in the first instance, subject to judicial review for abuse of discretion.

The Attorney General's statutory approval "as to liability" did not include deciding whether the dollar amount was reasonable. The office reviewed whether the agency could buy insurance under article 6252-19a and whether the policy covered authorized persons and equipment. The State Board of Insurance approved the form.

A general commercial form could incidentally provide extra coverage at no additional state cost. Because the agency spent no state money on that additional coverage, the Attorney General neither approved nor disapproved that part of the policy.

Section 101.027 separately allowed governmental units to buy insurance protecting the unit and employees against Tort Claims Act claims. The General Appropriations Act then prohibited spending appropriated funds for such policies. The opinion understood that the department had no unrestricted funds available and therefore did not decide whether buying both forms of coverage would add protection. If another agency had lawful funds, the Tort Claims Act itself imposed no approval requirement on the Attorney General or State Board of Insurance.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Did article 6252-19a cap the amount of agency liability insurance?

No. It set no minimum or maximum monetary coverage.

Did the Texas Tort Claims Act's liability limits cap the policy?

No. The opinion said those statutory liability limits did not apply to insurance purchased under article 6252-19a.

Who decided how much coverage was reasonable?

The state agency exercised that discretion first. A court, not the Attorney General during policy review, was the proper body to evaluate reasonableness.

What did Attorney General approval cover?

Whether the agency was authorized to buy the policy and whether it covered persons and equipment authorized by the statute.

What happened to extra coverage included for free?

The Attorney General neither approved nor disapproved it because no state funds were spent for that incidental coverage.

Could appropriated funds buy Tort Claims Act insurance?

Not under the appropriations rider in effect when the opinion was issued. It prohibited spending appropriated funds on insurance covering Tort Claims Act claims.

Background and statutory framework

Article 6252-19a authorized state agencies owning and operating vehicles, aircraft, and watercraft to insure officers and employees against liability arising from their use. Policy forms required State Board of Insurance approval as to form and Attorney General approval as to liability.

Attorney General Opinion M-501 (1969) had said the statute left coverage amounts to agency discretion but mentioned the Tort Claims Act limits as a reasonableness guide. JM-889 modified M-501 to prevent that example from being read as a binding cap.

Civil Practice and Remedies Code section 101.027 allowed a governmental unit to purchase policies for claims under the Tort Claims Act. Section 54 of the 1987 General Appropriations Act prohibited use of appropriated funds for that purpose.

Citations

Statutory authority:

• V.T.C.S. article 6252-19a, section 1
• Civil Practice and Remedies Code sections 101.001 and 101.027
• General Appropriations Act, Acts 1987, 70th Legislature, Second Called Session, chapter 78, article V, section 54, at 1120

Prior Attorney General materials referenced: M-501 (1969), JM-625 (1987), JM-551 (1986), and H-900 (1976).

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-889
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1988/jm0889.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Obvious character-level OCR errors have been corrected, but minor errors may remain; the linked PDF is authoritative.

THE ATTORNEY GENERAL
OF TEXAS

                   April 8, 1988



Mr. L. L. Bowman III            Opinion No. JM-889
Commissioner
Texas Savings and Loan          Re: Authority of the Savings
   Department                   and Loan Department to obtain
2601 N. Lamar, Suite 201        liability coverage   for its
Austin, Texas 78705             officers and employees
                                (RQ-1203)

Dear Mr. Bowman:

     You  ask  several    questions pertaining  to article
6252-19a, V.T.C.S., and the Texas Tort Claims Act     (Civ.
Prac. & Rem. Code §101.001 et seq.).       Several of your
questions relate to the scope of the attorney general's
review of liability    insurance policies and any monetary
limits on such policies.

     Article 6252-19a, V.T.C.S., authorizes state agencies
which own and operate motor vehicles,       aircraft,  and
watercraft to insure their officers and employees     from
liability arising out of the use of such vehicles       or
equipment.  V.T.C.S.  art. 6252-19a,   §1.   The attorney
general's  responsibility  in regard to this liability
insurance is set out in section 1 of article   6252-19a as
follows:

          Sec.  1 . . . All liabilitv insurance   so
       purchased shall be provided on a policy form
       or forms approved by the State Board of
       Insurance as to form and bv the Attorney
       General as to liability.   (Emphasis added.)

     You ask first whether there
limit on the amount of liability i~:u~~~c,"'~~=e~=ge'~~~~
may be purchased   under this statute. Specifically,   YOU
inquire about the applicability of the maximum liability

C limits set by the Texas Tort Claims Act. In Attorney
General Opinion M-501 (1969), this office addressed the
issue of limitations on the amount of coverage that the
Texas Highway Department was authorized to purchase

                           p.   4351

Mr. L.L. Bowman III - Page 2 (JM-889)

pursuant to the newly enacted article 6252-19a. That
opinion stated:

   With reference to your second question   as
   to the amount of coverage that may       be
   purchased, H.B. 203  [article 6252-19a] has
   provided no guidelines in this area.    The
   proper amount of coverage has been left to
   the sound discretion   of the governmental
   agencies involved, and in the event of a
   court test it is our view that a reasonable
   exercise of that discretion would be left
   undisturbed.

Attorney General Opinion M-501 (1969). Since the issuance
of Attorney General Opinion M-501, there has been no
amendment to article 6252-19a establishing a statutory
minimum or maximum coverage level. Therefore, we conclude
that your department has the responsibility to set the
level of coverage for its employees.

 Confusion may have arisen about the applicability of

the Texas Tort Claims Act to article 6252-19a, V.T.C.S.,
based on other language found in Attorney General Opinion
M-501. Following the language quoted above, the opinion
read as follows:

   In this connection we would point out that
   the Texas     Tort Claims    Act . . . limits
   governmental liability to $100,000.00     per
   person and $300,000.00      for any    single
   incident.   It is our view that an individual
   policy of insurance under [article 6252-19a]
   that did not exceed those limits would meet
   the test of reasonableness, provided that in
   the exercise of discretion      the   Highway
   Department finds that such is reasonably
   necessary.

We do not believe that the Texas Tort Claims Act controls
the amount of coverage which an agency may obtain under
article 6252-19a. The Texas Tort Claims Act establishes a
limited waiver of sovereign immunity and prescribes the
maximum governmental liability in certain circumstances.
Article 6252-19a, on the other hand, allows certain state
agencies to obtain liability insurance for employees under
certain conditions. The reference to the Tort Claims Act
in the opinion quoted above was merely intended as a guide
or example to assist state agencies in making reasonable

                      p. 4352

Mr. L.L. Bowman III - Page 3 (JM-889)

determinations of coverage. To the extent that the
opinion may have been interpreted as imposing the Texas
Tort Claims liability limitations onto article 6252-19a,
Attorney General Opinion M-501 is modified.

 To summarize,   article 6252-19a, V.T.C.S., does not

prescribe dollar limits on insurance coverage purchased
pursuant to that article. The liability limits established in the Texas Tort Claims Act are not applicable to
article 6252-19a.

 You next     ask  whether the    attorney    general's

responsibility to approve insurance policies "as to
liability" requires the attorney general to make a
determination of the reasonableness of the amount of
liability coverage purchased by a state agency. We think
not. The practice of the attorney general's office in
reviewing policies pursuant to article 6252-19a has been
to determine whether a given state agency is authorized to
purchase insurance under the statute and whether the
policy covers authorized persons and equipment.

 The attorney general's    policy of not attempting  to

determine the reasonableness of particular coverage limits
for a given agency is consistent with the earlier inter-
pretation of the statute in Attorney General Opinion
M-501. The affected state agency, in the first instance,
must exercise its discretion in determining whether to
purchase liability insurance and the amount of coverage it
deems appropriate. A court, in the second instance, is
the appropriate body to evaluate the reasonableness of the
limits obtained by a state agency. Unlike the state agency
or a court reviewing that agency's decisions, the attorney
general is not in a position to find facts regarding the
reasonableness of a particular amount of coverage. The
amount of coverage that is reasonable may vary from agency
to agency and between individual departments or sections
within the same agency.

 You also ask whether the attorney general       will

approve an insurance policy which provides, at no added
cost to the state, additional coverage that is not
authorized by article 6252-19a. We understand that the
State Board of Insurance has not prescribed a specific
form for use by state agencies pursuant to article
6252-19a. Rather, a state agency must use one of the
general forms for motor vehicle liability insurance that
has been approved by the board for general commercial use
in the state. Consequently, a state agency purchasing

                      p. 4353

Mr. L.L. Bowman III - Page 4 (JM-889)

liability insurance under the statute may incidentally
receive other coverage. Because no state funds are being
expended for this other coverage, this office neither -,
approves nor disapproves this portion of the policy.

 Finally, you raise the possibility of your department

purchasing liability insurance under the Texas Tort Claims
Act and ask: (1) whether the department would receive
additional protection by also purchasing insurance under
article 6252-19a, V.T.C.S.; and (2) whether the State
Board of Insurance and the attorney general must review a
policy purchased by the department pursuant to the Texas
Tort Claims Act. Section 101.027 of the Civil Practice
and Remedies Code governs liability insurance purchased
under the Texas Tort Claims Act. It provides in part:

      (a) Each governmental unit may purchase
   insurance policies protecting the unit and
   the unit's employees against claims under
   this chapter.

The Savings and Loan Department is a governmental unit as
defined by the Texas Tort Claims Act, and is covered by
section 101.027. However, we note that the General
Appropriations Bill for the current biennium contains the
following provision:

      Sec. 54. TORT CLAIMS ACT. None of the
   funds appropriated   in this Act may      be
   expended  for the purpose of      purchasing
   policies  of   insurance   covering   claims
   arising under the Texas Tort Claims Act.

General Appropriations Act, Acts 1987, 70th Leg., 2d C.S.,
ch. 78, art. V, §54, at 1120. A similar restriction has
been included in previous appropriation bills. See
Attorney General Opinion Nos. JM-625 (1987); JM-551
(1986); H-900 (1976).

 It is our understanding    that there are no funds

available to your department that are not subject to
the restriction of section 54, article V, of the General
Appropriations Act. Therefore, we decline to address the
first part of your question. Assuming a state agency has
funds available for the purchase of insurance under the 1

Texas Tort Claims Act, we have found no provision in the
act which requires this office or the State Board of
Insurance to approve the purchase.

                     p. 4354

Mr. L.L. Bowman III - Page 5 (JM-889)

                   SUMMARY

        (1) Article 6252-19a, V.T.C.S., sets no
  maximum or minimum monetary coverage available
  to a state agency covered by the article.

        (2) The statutory limits of liability
  prescribed by the Texas Tort Claims Act do not
  apply to an insurance policy purchased by a
  state agency pursuant to article     6252-19a,
  V.T.C.S.

       (3) The attorney general does not review
  the amount of liability coverage purchased   by
  a state agency pursuant to article 6252-19a.

       (4) The current general appropriations
  act prohibits  the use of appropriated   funds
  for the purchase of insurance under the Texas
  Tort Claims Act. The attorney general does
  not have a statutory obligation     to review
  insurance purchased pursuant to the act.




                             LL.JJJ
                                Very truly yours,

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Karen C. Gladney
Assistant Attorney General

                      p. 4355