Regulation of Residential Property Insurance

Residential property insurance policies and their associated rates are subject to the insurance laws of Texas as well as rules and regulations adopted by the Texas Department of Insurance (TDI).  Residential property insurance includes homeowners, condominium-unit owners, and renter/tenant policies.  While the insurance laws and regulations apply to most insurers, some insurers, such as a Lloyds plan, reciprocal insurance exchange, or farm mutual insurance company, are exempt from insurance laws and regulations that do not specifically apply to them. 

For most consumers, understanding all the laws and regulations is difficult, if not impossible.  However, these laws and regulations may have a significant impact on the price of your policy, the terms of your policy, your decision to file a claim, and how your insurance company must handle your claim.  To assist you in this endeavor, the Office of Public Insurance Counsel has prepared a Consumer Bill of Rights that provides a summary of the various rights afforded to you by law or regulation.  You may access this document by clicking here.

A brief explanation of the framework of insurance regulations that apply to residential property insurance in Texas is provided in the tabs below.

Homeowners Rates

Homeowners insurance rates must be filed with TDI prior to an insurer using the rates.  Insurers must file their rates, supplementary rating information, and any revisions in accordance with rules adopted by TDI.  Insurers may begin using the newly filed rates on or after the date of the filing. 

 

Rate filings must include enough information for TDI to establish that the newly filed rates are not excessive, inadequate, unreasonable, or unfairly discriminatory.  The commissioner can disapprove rates either before or after they go into effect.  Refunds can be ordered if excessive rates are charged to policyholders.

The Office of Public Insurance Counsel (OPIC) reviews each homeowners rate filing.  If the rates appear excessive or otherwise violate statutory rating standards, OPIC will formally object to the filing or provide comments to TDI.  OPIC can also request the commissioner set a disapproval hearing on the filed rates.  These actions have resulted in numerous rate and fee reductions that benefit consumers.

 

Homeowners Policy Forms

 

Homeowners insurance policy forms must be approved by TDI prior to an insurer using the form.  Insurers must file their policy forms in accordance with rules adopted by TDI 60 days before the policy form can be used.  The policy form is considered approved after the 60 days has expired unless the commissioner approves or disapproves it during the 60-day period.  The commissioner can extend the 60-day period by an additional 10 days.

 

The commissioner can disapprove a policy form that: (1)  violates any law, including a rule adopted by TDI; or (2)  contains a provision, title or heading that is unjust or deceptive, encourages misrepresentation, or violates public policy.

 

The insurer’s filing must include a detailed explanation of the coverage being provided, amended, and/or deleted in each of the filed policy forms.  Office of Public Insurance Counsel (OPIC) staff reviews each filing and will formally object to the filing or provide TDI comments when necessary.  OPIC takes this process very seriously and through its objections and comments has contributed to changes in the filed policy forms that benefit consumers.

 

Condo Owners Rates

 

Condo Owner rates are regulated the same way as standard homeowners policies.  However, Texas has adopted the Uniform Condominium Act, which governs many aspects of condomimium ownership.  A copy of the act is available by clicking here.

 

Condo Owner insurance rates must be filed with TDI prior to an insurer using the rates.  Insurers must file their rates, supplementary rating information, and any revisions in accordance with rules adopted by TDI.  Insurers may begin using the newly filed rates on or after the date of the filing.

 

Rate filings must include enough information for TDI to establish that the newly filed rates are not excessive, inadequate, unreasonable, or unfairly discriminatory.  The commissioner can disapprove rates either before or after they go into effect.  Refunds can be ordered if excessive rates are charged to policyholders.

 

The Office of Public Insurance Counsel (OPIC) reviews each condo owners rate filing.  If the rates appear excessive or otherwise violate statutory rating standards, OPIC will formally object to the filing or provide comments to TDI.  OPIC can also request the commissioner set a disapproval hearing on the filed rates.  These actions have resulted in numerous rate and fee reductions that benefit consumers.

 

Condo Owners Policy Forms

 

Condo Owner policy forms are regulated the same way as standard homeowners policy forms.  However, Texas has adopted the Uniform Condominium Act, which governs many aspects of condomimium ownership.  A copy of the act is available by clicking here.

 

Condo Owner policy forms must be approved by TDI prior to an insurer using the form.  Insurers must file their policy forms in accordance with rules adopted by TDI 60 days before the policy form can be used.  The policy form is considered approved after the 60 days has expired unless the commissioner approves or disapproves it during the 60-day period.  The commissioner can extend the 60-day period by an additional 10 days.

 

The commissioner can disapprove a policy form that: (1)  violates any law, including a rule adopted by TDI; or (2)  contains a provision, title or heading that is unjust or deceptive, encourages misrepresentation, or violates public policy.

 

The insurer’s filing must include a detailed explanation of the coverage being provided, amended, and/or deleted in each of the filed policy forms.  Office of Public Insurance Counsel (OPIC) staff reviews each filing and will formally object to the filing or provide TDI comments when necessary.  OPIC takes this process very seriously and through its objections and comments has contributed to changes in the filed policy forms that benefit consumers.

 

Renters/Tenants Rates

 

Renters/Tenants rates are regulated the same way as standard homeowners policies.  They must be filed with TDI prior to an insurer using the rates.  Insurers must file their rates, supplementary rating information, and any revisions in accordance with rules adopted by TDI.  Insurers may begin using the newly filed rates on or after the date of the filing.

 

Rate filings must include enough information for TDI to establish that the newly filed rates are not excessive, inadequate, unreasonable, or unfairly discriminatory.  The commissioner can disapprove rates either before or after they go into effect.  Refunds can be ordered if excessive rates are charged to policyholders.

 

The Office of Public Insurance Counsel (OPIC) reviews each renters/tenants rate filing.  If the rates appear excessive or otherwise violate statutory rating standards, OPIC will formally object to the filing or provide comments to TDI.  OPIC can also request the commissioner set a disapproval hearing on the filed rates.  These actions have resulted in numerous rate and fee reductions that benefit consumers.

 

Renters/Tenants Policy Forms

 

Renters/Tenants policy forms are regulated the same way as standard homeowners policy forms.  They must be approved by TDI prior to an insurer using the form.  Insurers must file their policy forms in accordance with rules adopted by TDI 60 days before the policy form can be used.  The policy form is considered approved after the 60 days has expired unless the commissioner approves or disapproves it during the 60-day period.  The commissioner can extend the 60-day period by an additional 10 days.

 

The commissioner can disapprove a policy form that: (1)  violates any law, including a rule adopted by TDI; or (2) contains a provision, title or heading that is unjust or deceptive, encourages misrepresentation, or violates public policy.

 

The insurer’s filing must include a detailed explanation of the coverage being provided, amended, and/or deleted in each of the filed policy forms.  Office of Public Insurance Counsel (OPIC) staff reviews each filing and will formally object to the filing or provide TDI comments when necessary.  OPIC takes this process very seriously and through its objections and comments has contributed to changes in the filed policy forms that benefit consumers.

 

 

Farm Mutual Insurance Companies

A farm mutual insurance company, such as Germania or Hochheim, does not have to file or gain approval of their policies or rates.  However, a farm mutual insurance company must be licensed in Texas and is protected by the guaranty association.  

Surplus Lines Companies

Surplus lines companies are out-of-state companies that do not have to file or gain approval of their policies or rates.  They are not licensed in Texas and they are not protected by the guaranty association.  This means your claim with an insolvent surplus lines company could go unpaid.  In addition, surplus lines companies generally charge more than licensed companies and often offer less coverage.  Agents must make an effort to find you coverage with a licensed company before offering you a surplus lines policy. Ask the agent which licensed companies turned you down, and why, before you buy a surplus lines policy. 

 

Last modified on Friday, 06 February 2015 16:39