CHAPTER 2002. POLICY PROVISIONS AND FORMS FOR FIRE INSURANCE AND ALLIED LINES, INCLUDING RESIDENTIAL PROPERTY INSURANCE
INSURANCE CODE
TITLE 10. PROPERTY AND CASUALTY INSURANCE
SUBTITLE D. FIRE INSURANCE AND ALLIED LINES,
INCLUDING RESIDENTIAL PROPERTY INSURANCE
CHAPTER 2002. POLICY PROVISIONS AND FORMS FOR FIRE INSURANCE AND
ALLIED LINES, INCLUDING RESIDENTIAL PROPERTY INSURANCE
SUBCHAPTER A. POLICY PROVISIONS
Sec. 2002.001. ENDORSEMENTS REDUCING AMOUNT OF COVERAGE. An
insurer may not use an endorsement to a policy form to which
Article 5.35, Subchapter B, or Subchapter B, Chapter 2301,
applies that reduces the amount of coverage that would otherwise
be provided under the policy unless:
(1) the insured requests the endorsement; or
(2) the insurer provides the policyholder with a written
explanation of the change made by the endorsement before the
effective date of the change.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2002.002. LIEN ON INSURED PROPERTY. A provision in an
insurance policy issued by an insurer subject to this subtitle or
Subchapter C, Chapter 5, is void if the provision states that the
encumbrance of the insured property by a lien of any character at
the time of or after the policy's issuance renders the policy
void.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2002.003. COVERAGES FOR SPOUSES AND FORMER SPOUSES. A
homeowners insurance policy or fire insurance policy promulgated
under Article 5.35 or filed and in effect as provided by
Subchapter B, Chapter 2301, may not be delivered, issued for
delivery, or renewed in this state unless the policy contains the
following language: "It is understood and agreed that this
policy, subject to all other terms and conditions contained in
this policy, when covering residential community property, as
defined by state law, shall remain in full force and effect as to
the interest of each spouse covered, irrespective of divorce or
change of ownership between the spouses unless excluded by
endorsement attached to this policy until the expiration of the
policy or until canceled in accordance with the terms and
conditions of this policy."
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2002.004. JEWELRY COVERAGE. (a) In this section,
"personal property insurance" means insurance against damage to
or loss of tangible personal property, including coverage
provided in a homeowners insurance policy, residential fire and
allied lines insurance policy, or farm and ranch owners insurance
policy.
(b) This section applies to each insurer that provides personal
property insurance in this state, including a county mutual
insurance company, farm mutual insurance company, Lloyd's plan,
and reciprocal or interinsurance exchange.
(c) An insurer that provides personal property insurance
coverage in this state for jewelry may elect to pay either:
(1) the stated value of the jewelry item; or
(2) the actual cost of replacing the jewelry item with one of
like kind and quality.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2002.005. COINSURANCE CLAUSES. (a) Except as otherwise
provided by this section, an insurer subject to this subtitle or
Subchapter C, Chapter 5, may not issue an insurance policy or
contract covering property in this state that contains a clause
that:
(1) requires the insured to obtain or maintain a larger amount
of insurance than expressed in the policy or contract; or
(2) in any way provides that the insured is liable as a
coinsurer with the insurer issuing the policy or contract for any
part of the loss or damage that may be caused by fire to the
property described in the policy or contract.
(b) A clause described by Subsection (a) is void.
(c) A coinsurance clause may be included in an insurance policy
written on cotton, grain, or other products in the process of
marketing, shipping, storing, or manufacturing.
(d) An insured may be given an option to accept an insurance
policy or contract that contains a clause described by Subsection
(a) covering a class of property other than the property
described by Subsection (c), a private dwelling, or a stock of
merchandise offered for sale at retail that has a value of less
than $10,000, if the insured is allowed a reduction in the
premium rate for the policy or contract. A clause to which this
subsection applies is valid and binding. The commissioner may
promulgate the premium rates that apply to a coinsurance clause
under this subsection.
(e) The commissioner by order may authorize or require the use
of any form of coinsurance clause in connection with an insurance
policy that insures against the hazards of tornado, windstorm,
and hail on any class of property. The commissioner may adopt
rules with reference to:
(1) coinsurance clauses authorized or required by this
subsection and the use of those clauses; and
(2) credits in premium rates for the use of coinsurance clauses
authorized or required by this subsection.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2002.006. PROVISIONS GOVERNING CERTAIN CONDITIONS OR RISKS.
(a) This chapter; Sections 403.002, 2001.001-2001.006,
2001.009, and 2001.010; Subchapter H, Chapter 544; Subchapter D,
Chapter 1806; Chapters 2003, 2004, 2006, and 2171; and Articles
5.25, 5.25A, 5.25-3, 5.26, 5.27, 5.28, 5.29, 5.30, 5.31, 5.32,
5.34, 5.35, 5.39, 5.40, and 5.41 govern the following in the same
manner and to the same extent those provisions govern fire
insurance and fire insurance rates:
(1) insurance coverage for any of the following conditions or
risks:
(A) weather or climatic conditions, including lightning,
tornado, windstorm, hail, cyclone, rain, or frost and freeze;
(B) earthquake or volcanic eruption;
(C) smoke or smudge;
(D) excess or deficiency of moisture;
(E) flood;
(F) the rising water of an ocean or an ocean's tributary;
(G) bombardment, invasion, insurrection, riot, civil war or
commotion, military or usurped power, or any order of a civil
authority made to prevent the spread of a conflagration, epidemic
or catastrophe;
(H) vandalism or malicious mischief;
(I) strike or lockout;
(J) explosion, as provided by Subsection (b);
(K) water or other fluid or substance resulting from:
(i) the breakage or leakage of a sprinkler, pump, or other
apparatus erected for extinguishing fire, or a water pipe or
other conduit or container; or
(ii) casual water entering a building through a leak or opening
in the building or by seepage through building walls; or
(L) accidental damage to a sprinkler, pump, fire apparatus,
pipe, or other conduit or container described by Paragraph
(K)(i);
(2) premium rates in this state for the insurance described by
Subdivision (1); and
(3) all matters pertaining to the insurance described by
Subdivision (1), except as provided by this section with respect
to marine insurance as defined by Section 1807.001.
(b) In this section:
(1) "explosion" includes:
(A) the explosion of a pressure vessel, other than a steam
boiler of more than 15 pounds pressure, in a building designed
and used solely for residential purposes by not more than four
families;
(B) an explosion of any kind originating outside of an insured
building or outside of the building containing the insured
property;
(C) the explosion of a pressure vessel that does not contain
steam or that is not operated with steam coils or steam jets; and
(D) an electric disturbance causing or concomitant with an
explosion in public service or public utility property; and
(2) insurance coverage for explosion does not include coverage
for loss of or damage to any property of the insured resulting
from the explosion of or injury to:
(A) a boiler, heater, or other fired pressure vessel;
(B) an unfired pressure vessel;
(C) a pipe or container connected with a boiler or vessel
described by Paragraph (A) or (B);
(D) an engine, turbine, compressor, pump, or wheel;
(E) an apparatus generating, transmitting, or using electricity;
or
(F) any other machinery or apparatus connected with or operated
by a boiler, vessel, or machine described by Paragraphs (A)-(E).
(c) This section does not apply to:
(1) a farm mutual insurance company operating under Chapter 911;
(2) a county mutual insurance company operating under Chapter
912;
(3) a mutual insurance company engaged in business under Chapter
12, Title 78, Revised Statutes, before that chapter's repeal by
Section 18, Chapter 40, Acts of the 41st Legislature, 1st Called
Session, 1929, as amended by Section 1, Chapter 60, General Laws,
Acts of the 41st Legislature, 2nd Called Session, 1929, that
retains the rights and privileges under the repealed law to the
extent provided by those sections;
(4) the making of inspections or issuance of certificates of
inspections on a boiler, apparatus, or machinery described by
Subsection (b)(2), whether insured or otherwise; or
(5) the insurance of a vessel or craft, its cargo, marine
builder's risk, marine protection and indemnity, or another risk
commonly insured under a marine insurance policy, as
distinguished from an inland marine insurance policy.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER B. POLICY FORMS
Sec. 2002.051. POLICY FORMS AND ENDORSEMENTS FOR RESIDENTIAL
PROPERTY INSURANCE. Notwithstanding Subsections (a)-(j), Article
5.35, policy forms and endorsements for residential property
insurance in this state are regulated under Subchapter A, Chapter
2301, and Article 5.13-2.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2002.052. APPLICABILITY OF OTHER LAW TO RESIDENTIAL
PROPERTY INSURANCE. An insurer may continue to use a policy form
or endorsement promulgated, approved, or adopted by the
commissioner under Article 5.35 before June 11, 2003, on
notification in writing to the commissioner that the insurer will
continue to use the policy form or endorsement.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER C. ITEMS PROVIDED TO POLICYHOLDER IN CONNECTION WITH
INSURANCE POLICY
Sec. 2002.101. RATE ANALYSIS. (a) On issuing a fire insurance
policy, an insurer engaged in the business of fire insurance in
this state shall provide the policyholder with a written analysis
of the rate or premium charged for the policy showing the items
of charge and credit that determine the rate or premium.
(b) Subsection (a) does not apply if the insurer has previously
provided the policyholder with an analysis of the rate or
premium.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2002.102. NOTICE OF RENEWAL. (a) An insurer, including a
farm mutual insurance company, county mutual insurance company,
Lloyd's plan, or reciprocal or interinsurance exchange, that
renews a homeowners insurance policy, fire and residential allied
lines insurance policy, farm and ranch owners insurance policy,
or farm and ranch insurance policy must provide the policyholder
with written notice of any difference between each form of the
policy offered to the policyholder on renewal and the form of the
policy held immediately before renewal.
(b) A notice provided under this section must be written in
plain language.
(c) The commissioner may adopt rules as necessary to implement
this section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.