Texas Personal Lines Insurance Overview

Property and Casualty Insurance Overview

  • Property Insurance: Covers physical property (e.g., buildings, contents) against loss or damage from various risks.
  • Casualty (Liability) Insurance: Provides compensation for harm the insured is legally responsible for, including bodily injury, property damage, personal and advertising injuries.
  • Key Differences:
    • Property Insurance: Protects real or personal property.
    • Casualty Insurance: Covers damages to third parties.

Approval of Rates and Forms

  • All policy forms, endorsements, and rates must be approved by the Texas Commissioner of Insurance.
  • Key Rules:
    • Insurers must submit rate and form filings at least 60 days before use.
    • If not disapproved within 60 days, forms are automatically approved.

Homeowners Insurance Regulations

Declination, Cancellation, & Nonrenewal Rules

  • Insurers must provide a written explanation for declining, canceling, or non-renewing a policy.
  • Cancellation After 60 Days: Allowed only for reasons such as:
    • Nonpayment of premium.
    • Increase in risk that impacts the premium rate.
    • Fraudulent claim submissions.
    • Violation of state insurance laws.
  • Cancellation Notice Requirements:
    • Written notice must be mailed at least 10 days before cancellation.
    • New policies can be canceled with 10 days' written notice within the first 60 days.

Premium Surcharges & Nonrenewal Rules

  • Premium surcharges apply for 2 or more claims within a 3-year period.
  • Non-renewal can occur if 3 or more claims are filed in 3 years.

Liquidated Demand Rule (Fire Insurance)

  • In case of total fire loss on insured real property, the insurer must pay the full policy amount.
  • This does not apply to personal property.
  • This provision is mandatory in all fire insurance policies for real property in Texas.

Loss Settlement Provisions

  • Property losses are settled on an Actual Cash Value (ACV) basis, defined as:
    1. Actual Cash Value at the time of loss.
    2. Policy limit for coverage.
    3. Cost to repair or replace the property.
    4. Insured’s financial interest at the time of loss.

Texas FAIR Plan Association

  • Purpose: To provide residential property insurance in underserved areas where standard insurance is unavailable.
  • Key Features:
    • Governing Committee with 11 voting members.
    • All admitted insurers must participate.
  • Coverage Limits:
    • Dwelling Coverage: $1,000,000
    • Contents Coverage: $500,000
  • Exclusions: Windstorm & hail coverage not included if eligible under the Catastrophe Property Insurance Pool Act.

Texas Windstorm Insurance Association (TWIA)

  • Purpose: Provides windstorm and hail insurance in high-risk coastal areas where private insurers do not cover.
  • Eligibility:
    • Areas must be declared a “catastrophe area”.
    • Properties must meet state building codes.

Texas Automobile Insurance: Key Regulations & Compliance

  • Texas Motor Vehicle Safety Responsibility Act:
    • Minimum Liability Coverage:
    • $30,000 for bodily injury or death (one person).
    • $60,000 for bodily injury or death (two or more).
    • $25,000 for property damage.
    • Penalties for No Insurance:
    • First Offense: Fine between $175 – $350.
    • Subsequent Offenses: Fine between $350 – $1,000.

Proof of Insurance

  • Must provide proof upon request:
    • Insurance document or binder.
    • Texas Liability Insurance Card includes necessary information regarding coverage.

Personal Injury Protection (PIP)

  • Coverage included automatically unless rejected.
  • Minimum Required PIP Coverage: $2,500
  • Covers medical expenses, lost income, essential services related to the accident.

Uninsured & Underinsured Motorist Coverage (UM/UIM)

  • Must be offered but can be declined in writing.
  • Coverage protects against uninsured and underinsured drivers and hit-and-run incidents.

Policy Cancellation & Nonrenewal

  • Cancellation Rules: Can only cancel after 60 days, barring specific reasons.
  • Nonrenewal Rules: Must notify at least 30 days before policy expires.

Texas Automobile Insurance Plan Association (TAIPA)

  • Provides auto insurance for drivers unable to obtain coverage.
  • Applicants must be rejected by at least two insurers.

Transportation Network Companies (TNCs) – Uber & Lyft

  • Rideshare drivers need specific coverage.
  • Minimum Liability Coverage Requirements vary based on rideshare status.

Texas Property and Casualty Insurance Guaranty Association

  • Purpose: Protects policyholders from financial loss due to insurer insolvency.
  • Who is Covered?: Policyholders of insurers authorized at the time of the event.
  • Exclusions: Does not cover life insurance, fidelity bonds, title insurance, etc.
  • Claims Management: Organized into accounts for workers' compensation and auto insurance, with specific payout limits.