COMMISSIONER'S BULLETIN NO. B-0006-01 February 14, 2001 TO: ALL COMPANIES, CORPORATIONS, EXCHANGES, MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS, OR OTHER INSURERS WRITING RESIDENTIAL PROPERTY INSURANCE IN THE STATE OF TEXAS AND TO OTHER AGENTS AND REPRESENTATIVES AND THE PUBLIC GENERALLY RE: Commissioner´s Order No. 01-0108, adoption of amendatory mandatory endorsements, optional endorsements, and manual rules and rates to the Texas Personal Lines Manual to provide coverage for increased cost of construction due to ordinance or law. The Commissioner of Insurance, by Commissioner’s Order No. 01-0108, dated February 8, 2001, has adopted amendments to the Texas Dwelling Policies (TDP), Texas Homeowners Policies (HO), and the Texas Personal Lines Manual (Manual), and new optional endorsements for use with the TDP and HO relating to coverage for the increased cost of construction when an ordinance, law or the building specifications of the Texas Windstorm Insurance Association´s (TWIA) plan of operation impose specific requirements on the repair or replacement of insured, damaged property. AMENDATORY MANDATORY ENDORSEMENTS Pursuant to this order, insurers must attach the following amendatory mandatory endorsements as applicable to the TDP and HO: •
Endorsement No. TDP-024 Dwelling Amendatory Mandatory Endorsement for Increased Cost of Construction – Building Laws - Applicable to Forms TDP-1 and TDP-2 only.
•
Endorsement No. TDP-025 Dwelling Amendatory Mandatory Endorsement for Increased Cost of Construction – Building Laws - Applicable to Form TDP-3.
•
Endorsement No. HO-134 Homeowners Amendatory Mandatory Endorsement for Increased Cost of Construction – Building Laws Applicable to Forms HO-A, HO-B, and HO-C.
These endorsements amend the Building Laws exclusion in the policies to provide $5,000 of coverage for the insured’s increased cost of construction due to the enforcement of any ordinance, law, or the building specifications
of the TWIA plan of operation. The coverage is provided at no additional premium and the endorsements specify that the coverage is additional insurance and does not reduce the dwelling limit of liability. An insurer may discontinue the use of these endorsements when the amended language has been incorporated into the applicable policy forms. The amended language must be incorporated into the policy forms on or before April 1, 2002, at which time the amendatory mandatory endorsements will be automatically withdrawn. OPTIONAL ENDORSEMENTS The following optional endorsements are adopted for use as applicable to the TDP and HO: •
Endorsement No. TDP-026 Increased Cost of Construction – Building Laws (Forms TDP-1 and TDP-2 only).
•
Endorsement No. TDP-027 Increased Cost of Construction – Building Laws (Form TDP-3).
•
Endorsement No. HO-135 Increased Cost of Construction – Building Laws (Forms HO-A, HO-B, and HO-C).
These endorsements amend the Building Laws exclusion in the policy to provide additional optional coverage above the included $5,000 in the amount of 10%, 15%, or 25% of the dwelling limit of liability. These endorsements specify that additional premium is to be paid for the percentage of coverage that is selected by the insured and that this coverage is additional insurance above the $5,000 that is included in the policy and the limit of liability that applies to Coverage – A Dwelling. MANUAL CHANGES Subsection O is added to Section IV, Optional Endorsements in the Dwelling Section. Subsection 20 is added to Section IV, A. Optional Additional Coverage’s & Endorsements in the Homeowners Section. New Premium Chart 19 for dwelling policies, and new Premium Chart 40 for homeowner’s policies is added to the Dwelling Section and Homeowners Section of the Manual. These premium charts are used to calculate the additional premium when optional endorsements TDP-026, TDP-027, and HO-135 are attached to the appropriate policy.
The Liberalization Clause as contained in each policy form applies to the adopted coverage. Insurers who currently have approved endorsements for building law or ordinance coverage may continue to use their approved endorsements so long as those endorsements conform with the endorsement approval requirements of Insurance Code, Article 5.35. The above endorsements and Manual changes are effective on April 1, 2001. Any questions regarding this bulletin may be directed to Gary Julian at (512) 322-2266 or Gary.Julian@tdi.state.tx.us. Marilyn Hamilton, Associate Commissioner Property & Casualty Program, MC 104-PC For further information, contact:
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COMMISSIONER'S BULLETIN NO. B-0021-01 May 18, 2001 TO: All Insurers Writing Residential Insurance in Texas RE: Adoption of Proposed Amendments to the Texas Statistical Plan for Residential Risks *** IMPORTANT NOTICE *** Please read carefully and distribute to appropriate personnel handling statistical reporting.
Commissioner's Order No. 01-0456 issued on May 15, 2001, adopted amendments to the Texas Statistical Plan for Residential Risks (Stat Plan) as proposed by the staff of the Texas Department of Insurance. The
Commissioner adopted the proposal to amend the options under the current Law and Ordinance field of the Stat Plan to read as follows: Code 0 (other Code 1 Code 2 Code 3 Code 4
No Additional Law and Ordinance Coverage is attached to policy than the mandatory $5,000 provided in the policy). 10% Additional Law and Ordinance Coverage Purchased. 15% Additional Law and Ordinance Coverage Purchased. 25% Additional Law and Ordinance Coverage Purchased. Other Approved Limits Purchased.
The adopted changes are necessary in order to collect experience to support the adjustment of rates for recently approved optional Law & Ordinance endorsements. These endorsements were adopted by Commissioner's Order No. 01-0108, dated February 8, 2001. All amendments and associated changes to the Stat Plan reporting requirements are effective July 1, 2001. Please replace the current same-numbered pages with the attached revised pages in the Stat Plan. Changes are noted with strike-through or underline marks as applicable. Questions relating to this bulletin should be directed to the undersigned at (512) 475-3026. Sincerely, Gary Gola Special Projects Director Property & Casualty (MC 105-5S) CODING SECTION PREMIUMS AND LOSSES TPSP - R - PART II - SECTION B 24 REVISED: 07-01-01 EFFECTIVE: 09-01-87 18. ZIP CODE The 5 digit ZIP Code of each risk must be reported. Report Plus 4 if available. 19. BUILDING CODE CREDITS (TWIA ONLY) CODE Seaward - New Structure Built to New Code 01 Seaward – Retrofitted Structures 02 Inland I - New Structure Built to New Code 03 Inland I - New Structure Built to Higher Standards than New Code 04 Inland I – Retrofitted Structures 05 Inland II – New Structure Built to Higher Standards than New Code: Built to Inland I Standard 06 Built to Seaward Standard 07 Inland II – Retrofitted Structures 08
Not Applicable 09
20. LAW AND ORDINANCE COVERAGE CODE No Additional Law and Ordinance Coverage is not attached to policy. (other than the mandatory $5,000 provided in the policy) 0 10% Additional Law and Ordinance Coverage Purchased is attached to policy 1 15% Additional Law and Ordinance Coverage Purchased 2 25% Additional Law and Ordinance Coverage Purchased 3 Other Approved Limits Purchased 4 RESIDENTIAL RISKS PREMIUMS COLUMNS CODES TYPE OR DESCRIPTION 13 REVISED: 07-01-01 EFFECTIVE: 09-01-87 136 (LOC) LAW AND ORDINANCE COVERAGE 0 No Additional Law and Ordinance Coverage is not attached (other than the mandatory $5,000 provided in the policy) 1 10% Additional Law and Ordinance Coverage Purchased is attached 2 15% Additional Law and Ordinance Coverage Purchased 3 25% Additional Law and Ordinance Coverage Purchased 4 Other Approved Limits Purchased 137 RESIDENTIAL SPRINKLER PREMIUM CREDIT Report the use of a premium credit for installation of an approved automatic sprinkler system. Do not report this premium credit under Individual Optional Credits. 0 No credit in force on policy 1 Credit in force on policy 138 * SKIP 139 PROPERTY PROTECTION PLAN POLICY 0 Policy is not a Property Protection Plan policy 1 Policy is a Property Protection Plan policy 140 TENURE DISCOUNT If the insurer offers a tenure discount, code the tenure of the insured using the following codes. Tenure is defined as the number of years previously insured with the insurer at the time the policy is issued or renewed. Insurers offering this discount shall code all premium transactions, including those which do not qualify for the discount. Do not code tenure discounts elsewhere, i.e., do not report tenure discounts in positions 46-47 as Individual Optional Credits. 0 0 Years 1 1 Year 2 2 Years 3 3 Years
4 4 Years 5 5 Years 6 6 or more Years 141-142 TENURE DISCOUNT AMOUNT * Report the tenure discount amount. Report 10% as 10. Report no discount as 00. Do not report the tenure discount amount elsewhere, i.e. -- do not report tenure discount amount in positions 80-82 as Individual Optional Credits RESIDENTIAL RISKS -- DWELLINGS AND HOMEOWNERS LOSSES COLUMNS CODE TYPE OR DESCRIPTION 8 REVISED: 07-01-01 EFFECTIVE: 09-01-87 134-135 (BCC) BUILDING CODE CREDIR (TWIA ONLY) 01 Seaward - New Structure Built to New Code 02 Seaward – Retrofitted Structure 03 Inland I - New Structure Built to New Code 04 Inland I - New Structures to higher Standards than New Code. 05 Inland I – Retrofitted Structures Inland II - New Structure Built to Higher Standards than the New Code: 06 Built to Inland I Standard 07 Built to Seaward Standard 08 Inland II – Retrofitted Structures 09 Not Applicable 136 (LOC) LAW AND ORDINANCE COVERAGE 0 No Additional Law and Ordinance Coverage is not attached. (other than the mandatory $5,000 provided in the policy) 1 10% Additional Law and Ordinance Coverage Purchased is attached. 2 15% Additional Law and Ordinance Coverage Purchased 3 25% Additional Law and Ordinance Coverage Purchased 4 Other Approved Limits Purchased 137 RESIDENTIAL SPRINKLER PREMIUM CREDIT Report the use of a premium credit for installation of an approved automatic sprinkler system. 0 No credit in force on policy 1 Credit in force on policy 138 * SKIP 139 PROPERTY PROTECTION PLAN POLICY 0 Policy is not a Property Protection Plan policy. 1 Policy is a Property Protection Plan policy. 140 TENURE DISCOUNT If the insurer offers a tenure discount, code the tenure of the insured using the following codes. Tenure is defined as the number of years previously insured with the insurer at the time the policy is issued or renewed. Insurers offering this discount shall code all premium transactions, including those which do not qualify for the discount. Do not code tenure discounts, i.e.,
do not report tenure discounts in positions 46-47 as Individual Optional Credits. 0 0 Years 1 1 Year 2 2 Years 3 3 Years 4 4 Years 5 5 Years