Law:Title 10. Property And Casualty Insurance. Subtitle D. Fire Insurance And Allied Lines, from Chapter 2002. Policy Provisions And Forms For Fire Insurance And Allied Lines, Including Residential Property Insurance (Texas)

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Subtitle D. Fire Insurance And Allied Lines,

Contents

Chapter 2002. Policy Provisions And Forms For Fire Insurance And Allied Lines, Including Residential Property Insurance

Subchapter A. Policy Provisions

Section 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.



Section 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.



Section 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.



Section 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.



Section 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.



Section 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; S

ubchapter 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

Section 2002.051.  Policy Forms And Endorsements For Residential Property Insurance. Notw

ithstanding 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.



Section 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

Section 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.



Section 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.


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