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Archived File - for Reference Use

This file is historical in nature. Links and contact information may be outdated and no longer valid.


COMMISSIONER'S BULLETIN #B-0062-98

August 14, 1998

 

TO: ALL PROPERTY AND CASUALTY INSURANCE COMPANIES

RE: Request for Information Relating to Denial of Certain Foundation Claims under the HO-B Policy Form

The Texas Supreme Court recently issued the Balandran opinion¹ in which the court held that the 1991 Texas Standard Homeowner´s Policy Form HO-B covers damage to the foundation of the insured´s dwelling from foundation movement caused by an underground plumbing leak.

As a result of this opinion, the Texas Department of Insurance is requesting that all property and casualty insurance companies writing HO-B policies in Texas provide the Department with information, as specified in this bulletin, on claims involving damage to the foundation of the insured´s dwelling from foundation movement caused by an underground plumbing leak that were denied during the period from August 1993 through August 1997 because the insurer determined, either on the basis of the Sharp² decision or on any other basis, that there was no coverage under the HO-B policy. The Department is also interested in obtaining information on claims involving damage to the foundation of the insured´s dwelling from foundation movement for which the cause was not investigated or determined during the period from August 1993 through August 1997.

On August 22, 1997, the Commissioner issued Commissioner´s Bulletin No. B-0032-97 requiring insurers to pay claims under the Texas Standard Homeowners Policy Form HO-B for damage to the insured´s dwelling, including damage to the foundation caused by settling, cracking, bulging, shrinkage, or expansion, caused by the peril of accidental discharge, leakage, or overflow of water from within a plumbing, heating, or air conditioning system or household appliance or be subject to possible disciplinary action for violations of the Texas Insurance Code, including unfair claim settlement practices pursuant to Article 21.21 §4(10)(a) and Article 21.21-2.

Insurers are requested to provide the following information to the Department:

(1) Number of claims involving damage to the foundation of the insured´s dwelling from foundation movement caused by an underground plumbing leak that were denied, in whole or in part, during the period from August 1993 through August 1997;

(2) Number of claims involving damage to the foundation of the insured´s dwelling from foundation movement for which the cause was not investigated or determined during the period from August 1993 through August 1997; and

(3) Action already taken or to be taken with regard to resolving each of the above categories of claims.

This request does not apply to claims involving damage to the foundation of the insured´s dwelling from foundation movement in which the cause of loss was determined to be other than a plumbing leak.

Insurers that do not have any claims pertaining to either one or both of the above categories of claims are requested to provide notice to this effect.

The requested information should be submitted to David Durden, Deputy Commissioner for Automobile and Homeowners Group, Texas Department of Insurance, P. O. Box 149104, MC #104-5A, Austin, Texas, 78714-9104 (512/322-3430).

This request is made pursuant to Article 1.24 of the Insurance Code, which authorizes the Department to make reasonable inquiries to any insurance company in relation to any matter connected to a company´s transactions which the Department may deem necessary for the public good or for a proper discharge of its duties. While Article 1.24 requires insurers to respond in writing no later than the 10th day after the request is made, the Department is granting insurers additional time to respond to this request. Insurers are asked to provide the requested information by no later than September 7, 1998.

David Durden
Deputy Commissioner
Automobile & Homeowners Group

__________________________

¹ Joe Balandran and Dolores Balandran v. Safeco Insurance Company of America, 41 Tex. Sup. Ct. J. 1153, (July 3, 1998).

² Sharp v. State Farm Fire and Casualty Insurance Companies, 115 F.3d 1258 (5th Cir. June 30, 1997).

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