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COMMISSIONER'S BULLETIN # B-0015-02

April 09, 2002


To: ALL COMPANIES, CORPORATIONS, EXCHANGES, MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS OR OTHER INSURERS WRITING PROPERTY AND CASUALTY INSURANCE IN THE STATE OF TEXAS AND TO OTHER AGENTS AND REPRESENTATIVES AND THE PUBLIC GENERALLY


Re: Commissioner's Order No. 01-1105 adopting amendatory mandatory endorsements, mandatory offer endorsements, an amendment to endorsement No. HO-170, and amendments to the Texas Personal Lines Manual rules to modify coverage for mold and other fungi, and amendments to the Texas Statistical Plan for Residential Risks

The Commissioner of Insurance, under Commissioner's Order No. 01-1105 (Order) issued on November 28, 2001, and pursuant to Texas Insurance Code Articles 5.35, 5.96, 5.98, and 5.101 has adopted amendatory mandatory endorsements, mandatory offer endorsements, an amendment to endorsement No. HO-170, and amendments to the Texas Personal Lines Manual rules to modify coverage for mold and other fungi, and amendments to the Texas Statistical Plan for Residential Risks.

The Order provides coverage in the basic policy for removal of mold that results from sudden and accidental discharge, leakage or overflow of water, including those that are hidden or concealed as long as the loss is reported no later than 30 days after the date the loss is detected or should be detected.

The Order eliminates coverage under the basic policy for procedures such as testing, treating, containing or disposing of mold beyond that necessary to repair or replace property that is physically damaged by water.

Policyholders will have the option, however, to purchase additional coverage in increments of 25 percent, 50 percent and 100 percent of policy limits that includes these procedures. Insurers must offer applicants all levels of coverage in addition to the coverage in the basic policy. Insurers using the prescribed policy forms may file for approval to offer a limit of liability selection option in lieu of the 25% and/or 50% selection options subject to prior approval of the Commissioner. However, the 100% limit of liability selection option shall be offered in conjunction with the approved selection option(s).

The amendment to Endorsement No. HO-170 conforms the water damage coverage in this endorsement to the changes made to the Texas Homeowners Form-A (HO-A) by attachment of amendatory mandatory endorsement HO-161A.

The nine amendatory mandatory endorsements are to be attached to certain residential property insurance policies:

  1. Endorsement No. HO-161A which will be attached to Texas Homeowners Form-A (HO-A),
  2. Endorsement No. HO-162A which will be attached to Texas Homeowners Form-B (HO-B),
  3. Endorsement No. HO-163A which will be attached to Texas Homeowners Form-C (HO-C),
  4. Endorsement No. HO-164A which will be attached to the Texas Homeowners Tenant Policy-Form B (HO-BT),
  5. Endorsement No. HO-165A which will be attached to the Texas Homeowners Condominium Policy-Form B (HO-B-CON),
  6. Endorsement No. HO-166A which will be attached to the Texas Homeowners Tenant Policy-Form C (HO-CT),
  7. Endorsement No. HO-167A which will be attached to the Texas Homeowners Condominium Policy-Form C (HO-C-CON),
  8. Endorsement No. TDP-004A which will be attached to the Texas Dwelling Policy-Form 1 (TDP-1) and the Texas Dwelling Policy-Form 2 (TDP-2), and
  9. Endorsement No. TDP-005A which will be attached to the Texas Dwelling Policy-Form 3 (TDP-3).

The nine mandatory offer endorsements are to be attached to certain residential property insurance policies:

  1. Endorsement No. HO-161 which may be attached to Texas Homeowners Form-A (HO-A),
  2. Endorsement No. HO-162 which may be attached to Texas Homeowners Form-B (HO-B),
  3. Endorsement No. HO-163 which may be attached to Texas Homeowners Form-C (HO-C),
  4. Endorsement No. HO-164 which may be attached to the Texas Homeowners Tenant Policy-Form B (HO-BT),
  5. Endorsement No. HO-165 which may be attached to the Texas Homeowners Condominium Policy-Form B (HO-B-CON),
  6. Endorsement No. HO-166 which may be attached to the Texas Homeowners Tenant Policy-Form C (HO-CT),
  7. Endorsement No. HO-167 which may be attached to the Texas Homeowners Condominium Policy-Form C (HO-C-CON),
  8. Endorsement No. TDP-004 which may be attached to the Texas Dwelling Policy-Form 1 (TDP-1) and the Texas Dwelling Policy-Form 2 (TDP-2), and
  9. Endorsement No. TDP-005 which may be attached to the Texas Dwelling Policy-Form 3 (TDP-3).

Amendments to the Texas Statistical Plan for Residential Risks are as follows:

(1) Coding Section (page 24) add:
21. MOLD COVERAGE OFFER ENDORSEMENT
Code actual endorsement number, excluding dashes,
i.e. HO161, HO162, TDP004, TDP005, etc.)
22. AMOUNT OF COVERAGE FOR ABOVE
(Percent or Dollar amount, as applicable, for
Mold Coverage Offer Endorsement)
(2) Premiums Section (page 12) add:
101-108 * MOLD COVERAGE OFFER ENDORSEMENT
(Code actual endorsement number, excluding dashes,
i.e. HO161, HO162, TDP004, TDP005, etc.)
109-114 * AMOUNT OF COVERAGE FOR FIELD "101-108"
(Percent or Dollar amount as applicable)
115 HO-A ADDITIONAL EXTENDED COVERAGE
0 Endorsement HO-170 is not attached to policy
1 Endorsement HO-170 is attached to policy
(3) Losses Section (page 7) add:
101-108 * MOLD COVERAGE OFFER ENDORSEMENT
(Code actual endorsement number, excluding dashes, i.e. HO161, HO162, TDP004, TDP005, etc.)
109-114 * AMOUNT OF COVERAGE FOR FIELD "101-108"
(Percent or Dollar amount as applicable)
115 HO-A ADDITIONAL EXTENDED COVERAGE
0 Endorsement HO-170 is not attached to policy
1 Endorsement HO-170 is attached to policy

Amendments to the Texas Personal Lines Manual:

The Homeowners and Dwelling Sections of the Texas Personal Lines Manual have been amended to provide rules for the use of the mandatory offer endorsements, including provisions for consumer notice requirements.

The above endorsements, Manual changes, and amendments to the Residential Statistical Plan are adopted and applicable to be effective on January 1, 2002, but insurers must implement the endorsements no later than January 1, 2003.

Pursuant to Article 5.35, Texas Insurance Code, insurers continue to have the ability to file individual policies or endorsements modifying coverage in order to provide various levels of mold coverage and/or to provide other forms of mold coverage. The Department will review and consider for approval or adoption all such filings in addition to those adopted in the Order. Rate regulated insurers may use the endorsements upon filing and approval of discounts and charges for the endorsements under Article 5.101 §4.

A copy of the Order is available on our web site at: http://www.tdi.state.tx.us/orders/co-01-1105.html

Questions regarding the Texas Personal Lines Manual may be addressed to:

Texas Department of Insurance
Attn: Gary Julian
Automobile / Homeowners Division, MC 104-1F
P. O. Box 149104
Austin, TX 78714-9104
Phone: (512) 322-2266

Questions regarding the Texas Statistical Plan for Residential Risks may be addressed to:

Texas Department of Insurance
Attn: Gary Gola
Property & Casualty Actuarial Division, MC 105-5F
P. O. Box 149104
Austin, TX 78714-9104
Phone: (512) 475-3017

Marilyn Hamilton, Associate Commissioner
Property & Casualty Program, MC 104-PC



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