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Review Requirements Checklist Personal Automobile

Updated 10/3/2016 - Return to Index

Indicates new addition since last update.Indicates new addition since last update.

Personal Auto Checklist
REVIEW REQUIREMENTS REFERENCE COMMENTS
FORMS
Filing Standards - Policy forms and endorsements may not be unjust, unfair, inequitable, misleading or deceptive.
POLICY FORMS & ENDORSEMENTS
Prior Approval of Policy Forms and Endorsements
Chapter 2301, Texas Insurance Code An insurance policy form or endorsement may not be delivered or issued for delivery in this state unless the form has been filed with and approved by the commissioner. Filings must be submitted to the Texas Department of Insurance at least 60 days before the effective date of filing. An insurer may continue to use the policy forms and endorsements promulgated, approved, or adopted under Chapter 1952 on notification to the commissioner in writing that the insurer will continue to use those forms.
Disapproval of Forms; Withdrawal of Approval §2301.007, Texas Insurance Code The commissioner may disapprove a form filed under §2301.006 or withdraw approval of a form if the form (1) violates any law, including a rule adopted under the Texas Insurance Code, or (2) contains a provision or has a title or heading that is unjust or deceptive, encourages misrepresentation, or violates public policy.
Applications
Not Required to be Filed for Approval Unless Being Made a Part of the Policy.
Explanatory Memorandum Filings Made Easy Guide A detailed explanatory memorandum must be attached to describe a new or revised product, its application and any changes in coverage, limits, exclusions, etc., from that provided by the previously promulgated/approved/adopted forms.
Comparative Evaluation Filings Made Easy Guide A side-by-side comparison must be attached showing any differences between the filed forms and the previously promulgated, approved, or adopted forms to which the filed form is being compared. Differences must be clearly indicated and explained. When a previously promulgated, approved, or adopted form is being amended, companies must use underlining to denote any new language added and bracketing to remove existing language from a form.
Flesch Scoring §§2301.051 - 2301.055,
Texas Insurance Code and Commissioner Order No. 92-0573
Filings must include the Flesch Score indicating the filed forms meet the minimum readability standards established by the Commissioner of Insurance under Commissioner Order No. 92-0573. Forms that fail to meet a minimum Flesch Score of "40" cannot be approved.
Coverage Issues
Betterment Chapter 2301, Texas Insurance Code Policy language must not exclude coverage for betterment. Automobile physical damage coverage pays to repair or replace damaged property with like kind and quality. If like parts are not available, the policy must pay to repair or replace the damaged property regardless of betterment.
Personal Injury Protection Coverage §§1952.151 - 1952.161, Texas Insurance Code Personal injury protection coverage must be provided unless the named insured rejects it in writing. Selection/rejection forms used for PIP are not subject to approval and are not part of the policy.
Uninsured or Underinsured Motorist Coverage §§1952.101 - 1952.110, Texas Insurance Code Uninsured/underinsured motorist coverage must be provided unless the named insured rejects it in writing. Selection/rejection forms used for UM/UIM are not subject to approval and are not part of the policy.
Underinsured Motorist Coverage §1952.103, Texas Insurance Code Statutory definition: "'Underinsured motor vehicle' means an insured motor vehicle on which there is collectible liability insurance coverage with limits of liability for the owner or operator that were originally lower than, or have been reduced by payment of claims arising from the same accident to, an amount less than the limit of liability stated in the underinsured coverage of the insured's policy." The policy must not conflict with §1952.103 or the Texas Supreme Court decision in Stracener v. United Services Automobile Association, 777 S.W.2d 378 (Tex. 1989). Stracener requires underinsured motorist coverage to pay the full amount of damages that the insured is legally entitled to recover, reduced by the amount recovered or recoverable from the insurer of the underinsured motor vehicle, up to policy limits for UM/UIM. Stracener states "a negligent party is underinsured whenever the available proceeds of his liability insurance are insufficient to compensate for the injured party's actual damages."
Recovery Under Underinsured Motorist Coverage §1952.106, Texas Insurance Code Underinsured motorist coverage must provide payment of all amounts that the insured is legally entitled to recover as damages from owners or operators of underinsured motor vehicles because bodily injury or property damage, not to exceed the limit specified in the insurance policy, and reduced by the amount recovered or recoverable from the insurer of the underinsured motor vehicle.
The coverage description for underinsured motorist coverage must not conflict with §1952.106 or the Texas Supreme Court decision in Stracener v. United Services Automobile Association, 777 S.W.2d 378 (Tex. 1989). Stracener states "the set off is to be subtracted from the amount of actual damages incurred as a result of the negligence of the underinsured motorist rather than from the limits in the underinsured motorist insurance policy."
UM/UIM Required Policy Language §§1952.101-1952.110, Texas Insurance Code To ensure that policies comply with §1952.103 and §1952.106, and to ensure that policyholders receive the underinsured motorist coverage to which they are entitled, TDI will not approve a UM/UIM coverage part unless the policy definition for "underinsured motor vehicle" states "an underinsured motor vehicle is one to which a liability bond or policy applies at the time of the accident but its limit of liability either: a. is not enough to pay the full amount the covered person is legally entitled to recover as damages; or b. has been reduced by payment of claims to an amount which is not enough to pay the full amount the covered person is legally entitled to recover as damages."
Recovery Prohibited for Vehicles Impounded for Drug Violation §1952.057, Texas Insurance Code A motor vehicle insurance policy delivered or issued for delivery in the state of Texas may not provide payment on final conviction of the named insured for loss for a covered motor vehicle that is seized by federal or state law enforcement officers as evidence in a case against the named insured under Chapter 481, Health and Safety Code or the federal Controlled Substances Act, 21 U.S.C. Section 801 et seq.
Required Provision: Coverage for Certain Spouses §1952.056, Texas Insurance Code Statutory requirement that a personal automobile policy must contain a provision to continue coverage for the spouse during a period of separation in contemplation of divorce.
Vehicles Acquired During Policy Period §1952.059, Texas Insurance Code (HB 949, 83rd Regular Session) A personal automobile policy must define a covered vehicle and provide certain amounts of coverage for newly acquired vehicles.
Ride-share and Car-share Exclusions Transportation Network Company Drivers Ins. Code Chapter 1954, as enacted by HB 1733, 84th Regular Session Ride-Share - Transportation Network Companies (TNC)

A personal auto policy or endorsement may exclude coverage for covered persons or vehicles if the exclusion is limited to the following:

Who
1. Insureds, under their own personal auto policies, while using a covered vehicle as a TNC vehicle at the time of loss;
2. Passengers while occupying a vehicle that an insured is using as a TNC vehicle at the time of loss.

What
1. A covered vehicle while it is being used as a TNC vehicle at the time of loss.
2. Any other vehicle being used by an insured as a TNC vehicle at the time of loss.

When
1. While an insured is logged on to a TNC "digital network" as a driver, and is using a vehicle as a TNC vehicle at the time of loss;
2. While an insured is engaged as a driver in a "prearranged ride."

A personal auto policy or endorsement may NOT exclude the following:

1. Coverage for a TNC passenger, under the passenger's personal auto policy, while the passenger is occupying a vehicle being used as a TNC vehicle at the time of loss. This applies if the passenger's policy is not the policy insuring either the TNC driver or vehicle. (Coverage examples: PIP, UM/UIM)

2. Coverage for pedestrians and other third parties under their own personal auto policies.

See link for definitions.

Car Share
Exclusions may be considered for approval only if limited to the following:

1. During the period the insured is driving the car to deliver it to a prearranged renter or a prearranged location for pickup by a renter, coverage may be excluded for that insured and that vehicle; and

2. While the renter has care, custody, and control of the car, coverage may be excluded for the renter and that vehicle.

A disclosure is required for car share exclusions. Submit a copy of the disclosure with your filing.
Anti-Stacking Provisions Chapter 2301, Texas Insurance Code "Other insurance" clauses or similar provisions may not contain "anti-stacking" or "non-cumulation" language that excludes or limits coverage in other separate, but applicable policies, that are issued by affiliated companies or by other unaffiliated companies. Anti-stacking language may only apply to policies issued to "you" (named insured) by "us" (underwriting company). Insureds are entitled to the coverage that they pay for. (Texas Supreme Court decision in Stracener v. United Services Automobile Association, 777 S.W.2d 378 (Tex. 1989)).
Defense Chapter 2301, Texas Insurance Code Cost of defense within limits is not permitted.
Examination Under Oath Chapter 2301, Texas Insurance Code If policy language requires examination under oath, the policy must state that a parent or guardian may be present during any examination of a minor.
Permissive Use of an Automobile Chapter 2301, Texas Insurance Code Policy language must provide coverage for individuals, other than family or household residents, using a covered automobile with permission.
Special Conditions for Lloyds, Mutuals, Reciprocals, & Participating Stock Companies General Casualty Bulletins Nos. 276, 443, and 446 When a policy is issued by a Lloyds, a mutual company, a reciprocal association or a participating stock company having special provisions applicable to its membership, dividends and/or policyholders, such provisions, when approved, in accordance with the provisions of the Texas Insurance Code, of 1951, as amended must be inserted in the policy.
Arbitration
Limited to Coverage Disputes Chapter 2301, Texas Insurance Code Voluntary, post dispute arbitration only. May be either binding or non-binding.
Toll Free Information
Notice to Accompany Policy §521.005, Texas Insurance Code Texas Insurance Code requires a brief written notice of suggested procedure to be followed by the policyholder in the event of a dispute concerning a policyholder's claim or premium. The notice must include the name and address of the department and the toll-free telephone number maintained under §§521.051 - 521.056 of the Texas Insurance Code.
Department Toll-Free Number for Information and Complaints §§521.051 - 521.056, Texas Insurance Code Toll-Free number for the Texas Department of Insurance.
Insurer Toll-Free Number for Information and Complaints §§521.101 - 521.103, Texas Insurance Code Insurer's requirement to maintain a toll-free number to provide information concerning policies issued by the insurer and to accept complaints from the policyholder. Article contains an exception for insurers whose gross initial premium receipts collected in this state are less than $2 million a year.
Notice of Toll-Free Telephone Numbers and Information & Complaint Procedures Indicates new addition since last update.28 TAC §1.601 & §1.602, Texas Administrative Code and Commissioner's Order 3952 To satisfy requirements for §521.005, §§521.051 - 521.056, and §§521.101 - 521.103 noted above.
Cancellation, Nonrenewal and Other Termination Provisions
Authorized Cancellation and Nonrenewal of Policies §§551.101 - 551.112, Texas Insurance Code Cancellation and Nonrenewal of Certain Property and Casualty Policies:
Note: Unless the insurer has mailed written notice of nonrenewal to the insured not later than the 30th day before the date on which the insurance policy expires, the insurer must renew an insurance policy, at the request of the insured, on the expiration of the policy.
Elected Officials §§551.151 & 551.152, Texas Insurance Code An insurer may not cancel or refuse to renew an insurance policy based solely on the fact that the policyholder is an elected official.
Insured's Right to Cancel Chapter 2301, Texas Insurance Code Insurance company cannot limit or restrict the insured's right to cancel a policy.
Refund of Unearned Premium §558.002, Texas Insurance Code (SB 698, 83rd Regular Session) An insurer must return unearned premium to the policyholder not later than the 15th business day after the effective date of cancellation or termination of a policy.
Voiding Coverage Chapter 705, Subchapter A, Texas Insurance Code "Void Coverage" language must comply with Chapter 705, Subchapter A, and the misrepresentation must be material.
Claims Settlement
Prompt Payment of Claims §§542.051 - 542.061, Texas Insurance Code Prompt payment of claim requirements. When the term "Business Day" is used, the definition must be in the policy.
Notice of Settlement of Liability Claims §§542.151 - 542.154, Texas Insurance Code Notice of settlement of claim under casualty insurance policy. EXCEPTION - This article does not apply to a casualty policy that requires the insured's consent to settlement of a claim against the insured or to fidelity, surety, or guaranty bonds.
Contractual Limitations Period - Suits §16.070, Civil Practice & Remedies Except as provided by Subsection (b), a person may not enter a stipulation, contract, or agreement that purports to limit the time in which to bring suit on the stipulation, contract, or agreement to a period shorter than two years. A stipulation, contract, or agreement that establishes a limitations period that is shorter than two years is void in this state. The Texas Third Court of Appeals issued an opinion that acknowledges that the language providing 2 years and 1 day from the date the cause of action first accrues satisfies the statutory requirement of §16.070, Civil Practices and Remedy Code. ( http://www.search.txcourts.gov/Case.aspx?cn=03-08-00408-CV) Case #03-08-00408-CV
Notice Requirements §16.071, Civil Practice & Remedies A contract stipulation that requires a claimant to give notice of a claim for damages as a condition precedent to the right to sue on the contract is not valid unless the stipulation is reasonable. A stipulation that requires notification within less than 90 days is void.
Damages
Punitive / Exemplary Damages Chapter 2301, Texas Insurance Code Exclusions may be considered with appropriate rate consideration and rate analysis. A "rate analysis" is the company's actuarial justification for the rate consideration given, or not given, for use of the exclusion. This would include the reasons for the amount of any rate credit or the justification for the position that no rate credit is given. Endorsements will not be approved until P&C Actuarial acknowledges that the rates are acceptable. NOTE: Approval of a punitive/exemplary damage exclusion does not relieve an insurer of any contractual obligation to defend which may otherwise exist in the policy.
Compensatory Damages Chapter 2301, Texas Insurance Code If insuring agreement specifies policy pays for compensatory damages, rate consideration may be necessary as policy may not cover non-compensatory damages such as punitive/exemplary damages.
Declarations Page
Specimen Policies §1812.003, Texas Insurance Code (SB 852, 83rd Regular Session) The policy must disclose certain information on the declarations page if the insurer elects to post a specimen policy on its website.
Exclusions
Abuse, Physical Abuse or Molestation Exclusions Chapter 2301, Texas Insurance Code If policy or endorsement contains this type exclusion, definition of "abuse" in abuse, physical abuse, or molestation exclusion must be included. Must include wording, "For purposes of this endorsement, abuse means an act which is committed with the intent to cause harm."
Communicable Disease Exclusion General Casualty Bulletin No. 708 TDI will not approve a communicable disease exclusion, unless it is limited to disease transmitted through sexual contact.
Rented or Leased Vehicles Chapter 2301, Texas Insurance Code Policy provisions that exclude coverage for loss arising from the use of a vehicle, while it is rented or leased to others, must also include an exception similar to: "This does not apply if you or any family member lends your covered auto to another person for reimbursement of operating expenses only."
General Change Endorsements
May Not Manuscript Coverage Once Approved Chapter 2301, Texas Insurance Code Coverage forms are prior approval. Change endorsements may be used to change insured address, etc., but may not be used to change, alter, or "clarify" coverage in any way. Company must provide verification that the endorsement will not be used to change, alter, or clarify coverage.
Rebating or Discrimination
Prohibited Practices and Rebates Related to Policies Chapter 1806, Subchapters A & B, Texas Insurance Code Inducements prohibited.
Choice of Law
Texas Laws Govern Policies Article 21.42, Texas Insurance Code Texas must be choice if filing contains choice of law provision.
Texas Motor Vehicle Safety Responsibility Act
Motor Vehicle Liability Insurance; Requirements Transportation Code §601.071 Provides requirements of a motor vehicle liability insurance policy for meeting financial responsibility.
Minimum Coverage Amounts Transportation Code §601.072 Provides minimum amounts of motor vehicle liability insurance required when using insurance to establish financial responsibility.
Occupations Code Vehicle Storage Facilities
Payment by Lienholder or Insurance Company Occupations Code §2303.156 (b) An insurance company that pays a claim of total loss on a vehicle in a vehicle storage facility is liable to the operator of the facility for any money owed to the operator in relation to delivery of the vehicle to or storage of the vehicle in the facility regardless of whether an amount accrued before the insurance company paid the claim.
RATES
Filing Standards
File & Use Chapter 2251, Texas Insurance Code Each insurer shall file with the Commissioner all rates, supplementary rating information, and reasonable and pertinent supporting information for risks written in this state.
Claims Not Paid or Payable Section 1953.051(b), Texas Insurance Code
(SB 189, 84th Regular Session)
An insurer may not assign a rate consequence solely to a claim filed by an insured under a personal automobile insurance policy that is not paid or payable under the policy.
Consumer Inquiries Sections 544.553, 1953.051(b), Texas Insurance Code
(SB 189, 84th Regular Session)
An insurer may not charge a rate that is different from the rate charged to other individuals for the same coverage or increase a rate charged to an insured based solely on whether a consumer inquiry has been made by or on behalf of the applicant or insured.
Elimination of (a) Rates Commissioner's Bulletin No. B-0022-95 Chapter 2251 does not provide for the filing of rates on an individual basis. Each insurer shall file with the Commissioner all rates, supplementary rating information, and reasonable and pertinent supporting information for risks written in this state.
Use of Motor Vehicle Violations Section 1953.051(a), Texas Insurance Code;
Chapters 541-600, Transportation Code
Insurers may not "assign a rate consequence to a charge or conviction for a violation for Subtitle C, Title 7 Transportation Code" (Chapters 541 - 600).
RULES
Filing Standards
File & Use Chapter 2301 & Chapter 2251, Texas Insurance Code Manual rules should reflect specific requirements for usage of policy forms, endorsements, and disclosures.
Required Documentation
Refer to Property & Casualty Filings Made Easy Go to Property & Casualty Filings Made Easy now


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Last updated: 10/12/2016

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