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Review Requirements Checklist Mortgage Guaranty

Updated 10/3/2016 - Return to Index

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

Mortgage Guaranty Checklist
REVIEW REQUIREMENTS REFERENCE COMMENTS
FORMS
Filing Standards
Mortgage Guaranty - File and Use Chapter 3502, Texas Insurance Code Policy forms must be filed with the department at least 15 days before they are to become effective.
Mortgage Guaranty Pool - Use and File Chapter 3502, Texas Insurance Code Policy forms which are to be used shall be filed within 15 days after they are to be effective.
Applications
Not Required to be Filed For Approval Unless Being Made a Part of the Policy
Arbitration
Arbitration §§3502.105 - 3502.106, Texas Insurance Code Language used in arbitration agreements is to be consistent with that of the policy: to wit, don't use the word "parties" when you actually mean insured(s) and insurer. Binding arbitration is okay. Arbitration agreements may be mandatory. Arbitration must be held in Texas for Texas policyholders unless mutually agree on an alternate. In general, arbitration language cannot be unjust, misleading or deceptive.
Cancellation & Nonrenewal
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 3502, Texas Insurance Code Insurance company cannot limit or restrict the insured's right to cancel a policy.
Voiding Coverage Chapter 705, Texas Insurance Code "Void Coverage" language must comply with Chapter 705, Subchapter A, and the misrepresentation must be material.
Choice of Law
Texas Laws Govern Policies Article 21.42, Texas Insurance Code Texas must be choice if filing contains choice of law provision.
Claims Settlement
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.
Providing Certain Claims Information On Request §§542.101-542.104, Texas Insurance Code; and Commissioner's Bulletin No. B-0043-05 If a policy form or endorsement contains language addressing the request or furnishing of claims information, it would need to comply with the applicable statute(s).
Coverage Issues
Examination Under Oath Chapter 2301, Texas Insurance Code If policy language requires examination under oath for anyone other than the named insured and spouse, the provision must also state that a parent or guardian may be present during any examination of a minor.
Tie-In Sales Chapter 1806, Texas Insurance Code & 6/1/78 Board Letter Tie-in sales may violate state law.
Disclosure of Guaranty Fund Nonparticipation
Disclosure of Guaranty Fund Nonparticipation 28 TAC §1.1001, Texas Administrative Code, Chapter 461, Texas Insurance Code Disclosure of Guaranty Fund Nonparticipation. NOTE: Texas Property and Casualty Insurance Guaranty Act does not apply to mortgage guaranty, financial guaranty, or other kinds of insurance offering protection against investments risks in accordance with §462.007(b)(2).
Fully Earned Premium/Retention of Minimum Earned Premium
Fully Earned Premium / Retention of Minimum Earned Premium Chapter 3502, Texas Insurance Code TDI will consider approving fully earned premium only for risks with exposure during a period certain, such as special events and weather policies.

TDI will consider approving minimum earned premium only if it is a nominal amount.

The company must file appropriate rates associated with a minimum or fully earned premium.
General Change Endorsements
May Not Manuscript Coverage Chapter 3502, Texas Insurance Code 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.
Subrogation Rights
Policy Form Requirements §§3502.105 - 3502.106, Texas Insurance Code No policy of mortgage guaranty insurance shall contain a provision which allows subrogation rights or any other claim by an insurer against the borrower for a deficiency arising from a foreclosure sale of a single-family dwelling occupied by the borrower as the principal residence of the borrower.
Rebating or Discrimination
Rebating or Discrimination Chapter 1806, Texas Insurance Code Inducements prohibited.
Title Insurance Issues
Mortgagee Title Insurance §2501.005 and §2502.001, Texas Insurance Code Coverage under Mortgage Guaranty Insurance should not include an "Undisclosed Lien" or similar situation which takes priority over the position of a Mortgage Agreement, this is the purpose of the Mortgagee Title Policy.
Toll Free Information
Notice of Policyholder Complaint Procedures §521.005, Texas Insurance Code 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.
Toll-Free Information & Complaint Number §§521.051 - 521.056, Texas Insurance Code Toll-Free number for the Texas Department of Insurance.
Insurer's Toll-Free Information & Complaint Number §§521.101 - 521.103, Texas Insurance Code Insurer's requirement to maintain toll-free number to provide information concerning policies issued by the insurer and to accept complaints from policyholder. Article contains an exception for insurers whose gross initial premium receipts collected in this state are less than $2 million a year or to an insurer with regard to fidelity, surety, or guaranty bonds.
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.
RATES
Filing Standards
Mortgage Guaranty and Mortgage Guaranty Pool - File and Use Chapter 3502, 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, at least 15 days before they are to become effective.
RULES
Filing Standards
File & Use Chapter 3502, 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: 10/21/2016

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