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Review Requirements Checklist - Commercial Property

Updated October 2012 - Return to Index

Indicates new addition since last update

Commercial Property Checklist
REVIEW REQUIREMENTS REFERENCE COMMENTS
FORMS
Filing Standards - Policy forms and endorsements may not be unjust, unfair, inequitable, misleading or deceptive.
Prior Approval of Policy Forms and Endorsements Chapter 2301, Subchapter A, 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. Each filing shall be made not later than the 60th day before the date of any use or delivery for use.
Large Risk Exemption §2301.004, Texas Insurance Code Policy forms for use with large risks are exempt from filing for prior approval if the forms are to be used with a "large risk". "Large Risk" is defined as an insured that has total insured property values of $5 million or more; an insured that has total annual gross revenues of $10 million or more; or an insured that has a total premium of $25,000 or more for property insurance, $25,000 or more for general liability insurance, or $50,000 or more for multiperil insurance.
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
Arbitration
Arbitration Chapter 2301, Subchapter A, 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.
Boiler & Machinery Coverage - Enhancement to Property Coverage Form
Boiler & Machinery Coverage - Enhancement to Property Coverage Form §2002.006 & Chapter 2301, Subchapter A, Texas Insurance Code When Property Coverage Form is enhanced to add coverage for B&M, the filing contains two lines of insurance (B&M and Property) and can only be approved on a Commercial Multi-Peril basis.
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.
Cancellation & Nonrenewal of Certain Property and Casualty Policies §§551.101 - 551.112, Texas Insurance Code Cancellation requirements of certain property and casualty policies insuring governmental units, one family dwellings or duplexes, and all farm & ranch owners and farm & ranch policies.
Insured's Right to Cancel Chapter 2301, Subchapter A, Texas Insurance Code Insurance company cannot limit or restrict the insured's right to cancel 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.
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
Prompt Payment of Claims §§542.051 - 542.061, Texas Insurance Code Prompt payment of claims.
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
Contractual Limitations Period and Claim Filing Period in Certain Property Insurance Forms §2301.010, Texas Insurance Code Filings made pursuant to Insurance Code, Sec. 2301.010 (as enacted by HB 3, Legislative Session 82(1)) must comply with Sec. 2301.010 and companies must submit a copy of the disclosure required in (f).
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).
Appraisal Chapter 2301, Subchapter A, Texas Insurance Code Must specify a number of days, cannot be open-ended and insured must retain their right to bring legal action against insurer, but only if the insurer retains their right to deny the claim (ie., CP 01 42).
Valued Policy §862.053, Texas Insurance Code In case of a total loss by fire of property insured, a fire insurance policy will be considered a liquidated demand against the company for the full amount of such policy. The provisions of this article shall not apply to personal property.
Condominium Associations
Condominium Associations Commissioner's Bulletin No. B-0014-97 If filing is for a condominium association, it must comply with requirements set forth in Commissioner's Bulletin No. B-0014-97.
Coverage Issues
Foundations Chapter 2301, Subchapter A, Texas Insurance Code Foundations may be added to property not covered, but must provide coverage for specified cause of loss and debris removal. Must not be used on a blanket basis or "roll-out" basis.
Roofs Chapter 2301, Subchapter A, Texas Insurance Code Actual cash value for roofs has been allowed provided the cause of loss is limited to wind and hail and will not be used on a blanket or "roll-out" basis.
Tie-In Sales Article 5.41, Texas Insurance Code & 6/1/78 Board Letter Tie-in sales may violate state law.
Fully Earned Premium/Retention of Minimum Earned Premium
Fully Earned Premium / Retention of Minimum Earned Premium is unacceptable - Exceptions Chapter 2251 & Chapter 2301, Texas Insurance Code and 28 TAC §5.9320, Texas Administrative Code Fully earned premium or retention of minimum earned premium is unacceptable. However, a nominal amount is considered acceptable. Fully earned would be considered where coverage is being provided for risks such as special events and weather policies.
General Change Endorsements
May Not Manuscript Coverage Once Approved Chapter 2301, Subchapter A, 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.
Notice To Mortgagee
Interest of Mortgagee or Trustee §862.055, Texas Insurance Code The policy must require the insurer provide notice to the mortgagee (mortgage holder) if the policy is cancelled, regardless of who initiates cancellation. (See Commissioner's Bulletin B-0003-00.)
Rebating or Discrimination
Rebating or Discrimination Chapter 1806 & Article 5.41, Texas Insurance Code Inducements prohibited.
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 28 TAC §1.601, Texas Administrative Code and Commissioner's Bulletin No. B-0023-07 To satisfy requirements for §521.005, §§521.051 - 521.056, and §§521.101 - 521.103 noted above.
Texas Lloyds, Mutual, Reciprocals and Participating Stock Cos.
Special Policy Conditions General Casualty Bulletins Nos. 276, 443, and 446 Requiring specific language be contained in policies issued by Lloyds, Mutuals, Reciprocals, and Participating Stock Companies.
Windstorm, Hurricane, or Hail
Windstorm, Hurricane or Hail Exclusion Chapter 2301, Texas Insurance Code Windstorm, hurricane, or hail may only be excluded in the catastrophe area as designated by the Texas Department of Insurance. The endorsement must limit the exclusion to the catastrophe areas as designated by the Texas Department of Insurance and the windstorm, hurricane, or hail exclusion endorsement must be signed by the insured. In lieu of the signature being required on the endorsement, the Department will consider a signed disclosure form that clearly explains coverage for windstorm, hurricane or hail is excluded from the policy. The Department will also consider optional windstorm, hurricane, or hail exclusions outside the designated catastrophe area only if there is proper rate consideration for the exclusion and the insured signs the endorsement or disclosure form as noted above. Must be optional from the insureds perspective and this should be reflected in the endorsement or in a rule. The Department will also consider windstorm, hurricane, or hail exclusions in the policy itself if such coverage is made available to the consumer through a buy-back option and there is proper rate consideration for the exclusion and the buy-back option.

Insurers are responsible for maintaining documentation in their underwriting files that supports that the coverage was made available to the insured. Forms and/or endorsements will not be approved until P&C Actuarial acknowledges that the rates are acceptable.
RATES
Filing Standards
File & Use With Exception 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. Exception: Lloyds or reciprocals are not required to file rates.
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: 08/21/2013



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