The purpose of this bulletin is to remind insurers of their responsibility to make policyholders aware of changes in types of coverage and to ensure that agents have the necessary information available to provide a full explanation to the policyholders. It is important that insurers and their representatives make consumers aware of changes in types of coverage and premium costs so that the consumers may make an informed decision regarding their insurance needs.
A policy is renewed if it provides like and similar coverage to the existing policy. A policy offer on renewal that reduces or eliminates coverage is no longer being offered under the same terms and conditions as the existing policy. As such, the policy offered is not like or similar to the existing policy. Therefore, insurers who eliminate or reduce coverage in an existing residential or commercial insurance policy must issue notice of non-renewal in accordance with the applicable provisions of Chapter 551. An offer to write a new policy with limited or excluded coverage may be included with the notice of non-renewal.
The Department's position on what constitutes a renewal is also stated in Commissioner's Bulletin B-0060-98 and restated in Commissioner's Bulletin B-0017-02. Bulletins are available online at the Department's website: www.tdi.state.tx.us.
Chapter 551 of the Texas Insurance Code describes the procedures an insurer must follow when non-renewing certain insurance policies. Generally, insurers must mail proper notice of non-renewal and include a written statement describing the reason for non-renewal as required by §§551.002(b) and 551.002(c). The specific notice requirements vary based on the type of insurance offered:
- Subchapter B, Chapter 551 applies specifically to certain liability insurance policies, including but not limited to commercial multi-peril insurance policies. Insurers must provide written notice as required by §551.054. Pursuant to §551.055, the notice must include the reason for non-renewal.
- Subchapter C, Chapter 551 applies specifically to property and casualty insurance policies, including but not limited to homeowners and farm or ranch owners insurance policies. This subchapter also applies to insurance polices providing coverage to state entities or political subdivisions of this state. Insurers must provide written notice as required by §551.105. Pursuant to §551.109, if requested by the insured, the insurer must provide a statement of the reason for non-renewal.
- Subchapter A, Chapter 551 applies to all insurance policies regulated by the Department under Chapter 5 of the Texas Insurance Code except for marine insurance policies (other than inland marine) and those policies subject to Subchapters B or C. Insurers are required to provide notice in accordance with rules adopted by the Commissioner. Pursuant to §5.7012 of Title 28 of the Texas Administrative Code, if requested by the insured, the insurer must provide a statement of the reason for non-renewal.
For additional information regarding the notice requirements specified in detail in Chapter 551 of the Texas Insurance Code, please refer to Commissioner's Bulletin B-0008-00.
Insurers should also take note of two additional considerations, if applicable:
- Insurers writing coverage for condominium associations under a commercial property coverage form must comply with the non-renewal provisions contained in Chapter 82 of the Texas Property Code, Uniform Condominium Act. For additional information regarding the Uniform Condominium Act, please refer to Commissioner's Bulletin B-0014-97.
- Insurers writing residential property insurance policies, including farm and ranch insurance policies, must provide notice of any difference between the existing policy and the policy being offered at renewal in accordance with Article 5.45 of the Texas Insurance Code.
Questions regarding this bulletin should be directed to:
Texas Department of Insurance
Attn: David Nardecchia, CPCU, Director
Personal and Commercial Lines Division, MC 104-PC
P.O. Box 149404
Austin, TX 78714-9104
Marilyn Hamilton, Associate Commissioner
Property & Casualty Program MC 104-PC