Review Requirements Checklist – Personal Automobile

You must file applications:

• for approval if the application is a part of the policy. Always file new or amended applications for prior approval.
• for informational purposes if the application is not a part of the policy. File the application when you file a new personal automobile policy form.

Let us know.

When you file an application, tell us in the filing’s Explanatory Memorandum whether it is a part of the policy.

Insurance Code §1952.0515, §1952.101, §1952.301; Transportation Code 601, Subchapter D

Exclusions may only apply to:

Who

1. Insureds, under their own personal auto policies, while using a covered vehicle as a Transportation Network Company (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."

An auto policy or endorsement may NOT exclude:

1. Coverage for a TNC passenger, under the passenger's 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 auto policies.

TNC related definitions should track Insurance Code Section 1954.001. This section only applies to ridesharing and not -to-peer car sharing or delivery.

Peer-to-peer car sharing exclusions are permitted by Business & Commerce Code Section 113.0053 and may only apply during the “car sharing period” as defined in Section 113.0001(2):

Peer-to-peer car sharing is different than a rental vehicle agreement.

An insurer may not exclude a class of drivers in a provision or endorsement of an automobile insurance policy.

A personal automobile policy must define a temporary vehicle and provide primary liability coverage for the insured's legal liability for bodily injury and property damage, and for damage to the temporary vehicle. The coverage must be primary and not excess.

§1952.060(b), §1952.060(a)(3), §1952.060(a)(1), and §1952.060(a)(2), Insurance Code

Definitions

The policy must define temporary vehicle as it is defined in Subsection 1952.060(a)(3).

The policy does not have to define repair facility or resident relative, but if it does, the definitions must be substantially similar to the statutory definitions in Subsections 1952.060(a)(1) and (2).

§1952.060(d), §1952.060(e), and §1952.060(b), Insurance Code

Liability Coverage

Temporary vehicle coverage must insure:

1. the person named in the policy;
2. any resident relative of the insured; and
3. any licensed operator residing in the insured’s household.

The policy limits must be available to cover a temporary vehicle. A sublimit for temporary vehicles is not allowed.

The policy must state that liability coverage is primary for a temporary vehicle.

§1952.060(c), Insurance Code

Liability Exclusions

Policies with certain exclusions must have exceptions for a temporary vehicle, including:

1. damage to property rented to, used by or in the care of an insured;
2. delivery of property for a fee;
3. business use; and
4. assumed or contractual liability.

The exceptions to these exclusions must use language similar to:

• "This exclusion does not apply to a temporary vehicle;" or
• “This exclusion does not apply to a temporary vehicle that is:
  • a private passenger automobile;
  • a pickup, utility vehicle, or van with a gross vehicle weight of 14,000 pounds or less that is not primarily used for the delivery or transportation of goods, materials, or supplies, other than samples; or
  • used in farming or ranching.”

§1952.057, Insurance Code

Controlled Substance Exclusion

A temporary vehicle is a covered vehicle in the liability section and so the liability section must include the controlled substance exclusion required by Section 1952.057.

When cancellation is allowed

Insurance Code §551.104 lets insurers cancel a personal auto policy if:

1. the policy has been in effect less than 60 days;
2. the named insured does not pay any portion of the premium when due;
3. the insured submits a fraudulent claim;
4. TDI determines that continuation of the policy would result in a violation of the Insurance Code or any other law governing the business of insurance in this state; or
5. the driver's license or motor vehicle registration of the named insured or any other motor vehicle operator who resides in the same household as the named insured or who customarily operates an automobile covered by the policy is suspended or revoked (unless the named insured consents to excluding coverage for that person).

When cancellation is not allowed

1. Elected Officials

Insurers can’t cancel the policy solely because the policyholder is an elected official.  Insurance Code §551.152

2. Inquiries

Insurers can’t cancel the policy because of a customer inquiry.  Insurance Code §551.113

Required notices

Insurers must send cancellation notices to the policyholder at least 10-days before cancellation is effective.  Insurance Code §551.104(e)

Insurers must also send cancellation notices to covered vehicles’ lienholders at least 10-days before cancellation is effective.  28 TAC §5.7018

Chapter 551, Insurance Code;

28 TAC §5.7018;

28 TAC §5.7016

When nonrenewal is allowed

Insurers may refuse to renew a personal auto policy for any lawful reason on the 12-month anniversary of the original effective date of the policy.  Insurance Code §551.106

When nonrenewal is not allowed

1. Age

Insurers can’t refuse to renew the policy solely because of the age of the person covered by the policy.  Insurance Code §551.106(a)

2. Elected Officials

Insurers can’t refuse to renew the policy solely because the policyholder is an elected official.  Insurance Code §551.152

3. Inquiries

Insurers can’t refuse to renew the policy because of a customer inquiry.  Insurance Code §551.113

4. Certain Claims

28 TAC §5.7016 doesn’t allow insurers to refuse to renew the policy solely because of:

1. claims involving damage from a weather-related incident that do not involve a collision;
2. accidents or claims involving damage by contact with animals or fowls;
3. accidents or claims involving damages caused by flying gravel, missiles, or falling objects;
4. towing and labor protection; or
5. any other not-at-fault claim or accident, unless there are two or more such claims or accidents in any 12-month period.

Required notices

Insurance Code §551.105 requires insurers to send notice of nonrenewal at least 60 days before the policy expires.  Otherwise, the insurer must renew the policy at the request of the policyholder.

A named driver exclusion must:

• specifically name each excluded driver;
• not exclude a class of drivers; and
• be accepted in writing by the named insured.

If the insurer intends to apply the named driver exclusion to PIP and UM/UIM, the named driver exclusion must also include a rejection of these coverages