Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 5.
PROPERTY AND CASUALTY INSURANCE
Subchapter E. TEXAS WINDSTORM INSURANCE ASSOCIATION
The Commissioner of Insurance adopts amendments to §5.4101 concerning
the adoption by reference of the dwelling and commercial policy forms for
windstorm and hail insurance coverage by the Texas Windstorm Insurance Association
(Association or TWIA), and §5.4401 concerning the adoption by reference
of the Texas Special Mobile Home Windstorm and Hail Insurance Policy. The
amendments to §5.4101 and §5.4401 are adopted without changes to
the proposed text published in the December 13, 2002 issue of the
Texas Register
(27 TexReg 11715).
The adoption of three amended policy forms was requested by the Association
in a petition filed with the department on March 12, 2002, and amended on
November 13, 2002 (Ref. No. P-0302-8). The Commissioner held a public hearing
on the proposed amendments on January 8, 2003, Docket No. 2540. These adopted
policy amendments concern provisions relating to mold coverage in the dwelling,
commercial, and mobile home policies. The amendment to §5.4101 adopts
by reference an amended dwelling policy form and an amended commercial policy
form. The amendment to the dwelling policy adds a new exclusion no. 9 entitled
"Mold, Fungi, or Other Microorganisms" and the amendment to the commercial
policy adds a new exclusion no. 10 entitled "Mold, Fungi, or Other Microorganisms"
to the exclusions sections of these policies. The language in the exclusions
is essentially the same for both of the policies. The exclusion defines mold,
fungi or other microorganisms as the presence, growth, proliferation, spread,
or any activity of fungi or mold and other microorganisms. The exclusion applies
to the cost to remove mold, fungi or other microorganisms from covered property,
the cost to tear out and replace any part of the building or other property
required to gain access to the mold, fungi or other microorganisms, and the
cost of testing to confirm the absence or presence or level of mold, fungi
or other microorganisms. The exclusion contains an exception that coverage
is provided for mold, fungi or other microorganisms located upon the portion
of covered property which must be repaired or replaced because of sudden,
accidental, direct physical damage resulting from wind or hail that is a covered
loss under the policy. The exception also specifies that sudden and accidental
damage shall include a loss event that is hidden or concealed for a period
of time until it is detected provided the loss was reported no later than
30 days after the date it was detected or should have been detected. The exception
further specifies that the mold, fungi or other microorganisms coverage in
the exception does not include coverage for: 1) the cost to treat, contain,
remove or dispose of the mold, fungi or other microorganisms beyond that which
is reasonably necessary to repair or replace the covered property; 2) the
cost of testing for the absence or presence of mold, fungi or other microorganisms;
3) the cost of decontamination of the residence premises; and 4) any increase
in Loss of Use or Debris Removal coverage or diminution in value. The amendment
to §5.4401 adopts by reference an amended Texas Special Mobile Home Windstorm
and Hail Insurance Policy (mobile home policy). The amendment to the mobile
home policy adds a new exclusion entitled "Mold, Fungi, or Other Microorganisms"
to the policy. The language of the exclusion is essentially the same as that
described in the adopted exclusions in the dwelling and commercial policy
forms. Basically, this exclusion provides a new, broad mold, fungi or other
microorganisms exclusion, but it contains the same exception as previously
described for the dwelling and commercial policies. The other provisions in
the exclusion limit the mold, fungi or other microorganisms coverage to provide
that there is no mold, fungi or other microorganisms coverage beyond the physical
damage to the covered property and that only reasonable and necessary costs
to repair or replace the damaged covered property are covered. Any expenses
beyond this due to mold, fungi or other microorganisms, such as remediation,
testing, decontamination, or any increase in expenses for loss of use and/or
debris removal due to remediation or testing are not covered.
The adopted amendments to §5.4101, adopt by reference policy forms
containing a new, broad mold, fungi, or other microorganisms exclusion. The
other provisions in the adopted exclusion limit the mold, fungi, or other
microorganisms coverage to provide that there is no coverage beyond the physical
damage to the covered property and that only reasonable and necessary costs
to repair or replace the damaged covered property are covered. Any expenses
beyond this due to mold, fungi, or other organisms, such as remediation, testing,
decontamination, or any increase in expenses for loss of use and/or debris
removal due to remediation or testing are not covered. The adopted amendment
to §5.4401 adopts by reference the amended Texas Special Mobile Home
Windstorm and Hail Insurance policy (mobile home policy) that adds a new exclusion
to exclude mold, fungi, or other microorganisms from the mobile policy. The
language of this exclusion is essentially the same as that described in the
adopted exclusions in the dwelling and commercial policy forms.
No comments were received on the sections.
3.
POLICY FORMS
28 TAC §5.4101
The amendments are adopted pursuant to the Insurance Code
Article 21.49 and §36.001. Pursuant to Article 21.49, §8, the Commissioner
is authorized to promulgate policy forms for use by the Association in providing
windstorm and hail insurance coverage without regard to other forms filed
with, approved by, or promulgated by the Commissioner for use in this state.
Article 21.49, §5A provides that the Commissioner may, after notice and
hearing, issue any orders which the Commissioner considers necessary to carry
out the purposes of Article 21.49, including maximum rates, competitive rates,
and policy forms. Insurance Code §36.001 authorizes the Commissioner
of Insurance to adopt rules which must be for general and uniform application,
for the conduct and execution of the duties and functions of the Texas Department
of Insurance only as authorized by statute.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on January 29, 2003.
TRD-200300720
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: February 19, 2003
Proposal publication date: December 13, 2002
For further information, please call: (512) 463-6327
5.
TEXAS SPECIAL MOBILE HOME WINDSTORM AND HAIL INSURANCE POLICY