Texas Department of Insurance

Proposed Action on Rules

The Commissioner of Insurance, at a public hearing under Docket Number 2488 on July 24, 2001 at 9:30 a.m., in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas, will consider a petition filed by State Farm Fire and Casualty Company, State Farm General Insurance Company, and State Farm Lloyds (collectively referred to as State Farm) that requests the adoption of three new residential property policy forms which include form number FP-7955 TX (homeowners policy), form number FP-7954 (renters policy), and form number FP-7956 TX (condominium unitowners policy) and further requests the adoption of thirty-three new endorsements (as listed in Exhibit D) for use in the State of Texas.

These filings were made pursuant to the Insurance Code Article 5.35(b), which provides that the Commissioner may adopt policy forms and endorsements of national insurers. State Farm conforms to the definition of a national insurer and is, therefore, authorized to file its policies and endorsements with the Department to be considered by the Commissioner for adoption.

State Farm's original petition on this matter, filed on January 21, 1997, requested the adoption of a proposed new Texas homeowners policy. Since the filing of the original petition, State Farm and Department staff have engaged in extensive discussions and dialogue relating to the proposed form and endorsements. State Farm has made several modifications to the homeowners policy, as originally filed, as a result of its discussions with Department staff. On March 15, 2001, State Farm filed an amended petition in which it refiled its proposed new homeowners policy with the modifications that have been agreed upon by State Farm and staff and it also filed a proposed new renters policy, condominium unitowners policy, and thirty-three endorsements as additional items to be considered by the Commissioner. On June 12, 2001, State Farm amended its petition by withdrawing endorsement number FE-7421.1 and substituting in its place endorsement number FE-8716.

I. State Farm Homeowners Policy. The following is a general description of the coverage provided by the proposed State Farm homeowners policy that has been filed for adoption by the Commissioner pursuant to Article 5.35(b). A copy of the policy is attached as Exhibit A.

A. Section 1-Property Coverage.

1. The policy covers the dwelling and other private structures on the premises against the risk of direct physical loss, with certain exceptions.

2. It covers personal property on and away from the premises against losses by fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicular impact, smoke, vandalism or malicious mischief, and theft.

3. It provides loss of use which covers additional living expenses when the residence becomes uninhabitable and fair rental value when part of the premises is rented to others.

B. Section 2-Liability Coverages.

1. Coverage L-Personal Liability. The policy covers payment on behalf of the insured of all sums, up to the stipulated limit, which the insured is legally liable to pay as damages because of bodily injury or property damage arising out of the residence premises or personal activities.

2. Coverage M-Medical Payments to Others. The policy covers medical and related expenses, subject to the stipulated limit, arising out of accidents to persons other than the insured and residents of the premises.

3. Additional Coverages. Additional coverage is provided for claim expenses, first aid expenses, and damage to property of others.

II. State Farm Condominium Unitowners Policy. This policy for condominium unitowners covers items of real property which are the insured's responsibility under the governing rules of a condominium association. This policy covers personal property on and away from the premises against losses by fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicular impact, smoke, vandalism or malicious mischief, and theft. This policy also contains loss of use, additional coverages, and liability coverage provisions that are the same as those described for the State Farm homeowners policy. A copy of this policy is attached as Exhibit B.

III. State Farm Renters Policy. This is a tenants policy that covers personal property on and away from the premises against losses by fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicular impact, smoke, vandalism or malicious mischief, and theft. This policy also contains loss of use, additional coverages, and liability coverage provisions that are the same as those described for the State Farm homeowners policy. A copy of this policy is attached as Exhibit C.

IV. Comparison of the Proposed State Farm Policies to the Currently Prescribed Texas Homeowners Policy-Form B (HO-B). The HO-B is the predominant policy form issued in Texas for owner occupied dwellings. In the course of staff's review of State Farm's proposed homeowners, renters, and condominium unitowners policies, staff has noted several differences in the coverage provided in the HO-B and that provided in the proposed State Farm policy forms. Since the proposed renters policy contains the same coverages as the proposed homeowners policy (except that the renters policy does not provide the dwelling coverage) and the proposed condominium unitowners policy also contains the same coverages as the homeowners policy (except that the dwelling coverage is much more limited) the restrictions and enhancements in coverage will be discussed in terms of a comparison between the State Farm homeowners policy and the HO-B. However, it should be noted that most of the comparisons of coverage also apply to the renters and condominium unitowners policies.

V. Restrictions In Coverage. The following is a list of some of the restrictions in coverage that are contained in the proposed homeowners policy as compared to the existing HO-B. This list is not intended to cover every restriction in coverage that is contained in the proposed State Farm policy forms. If more detailed coverage information is desired, a side by side comparison of the State Farm homeowners policy and the HO-B is available from the Department upon request.

A. Coverage for Boats, Boat Trailers, and Other Trailers.

The State Farm policy provides up to $1,000 in coverage for boats, boat trailers, and other trailers not used with watercraft for losses that occur on and off premises for all losses insured. (See Section 1-Coverages, Coverage B-Personal Property, Special Limits of Liability, paragraphs d. and e.) The State Farm policy provides theft coverage for boats, boat trailers, and other trailers if the theft occurs on the residence premises; however, if the theft occurs off of the residence premises, theft coverage is excluded. (See Section 1-Losses Insured, Coverage B-Personal Property, paragraphs 9.c.(2) and (3)) The State Farm policy provides windstorm and hail coverage for boats and their trailers only if they are inside a fully enclosed building. (See Section 1-Losses Insured, Coverage B-Personal Property, paragraph 2.) The HO-B provides coverage up to the limits of liability that apply to Coverage B (Personal Property) for boats and boat trailers while located on land on the residence premises for all perils insured against. Additionally, the HO-B provides coverage up to the limits of liability that apply to Coverage B (Personal Property) for trailers designed for use principally off public roads (e.g., travel trailers) whether on or off premises. (See Section 1-Property Coverage, Coverage B (Personal Property), Property Not Covered, paragraphs 4. and 6.)

B. Coverage for Firearms.

The State Farm policy limits the coverage for firearms to losses by the peril of theft with a maximum limit of liability of $2,500. (See Section 1-Coverages, Coverage B-Personal Property, 1. Property Covered, paragraph g.) The HO-B provides coverage for firearms to the extent described under the Perils Insured Against section of the policy, including the peril of theft, up to the limits of liability that apply to Coverage B (Personal Property.)

C. Coverage for Goldware and Silverware.

The State Farm policy limits the coverage for goldware and silverware to losses by the peril of theft with a maximum limit of liability of $2,500. (See Section 1-Coverages, Coverage B-Personal Property, 1. Property Covered, paragraph h.) The HO-B provides coverage for goldware and silverware to the extent described under the Perils Insured Against section of the policy, including the peril of theft, up to the limits of liability that apply to Coverage B (Personal Property.)

D. Coverage for Golf Carts.

The State Farm policy only covers golf carts if they are used to service the residence premises or while used for golfing purposes. (See Section 1-Coverages, Coverage B-Personal Property, 2. Property Not Covered, paragraph c.) The HO-B provides coverage for golf carts up to the limits of liability that apply to Coverage B (Personal Property) to the extent described under the Perils Insured Against section of the policy. The golf cart coverage provided in the HO-B is not limited to golf carts that are used to service the residence or while used for golfing purposes, (See Section 1-Property Coverage, Coverage B (Personal Property) Property Not Covered, paragraph 3.c.)

E. Coverage for Tree Debris Removal.

The State Farm policy limits the coverage for the removal of debris from a fallen tree to $500. (See Section 1-Coverages, Section 1-Additional Coverages, paragraph 1.) The HO-B provides coverage for removal of debris from a fallen tree to the extent described under the Extensions of Coverage section of the policy up to the limits of liability that apply to the damaged property. (See Extensions of Coverage, paragraph 1.)

F. Coverage for Water Damage.

1. The State Farm policy specifies that an accidental discharge or overflow of water from a plumbing system, heating or air conditioning system, or household appliance must be "sudden" before there is water damage coverage under the policy. (See Section 1-Losses Insured, paragraph 12.) The HO-B also provides coverage for water damage from repeated and continuous seepage or leakage of water or steam from a plumbing system, heating or air conditioning system, or household appliance which occurs over a period of time. (See Section 1-Perils Insured Against, paragraph 9.)

2. The State Farm policy does not cover a loss caused by water or sewage from outside the residence premises that backs up or overflows from a sewer, drain, or sump pump. (See Section 1-Losses Insured, paragraph 12.) The HO-B does not exclude damage to property covered under Coverage A-Dwelling for a loss caused by back up or overflow from a sewer, drain, or sump pump of sewage or water even if it is from outside the residence premises. Property covered under Coverage B-Personal Property is specifically insured for loss caused by accidental discharge, leakage, or overflow of water or steam from within a plumbing system, heating or air conditioning system, or household appliance which may include a loss caused by water or sewage from outside the residence premises that backs up or overflows from a sewer, drain, or sump pump. (See Section 1-Perils Insured Against, Coverage B-Personal Property, paragraph 9.)

G. State Farm Policy Exclusions.

1. The State Farm policy excludes loss from freezing, thawing, pressure or weight of water or ice to a swimming pool, hot tub or spa. (See Section 1-Losses Not Insured, paragraph 1.c.) The HO-B does not contain this exclusion.

2. The State Farm policy excludes loss from vandalism or malicious mischief or breakage of glass if the dwelling is vacant for more than 30 days immediately before the loss. (See Section 1-Losses Not Insured, paragraph 1.e.) The HO-B provides coverage for all perils insured against for up to 60 days of vacancy. (See Section 1-Conditions, paragraph 13.)

3. The State Farm policy restates under "Losses Not Insured" that a loss resulting from continuous or repeated seepage or leakage of water or steam is excluded. (See Section 1-Losses Not Insured, paragraph 1.f.) The HO-B does not contain this exclusion.

4 The State Farm policy excludes losses resulting from pressure or presence of tree, shrub or plant roots. (See Section 1-Losses Not Insured, paragraph 1.n.) The HO-B does not contain this exclusion.

5. The State Farm policy restates under "Losses Not Insured" that a loss resulting from backup or overflow from a sewer, drain, or sump pump of water or sewage from outside the residence is excluded. (See Section 1-Losses Not Insured, paragraph 2.c.(2)) The HO-B does not contain this exclusion.

6. The State Farm policy excludes losses consisting of defect, weakness, inadequacy, fault or unsoundness in planning, zoning, development, surveying, siting, design, specifications, workmanship, construction, grading, compaction, materials used in construction or repair, or maintenance of any property whether on or off the residence premises. However, any resulting loss from the items specified above is insured unless the resulting loss is itself a loss not insured. (See Section 1-Losses Not Insured, paragraph 3.b.) The HO-B does not contain this exclusion.

7. The State Farm policy excludes coverage for settling, cracking, shrinking, bulging, or expansion of pavements, patios, walls, floors, roofs, ceilings, or foundations of the dwelling. (See Section 1-Losses Not Insured, paragraphs 1.l.) The HO-B provides foundation coverage caused by seepage or leakage of water or steam from within a plumbing, heating, air conditioning, or automatic fire protective sprinkler system. (See Section 1-Perils Insured Against, paragraph 9. and Section 1-Exclusions paragraph 1.h.)

VI. Coverage Enhancements. The following is a list of some of the areas where the proposed State Farm homeowners policy provides coverage that is broader than the coverage provided in the HO-B.

A. Coverage of Personal Property Off Premises.

The State Farm policy provides coverage for personal property away from the residence premises up to the full limit of Coverage B. There is an exception to this coverage that limits personal property coverage to the greater of $1000 or 10% of Coverage B, if the property is usually situated at an insured's residence, other than the residence premises. (See Section 1-Coverages, Coverage B-Personal Property, paragraph 1.) The HO-B limits coverage on losses to personal property located away from the residence premises to the greater of $1000 or 10% of Coverage B. (See Section 1-Property Coverage, Coverage B (Personal Property), paragraph 2.) The HO-B excludes theft loss if the personal property is at any other residence owned by, rented to, or occupied by an insured, except while an insured is temporarily living there. (See Section 1-Exclusions, paragraph 1.d.(1))

B. Special Limits of Liability.

1. The State Farm policy provides a $200 limit of liability for losses of money. (See Section 1-Coverages, Coverage B-Personal Property, Special Limits of Liability, paragraph a.) The HO-B provides a $100 limit of liability for losses of money. (See Section 1-Property Coverage, Coverage B (Personal Property), Special Limits of Liability, paragraph 1.)

2. The State Farm policy provides a $1000 limit of liability for loss of securities, checks, money orders, accounts, deeds, passports, tickets, etc. (See Section 1-Coverages, Coverage B-Personal Property, Special Limits of Liability, paragraph c.) The HO-B provides a $500 limit of liability for "Bullion/Valuable Papers". (See Section 1-Property Coverage, Coverage B (Personal Property), Special Limits of Liability, paragraph 2.)

3. The State Farm policy provides a $1000 limit of liability for boats, boat trailers, and other trailers while away from the residence premises, except for the peril of theft. (See Section 1-Coverages, Coverage B-Personal Property, Special Limits of Liability, paragraphs d. and e.) The HO-B excludes coverage for boats and boat trailers while away from the residence premises. (See Section 1-Property Coverage, Property Not Covered, paragraphs 4.b. and 6.)

4. The State Farm policy provides $2,500 coverage for stamps, trading cards, and comic books. (See Section 1-Coverages, Coverage B-Personal Property, Special Limits of Liability, paragraph f.) The HO-B provides a $500 limit of liability for "Bullion/Valuable Papers". (See Section 1-Property Coverage, Coverage B (Personal Property), Special Limits of Liability, paragraph 2.)

C. Service Vehicle Coverage.

The State Farm policy covers any vehicle not licensed and used solely to service the residence premises or designed to assist the handicapped. (See Section 1-Coverages, Coverage B-Personal Property, 2. Property Not Covered, paragraph c.) The HO-B only covers vehicles which are not subject to motor vehicle registration and are devices and equipment to assist the handicapped, power mowers, golf carts, vehicles used for recreational purposes while on the residence premises, and farm equipment not designed for use principally on public roads. (See Section 1-Property Coverage, Coverage B (Personal Property) Property Not Covered, paragraph 3.)

D. Additional Coverages.

1. The State Farm policy provides an additional 5% of the limit of the damaged property for debris removal if the property damage and debris removal exceeds the limit for the damaged property. (See Section 1-Coverages, Section 1-Additional Coverages, paragraph 1.) The HO-B's debris removal coverage is included in the limit of liability for the damaged property and does not add additional coverage. (See Section 1-Property Coverage, Coverage B (Personal Property), Extensions of Coverage, paragraph 1.)

2. The State Farm policy provides up to $500 for covered damage to any one tree, shrub or plant. (See Section 1-Coverages, Section 1-Additional Coverages, paragraph 3.) The HO-B provides up to $250 for covered damage to any one tree, shrub or plant. (See Section 1-Property Coverage, Coverage B (Personal Property), Extensions Of Coverage, paragraph 4.)

3. The State Farm policy pays up to $1000 for unauthorized use of credit cards and bank fund transfer cards. There is no deductible for this coverage. (See Section 1-Coverages, Section 1-Additional Coverages, paragraph 5.) The HO-B provides a $100 limit of liability (subject to a deductible) for loss by theft or unauthorized use of bank fund transfer cards. (See Section 1-Property Coverage, Coverage B (Personal Property), Special Limits of Liability, paragraph 1.)

4. The State Farm policy extends Coverage B to the contents of a deep freeze or refrigerated units on the residential premises for loss due to power failure or mechanical failure whether the power failure is on or off premises. (See Section 1-Coverages, Section 1-Additional Coverages, paragraph 7.) The HO-B limits consequential loss to $500 if the power failure is a result of damage to any power, heating, or cooling equipment off of the residence premises that is caused by an HO-B peril. The HO-B provides coverage to property contained in a building on the residence premises due to a temperature change resulting from damage to the dwelling or equipment in the dwelling that is caused by a peril insured against. (See Section 1-Property Coverage, Coverage B (Personal Property), Extensions Of Coverage, paragraph 6.)

5. The State Farm policy provides an arson reward of $1000 for information leading to an arson conviction. (See Section 1-Coverages, Section 1-Additional Coverages, paragraph 8.) The HO-B does not provide arson reward coverage.

6. The State Farm policy provides coverage for reasonable expenses incurred to rekey exterior doors to the residence premises if the keys are stolen as part of a covered theft loss. (See Section 1-Coverages, Section 1-Additional Coverages, paragraph 11.) The HO-B does not provide similar coverage.

E. Windstorm or Hail Coverage.

The State Farm policy does not exclude windstorm or hail coverage to structures wholly or partially over water. (See Section 1-Losses Insured, Coverage B-Personal Property, paragraph 2.) The HO-B excludes loss from windstorm, hurricane and hail to structures wholly or partially over water and their contents. (See Section 1-Exclusions, paragraph 1.c.(1))

F. Policy Exclusions.

The State Farm policy pays for a loss not otherwise excluded that results from destruction of property by order of a governmental authority. (See Section I - Losses Not Insured, paragraph 3.a.) The HO-B excludes losses caused by the destruction of property by order of a governmental authority. However, the HO-B will cover loss caused by order of destruction ordered by a governmental authority taken at the time of a fire to prevent its spread. (See Section 1-Exclusions, paragraph 2.)

G. Conditions.

The State Farm policy excludes losses only from the perils of vandalism, malicious mischief, or breakage of glass after 30 days of vacancy. (See Section 1-Losses Not Insured, paragraph 1.e.) The HO-B suspends dwelling coverages for all perils insured against after 60 days of vacancy. (See Section 1-Conditions, paragraph 13.)

H. Loss Settlement Provisions.

The State Farm policy pays replacement cost coverage on the dwelling and other structures on the residence premises without depreciation. (See Section 1-Loss Settlement, Coverage A-Dwelling, paragraphs 1. and 2.) The HO-B's loss settlement provisions allow initial loss payment of actual cash value with the difference between actual cash value and replacement cost paid upon replacement or repair of the damaged property, if the repair or replacement is done within 365 days of the loss. An additional 180 days may be requested by the insured. (See Section 1-Conditions, paragraph 4.)

VII. State Farm Homeowners Endorsements. In addition to the three proposed policy forms filed for adoption, State Farm has filed thirty-three endorsements for adoption pursuant to Article 5.35(b). A copy of each of these proposed endorsements is attached as Exhibit D. Additionally, since the proposed State Farm policies contain notable restrictions in both the water damage coverage and dwelling foundation coverage as compared to the coverage contained in the HO-B, a general description of the coverage that will be provided by the proposed State Farm Dwelling Foundation endorsement and Water Damage endorsement is provided.

A. Dwelling Foundation Endorsement.

The proposed endorsement provides coverage for settling, cracking, shrinking, bulging, or expansion of foundations, floor slab or footings that support the dwelling caused by seepage or leakage of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system. The coverage includes the cost of tearing out and replacing any part of the building necessary to repair the system from which the water or steam escaped. The loss to the system from which the water or steam escaped is not covered. The endorsement limits coverage to 15% of the amount of insurance for Coverage A - Dwelling on the date of the loss. In contrast, the HO-B provides dwelling foundation coverage limits up to the total amount of insurance for Coverage A - Dwelling.

B. Water Damage Endorsement.

The proposed endorsement provides coverage for deterioration, wet rot, or dry rot to Coverage A - Dwelling and Coverage B - Personal Property caused by continuous or repeated seepage or leakage of water or steam from heating, air conditioning systems or automatic fire sprinkler systems, household appliances, or plumbing systems. The coverage includes the cost of tearing out and replacing any part of the building necessary to repair the system or appliance from which the water or steam escaped, but does not include the loss to the system or appliance from which the water or steam escaped. Mold or fungus that results from a continuous or repeated seepage or leakage of water or steam from a heating, air conditioning or automatic fire sprinkler system; household appliance; or plumbing systems is excluded; however, mold or fungus that results from a sudden discharge of water from these systems or appliances is not excluded. In contrast, the HO-B provides coverage for mold or fungus resulting from both sudden and/or continuous or repeated seepage or leakage of water.

VIII. State Farm's Plan to Phase In the Proposed Policy Forms. State Farm has informed the Department that when its proposed policy forms have been adopted, the proposed policy forms will be phased in for use with State Farm policyholders while the policy forms promulgated by TDI will be discontinued for use with State Farm policyholders. State Farm has outlined the details of its plan to phase-in the proposed policy forms as follows:

A. New Business.

Once the proposed policy forms are adopted, State Farm will write all new business on the proposed policy forms. The proposed policy forms exclude coverage for dwelling foundation losses and limit coverage for water damage losses. At the time each new residential property policy is written, the applicant will be offered a separate dwelling foundation coverage endorsement and a separate water damage coverage endorsement subject to State Farm's current underwriting guidelines. If the applicant declines the dwelling foundation coverage endorsement or the water damage coverage endorsement at the inception of the policy, these endorsements will not be available to be added to a policy in the future. If a policyholder desires to continue the dwelling foundation coverage (subject to the 15% cap) and water damage coverage that the policyholder essentially has under the HO-B, both the dwelling foundation coverage and water damage coverage endorsements must be purchased for an additional premium.

B. Existing Business.

Six months after the date that State Farm begins to offer the new policies to its new business customers, State Farm will begin to convert the in-force HO-A's and HO-B's to the new policy forms.

1. Homeowners-Form A (HO-A). The HO-A's that are in-force will be converted to the State Farm homeowners policy form without water damage or dwelling foundation coverage endorsements. Since this form does not cover water damage, there will be no offer made to these HO-A policyholders allowing them to purchase the water damage or dwelling foundation coverage endorsements. Furthermore, the water damage and dwelling foundation damage endorsements will not be available to be added to the State Farm policy in the future.

2. Homeowners-Form B (HO-B) and Homeowners-Form C (HO-C). The HO-B's and HO-C's that are in force at the time of the conversion will be converted to the State Farm policy with the water damage and dwelling foundation damage coverage endorsements attached. State Farm will offer each consumer the opportunity to delete either or both of these endorsements in exchange for a premium credit. If a policyholder chooses the option of deleting these endorsements, they will not be available to be added in the future. The water damage and dwelling foundation endorsements will be available to the policyholder who originally receives the new State Farm policy for as long as that policyholder owns the dwelling insured under the new policy. Water damage and dwelling foundation endorsements that are deleted from this policy at any time will not be available to be added at a later date to this policy or any other policy that may be issued to cover the dwelling originally insured under the new policy. The water damage and dwelling foundation endorsements will not be available to be added to any other policy written for a policyholder to cover a replacement of their currently insured dwelling or any additional dwelling.

3. Homeowners Tenant-Form B (HO-BT), Homeowners Tenant-Form C (HO-CT), Homeowners Condo-Form B (HO-CON-B), and Homeowners Condo-Form C (HO-CON-C). The HO-BT's and HO-CT's that are in force at the time of the conversion will be converted to the State Farm renters policy and the HO-CON-B's and HO-CON-C's that are in force at the time of the conversion will be converted to the State Farm condominium unitowners policy with the water damage coverage endorsement attached. State Farm will offer each consumer the opportunity to delete this endorsement in exchange for a premium credit. If a policyholder chooses the option of deleting this endorsement, it will not be available to be added in the future. The water damage endorsement will be available to the policyholder who originally receives the new State Farm policy for as long as that policyholder owns the condominium insured under the new policy or as long as that tenant occupies the dwelling, apartment or townhouse insured under the new policy. A water damage endorsement that is deleted from these policies at any time will not be available to be added at a later date to these policies or any other policy that may be issued to cover a condominium or tenant occupied dwelling, apartment, or townhouse originally insured under the new policy. The water damage endorsement will not be available to be added to any other policy written for a policyholder to cover a replacement of their currently insured condominium or tenant occupied dwelling, apartment, or townhouse or any additional condominium or tenant occupied dwelling, apartment, or townhouse.

4. Consumer Disclosures. State Farm agrees to provide an explanatory letter and a summary of coverages expressly noting where there is less coverage in the State Farm policies than in the currently prescribed policies to the policyholders who are being converted from the currently prescribed Texas forms to the new State Farm forms. This notice letter will be sent to the policyholders ninety days in advance of the policy conversion date. This notice letter will be provided to the Department for its review prior to State Farm's use of this letter. State Farm has indicated in a letter to the Commissioner dated June 14, 2000, that policyholders who convert to the new State Farm policy forms and who purchase both the dwelling foundation and water damage endorsements will continue to have essentially the same comprehensive foundation and/or water damage coverage that they have under the currently prescribed policies.

C. Rating Information.

State Farm agrees to file its initial rates and any rate changes for policies written through State Farm Lloyds with the Department on an informational basis for a period of two years to allow the Department to monitor the rates on the new State Farm policies. State Farm also agrees to provide the Department with a copy of its loss cost analyses during the time period it is providing the rating information.

The Commissioner has jurisdiction of this matter pursuant to the Insurance Code, Articles 5.35 and 5.96.

A copy of the petition, including the exhibits with the full text of the proposed policy forms and endorsements and a side by side comparison of the proposed State Farm homeowners policy and the HO-B, and a copy of the exempt filing notice are available for review in the office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas. For further information or to request copies of the petition, side by side comparison, and the exempt filing notice, please contact Angie Arizpe at (512) 463-6326; refer to (Reference Number P-0301-04).

Comments on the proposed changes must be submitted in writing within 45 days after publication of the proposal in the Texas Register, to the Office of the Chief Clerk, Texas Department of Insurance, P.O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional copy of the comments is to be submitted to Marilyn Hamilton, Associate Commissioner, Personal and Commercial Lines Division, Texas Department of Insurance, P.O. Box 149104, MC 104-PC, Austin, Texas 78714-9104.

This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Government Code, Chapter 2001 (Administrative Procedure Act).

TRD-200103337

Lynda Nesenholtz

General Counsel and Chief Clerk

Texas Department of Insurance

Filed: June 13, 2001