Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 5.
PROPERTY AND CASUALTY INSURANCE
Subchapter W. CONSUMER PROTECTION REQUIREMENTS CONSUMER BILL OF RIGHTS
28 TAC §5.9970
The Commissioner of Insurance adopts new Subchapter W, §5.9970,
concerning the Consumer Bill of Rights Personal Automobile Insurance (BRPA)
and the Consumer Bill of Rights Homeowners, Dwelling and Renters Insurance
(BRHO). The section is adopted with changes to the proposed text as published
in the October 22, 2004, issue of the
Texas Register
(29 TexReg 9810).
The department received petitions from the Office of Public Insurance Counsel
(OPIC), requesting the adoption of a revised BRPA and a revised BRHO. Article
1.35A, Sec. 5(b)(8), Insurance Code, provides that the Public Counsel for
OPIC "shall submit to the department for adoption a consumer bill of rights
appropriate to each personal line of insurance regulated by the department
to be distributed upon the issuance of a policy by insurers to each policyholder
under rules adopted by the department."
As a result of legislative changes, specifically the enactment of Senate
Bill (SB) 14 by the 78th Legislature, the commissioner adopts new §5.9970,
which adopts the BRPA and the BRHO, in English and Spanish, and sets forth
the responsibility and obligation of insurers to provide copies of these Bills
of Rights to insureds. Based on changes to regulatory provisions brought about
by SB 14, the new rule provides a more efficient method of requiring that
the Bills of Rights be provided to each policyholder for each personal line
of insurance regulated by the department. Since the last adoption of the Bills
of Rights in 2002, (Commissioner’s Order No. 02-0507), SB 14 and departmental
actions have resulted in changes affecting both policyholders and insurers.
It is necessary to adopt the 2005 version of the Bills of Rights so that insurers
will be distributing to current and future policyholders the appropriate information
informing them of their rights.
The department has made the following changes to the Bills of Rights as
proposed: The department has resolved the formatting errors in the Bills of
Rights and deleted the information box containing OPIC contact information
on the last page of the Bills of Rights. More precise statutory language was
incorporated where appropriate and the footer was changed to reflect the 2005
publication date. Language in the RIGHT TO PRIVACY and the section regarding
the USE OF CREDIT INFORMATION in both Bills of Rights was condensed. The last
sentence in the NOTICE OF CHANGE IN COVERAGE was deleted and the title and
first sentence were changed. The version year was changed from 2004 to 2005.
New §5.9970 adopts the 2005 versions of the BRPA and the BRHO, in
English and Spanish. The section defines "insurer" and sets forth the responsibility
and obligation of insurers to provide copies of the Bills of Rights to insureds.
The 2005 versions of the Bills of Rights contain the information previously
provided to insureds as well as reflect legislative acts and departmental
actions concerning the use of credit information; repeal of statutory discounts;
information regarding rate differentials within a county; the use of water
claims, previous mold damage or mold damage claims, and appliance-related
claims in underwriting; information concerning right to privacy; notices regarding
premium increases and reduced coverage; and information concerning the use
of underwriting guidelines. The documents provide accurate, simplified, and
clarified language.
In response to comments regarding the BRPA, the department updated the
footer; condensed the RIGHT TO PRIVACY; condensed the CREDIT RIGHT; renumbered
the individual rights under CREDIT RIGHT; and removed the OPIC information
box at the end of both Bills of Rights. In response to comments regarding
the BRHO, the department updated the footer; in APPLIANCE CLAIMS, the department
changed the title to APPLIANCE RELATED WATER DAMAGE CLAIMS; added "water damage"
to the first sentence in right number six; condensed RIGHT TO PRIVACY; the
department added "water damage" to the fourth bullet under USE OF CLAIMS HISTORY
TO NONRENEW; the department revised the title to read NOTICE OF CHANGE IN
POLICY FORM from NOTICE OF CHANGE IN COVERAGE; the department condensed CREDIT
RIGHT; and renumbered the rights following CREDIT RIGHT.
Comment: One commenter stated that Article 1.35A Section 5(b)(8) of the
Texas Insurance Code authorizes promulgation of a rule that Bills of Rights
be distributed upon "issuance" of a policy by insurers. The commenter states
that the statute does not authorize a rule requiring insurers to furnish revised
Bills of Rights to existing insureds upon renewal of their policies.
Agency Response: The department disagrees with the comments regarding statutory
authority. Insurance Code Article 1.35A, Section (5)(b)(8) requires the department
to adopt rules for Bills of Rights appropriate to each personal line of insurance
regulated by the department to be distributed upon the issuance of a policy
by insurers to each policyholder which would include the issuance of a renewal
policy to an existing policyholder. To accept the commenters’ interpretation
of this authority would mean that any updates to the Bills of Rights would
not reach renewing policyholders, thus existing policyholders would have an
outdated version and would only receive the updated version if they become
a new policyholder. The department submits that the commenter’s interpretation
of the statute contravenes not only the wording of the statute but also the
authority of the department to promulgate rules which properly implement,
interpret, and prescribe policy.
Comment: Another commenter states that the use of the word "current" in
the text is ambiguous since the current Bills of Rights have been presumably
provided to insureds with their initial policy and thus this language could
be read to eliminate the need for the revision to be sent out at all. This
commenter further states that some insurers might prefer to send the new versions
to existing policyholders at one time thereby getting the new information
to them sooner. This commenter also suggests language that eliminates the
word "current," references the 2005 revised version, and eliminates the requirement
to provide the Bills of Rights at renewal after all customers have received
the revised version.
Agency Response: Regarding the use of the word "current" in the text, the
department has removed any ambiguity by specifying that insurers must provide
to policyholders the 2005 edition of the Bills of Rights as adopted under
the applicable subsections of the rule, unless the 2005 edition of the Bills
of Rights has previously been provided to the policyholder. The department
changed subsection (b) to be specific to the adoption of BRPA and BRHO and
incorporated language from subsection (d) regarding Figure 1 and 2. Changes
were made to subsections (c) and (e) to delete the word "current" and replace
it with "adopted as set forth . . ."
Comment: A few commenters disagree with the information in the BRPA relating
to the availability of underwriting guidelines. They feel the language in
the Bills of Rights could be confusing to consumers and should be removed.
A commenter suggests the language in the BRPA regarding the rate differentials
within counties be removed as it is confusing to consumers.
Agency Response: The department does not agree that the information in
the section entitled UNDERWRITING GUIDELINES is confusing, as consumers have
the right to pursue that information via the Public Information Act. The department
deems all of the information found in the Bills of Rights to be essential.
The information found in the section entitled RATE DIFFERENTIAL WITHIN A COUNTY
is needed to properly inform the public about very important matters impacting
their insurance.
Comment: A couple of commenters state the provisions in the Bills of Rights
concerning the use of credit information are duplicative of the information
required under state and federal law, create unnecessary confusion and anxiety
among consumers and policyholders of insurers who do not in fact use credit
information in their underwriting or rating practices, and request either
removal of the sections on credit information or a more concise reference
to the requirement that companies must provide disclosure notices. A commenter
states that the BRPA provision regarding the right to privacy was redundant
as it is already provided to consumers under federal law.
Agency Response: The department has re-examined WHAT YOU SHOULD KNOW ABOUT
INSURANCE COMPANIES’ USE OF CREDIT INFORMATION in both Bills of Rights
and the section of the BRPA entitled RIGHT TO PRIVACY and has worked with
OPIC to condense these sections while providing information deemed necessary
to inform the public about very important matters which may impact their insurance
rights, rates and coverage.
Comment: A commenter states that the BRPA provision entitled EQUAL TREATMENT
on page 14 seems duplicative to an item on page 17 and adds an unnecessarily
adversarial tone to the Bills of Rights.
Agency Response: The department notes that the two causes of action discussed
in the provisions are distinct and not related to one another. OPIC and the
department added the right to the 2005 version of the Bills of Rights to advise
consumers about an important new right.
Comment: A commenter states that the BRPA provision entitled TIMEFRAMES
FOR CLAIMS PROCESSING AND PAYMENT regarding Insurance Code Article 21.55 right
to collect interest and attorneys’ fees contains an incorrect statement
of the right. The commenter believes the right to collect first requires the
insured to file suit to collect those items as damages and the insured must
first prove a failure to comply with the deadlines. The provision, the commenter
states, is misleading and should be removed.
Agency Response: The department does not believe this is misleading. Based
on the statutory language the consumer may collect 18% plus attorneys’
fees whether or not the insured files suit.
Comment: A few commenters state that the APPLIANCE CLAIMS provision in
the BRHO should be entitled: APPLIANCE RELATED WATER DAMAGE CLAIMS and should
more closely reflect the law in Insurance Code Article 5.35-4 (c) and (e).
Another commenter stated that USE OF CLAIMS HISTORY TO NON-RENEW specifically
addresses appliance related water damage claims and the language should be
clarified. A commenter states that the WATER CLAIMS / MOLD DAMAGE OR CLAIMS
provision in the BRHO should more closely reflect 28 TAC §21.1007. A
commenter states that the BRHO provision regarding the BURDEN OF PROOF is
unnecessary since an attorney can explain the burden of proof when necessary
and the commenter suggests clarification.
Agency Response: The department appreciates the suggestions and has ensured
that the Bills of Rights accurately reflect all relevant rules and statutes.
The department has added "WATER" to the title of the USE OF CLAIMS HISTORY
TO NON-RENEW section.
Comment: A commenter states that the language in the BRHO provision entitled
LIMITATION ON CANCELLATION FOR THE DWELLING POLICIES needs to more properly
distinguish between homeowners and dwelling policies and it is an incorrect
statement under Insurance Code Article 21.49-2B §(4)(i).
Agency Response: The Department disagrees with the commenter's interpretation
of Article 21.49-2B. Article 21.49-2B(i) provides that any insurance policy
other than personal automobile or homeowners may be canceled if it has been
in effect less than 90 days. The Article also specifically states that a homeowners
policy may be canceled if the policy has been in effect for less than 60 days
and certain specified circumstances exist.
Comment: A commenter states the BRHO provision entitled NOTICE OF CHANGE
IN COVERAGE lacks statutory support for the statement that in certain instances
the insurance company must provide a comparison between the policy offered
and policies adopted by the department. The commenter believes the title and
the substance seem incorrect and suggests changing the title to NOTICE IN
CHANGE OF POLICY FORM and changing the word "policy" to "policy contract."
Agency Response: The department agrees with the commenter and has made
the suggested changes.
Comment: Some commenters point out formatting errors in the Bills of Rights,
and one commenter requests that the information box at the end of the Bills
of Rights be deleted since many consumers having claims or questions for their
insurer or agent often contact OPIC which is referenced in the information
box, thereby causing confusion or delay for consumers who require immediate
help from their insurers or agents.
Agency Response: The department understands how the box could confuse some
consumers who were attempting to contact their insurers and notes that the
formatting errors appeared only in the electronic versions of the Bills of
Rights. The department has resolved the formatting errors in the Bills of
Rights and deleted the information box containing OPIC contact information
on the last page of the Bills of Rights.
Comment: One commenter notes that the BRPA ELECTRONIC PAYMENTS requirement
does not apply to county mutuals.
Agency Response: The BRPA notes some exceptions to the rights when it states:
"This Bill of Rights identifies your rights specified by rule or by state
statute, but it does not include all your rights. Also, some exceptions to
the rights are not listed here. If your agent, company, or adjuster tells
you that one of these rights does not apply to you, contact TDI Consumer Protection
at 1-800-252-3439 (463-6515 in Austin) (111-1A), P.O. Box 149091, Austin,
TX 78714-9091."
For with changes: Office of Public Insurance Counsel; Progressive County
Mutual Insurance Company; Property Casualty Insurers Association of America;
Nationwide Insurance and Financial Services; American Insurance Association;
and Farmers Insurance Group.
This new section is adopted pursuant to Insurance Code Articles
1.35A, 5.145, 5.13-2, and §36.001. Article 1.35A, Sec. 5(b)(8) of the
Insurance Code provides that OPIC shall submit to the department for adoption
a consumer bill of rights appropriate to each personal line of insurance to
be distributed upon the issuance of a policy by insurers to each policyholder.
Article 5.145, §2 provides that, notwithstanding any other provision
of the Insurance Code and except as provided in this section, an insurer is
governed by the provisions of §8 of Article 5.13-2 relating to policy
forms and endorsements for personal automobile and residential property insurance.
Article 5.13-2 provides the commissioner authority to regulate policy forms,
endorsements, and rates for the writing of insurance subject to this article.
Section 36.001 provides that the Commissioner of Insurance may adopt any rules
necessary and appropriate to implement the powers and duties of the Texas
Department of Insurance under the Insurance Code and other laws of this state.
§5.9970.Responsibility and Obligation of Insurers To Provide Copies of the Consumer Bills of Rights to Each Insured for Personal Automobile Insurance and for Homeowners, Dwelling and Renters Insurance.
(a)
For the purposes of this section, insurer(s) means an insurance
company, reciprocal or interinsurance exchange, mutual insurance company,
capital stock company, county mutual insurance company, Lloyd's plan, or other
legal entity authorized to write personal automobile insurance or residential
property insurance in this state. The term includes an affiliate, as described
by §823.003(a) of the Insurance Code, if that affiliate is authorized
to write and is writing personal automobile insurance or residential property
insurance in this state.
(b)
The Texas Department of Insurance adopts the "Consumer
Bill of Rights Personal Automobile Insurance" (BRPA - Revised 2005), and the
Spanish language translation,
(c)
All insurers writing personal automobile insurance policies
must provide with each new policy of personal automobile insurance a copy
of the "Consumer Bill of Rights Personal Automobile Insurance." The Consumer
Bill of Rights shall accompany each renewal notice for personal automobile
insurance unless the adopted version of the Consumer Bill of Rights as set
forth in subsection (b) of this section has been previously provided to the
insured by the insurer. The Consumer Bill of Rights must appear in no less
than 10 point type and be on separate pages with no other text on those pages.
The Spanish language version of the Consumer Bill of Rights Personal Automobile
Insurance must be provided to any consumer who requests it from the insurer.
A copy of the Consumer Bill of Rights Personal Automobile Insurance can be
obtained from the Texas Department of Insurance, MC 104-1A, P.O. Box 149104,
Austin, Texas 78714-9104 or from the Texas Department of Insurance website
at www.tdi.state.tx.us.
(d) The Texas Department of Insurance adopts the "Consumer
Bill of Rights Homeowners, Dwelling and Renters Insurance" (BRHO - Revised
2005), and the Spanish language translation
(e) All insurers writing homeowners, renters or dwelling insurance
must provide with each new policy of any such insurance a copy of the "Consumer
Bill of Rights Homeowners, Dwelling and Renters Insurance." The Consumer Bill
of Rights shall accompany each renewal notice for any such insurance unless
the adopted version of the Consumer Bill of Rights as set forth in subsection
(d) of this section has been previously provided to the insured by the insurer.
The Consumer Bill of Rights must appear in no less than 10 point type and
be on separate pages with no other text on those pages. The Spanish language
version of the Consumer Bill of Rights Homeowners, Dwelling and Renters Insurance
must be provided to any consumer who requests it from the insurer. A copy
of the Consumer Bill of Rights Homeowners, Dwelling and Renters Insurance
can be obtained from the Texas Department of Insurance, MC 104-1A, P.O. Box
149104, Austin, Texas 78714-9104 or from the Texas Department of Insurance
website at www.tdi.state.tx.us.
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 March 30, 2005.
TRD-200501367
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: April 19, 2005
Proposal publication date: October 22, 2004
For further information, please call: (512) 463-6327