Proposed Action on Rules
Notice is given that the Commissioner of Insurance will consider four endorsements
proposed by the staff of the Personal and Commercial Lines Division of the
Texas Department of Insurance. For an additional premium, the proposed optional
endorsements provide coverage for additional living expenses resulting from
mandatory evacuations or an extended loss of utilities. The purpose of these
endorsements is to establish a method for insurers that opt to provide coverage
to address the costs associated with these events. Currently, the costs a
homeowner, tenant, or condominium unit owner incurs when a civil authority
orders them to leave an area or when utilities are lost for an extended period
of time are not generally covered by most residential property insurance policies.
In September 2005, many consumers residing along the Texas Gulf Coast were
required by civil authorities to evacuate their communities and in many cases
lost their utilities due to Hurricane Rita. Due to either the ordered evacuation,
the loss of utilities, or both, these consumers incurred additional living
expenses, such as meals and lodging, that were necessary to maintain a normal
standard of living. When a catastrophic event such as a hurricane strikes
or threatens to strike an area, residents may be less inclined to evacuate
their homes if this type of insurance coverage is not available. As a matter
of public policy, consumers should be encouraged to escape harm’s way.
These endorsements will provide homeowners, tenants, and condominium unit
owners with a means to obtain this additional living expenses coverage from
those insurers that choose to offer the coverage.
Staff’s petition (Reference No. P-0606-09-I) was filed on June 14,
2006. Article 5.96(d) provides that any interested person may request the
Commissioner to hold a hearing before acting on a pending petition. Except
as provided by Article 5.96A, the Commissioner has discretion on whether to
hold the hearing. Any request for a public hearing should be submitted separately
by 5:00 p.m. on July 24, 2006 to Gene Jarmon, General Counsel and Chief Clerk,
Texas Department of Insurance, P.O. Box 149104, Mail Code 113-2A, Austin,
Texas 78714-9104. If a hearing is held, written and oral comments presented
at the hearing will be considered.
The proposed endorsements are filed pursuant to Insurance Code Articles
5.13-2 and 5.96. Article 5.13-2, §8(e) provides that the Commissioner
of Insurance may promulgate policy forms, endorsements, and other related
forms that insurers may use, at their discretion, in lieu of the insurer’s
own forms in writing insurance subject to Article 5.13-2. Article 5.96 authorizes
the Commissioner of Insurance to promulgate policy and endorsement forms for
fire and allied lines of insurance which includes residential property insurance.
Staff proposes the following optional endorsements for use with Texas Homeowners
Policy Forms A, B, and C:
A new endorsement, HO-115, entitled "Loss of Use Due to Mandatory Evacuation."
The endorsement provides coverage for homeowners who incur additional living
expenses when a civil authority orders a mandatory evacuation. The ordered
evacuation must be in effect for a period of twenty-four consecutive hours
for coverage to apply. The endorsement imposes other coverage limitations.
No deductible applies.
A new endorsement, HO-116, entitled "Loss of Use Due to Loss of Utilities."
The endorsement provides coverage for homeowners who incur additional living
expenses as a result of an extended loss of utilities. Utility service, as
defined in the endorsement, must be unavailable for a period lasting longer
than twenty-four hours for coverage to apply. The endorsement imposes other
coverage limitations. No deductible applies.
Staff proposes the following optional endorsements for use with Texas Homeowners
Tenant Policy Forms B and C and Texas Homeowners Condominium Policy Forms
B and C:
A new endorsement, HO-115A, entitled "Loss of Use Due to Mandatory Evacuation."
The endorsement provides coverage for tenants and condominium unit owners
who incur additional living expenses when a civil authority orders a mandatory
evacuation. The ordered evacuation must be in effect for a period of twenty-four
consecutive hours for coverage to apply. The endorsement imposes other coverage
limitations. No deductible applies.
A new endorsement, HO-116A, entitled "Loss of Use Due to Loss of Utilities."
The endorsement provides coverage for tenants and condominium unit owners
who incur additional living expenses as a result of an extended loss of utilities.
Utility service, as defined in the endorsement, must be unavailable for a
period lasting longer than twenty-four hours for coverage to apply. The endorsement
imposes other coverage limitations. No deductible applies.
The staff requests that these proposed endorsements be adopted effective
fifteen days after notice of adoption is published in the Texas Register.
A copy of the full text of the proposed endorsements is available for review
in the Office of the Chief Clerk of the Texas Department of Insurance located
at 333 Guadalupe Street, Austin, Texas 78714-9104. For further information
or to request copies of the proposed endorsements, please contact Ms. Sylvia
Gutierrez at 512-463-6327 and (refer to Reference No. P-0606-09-I).
Written comments to these proposed endorsements must be submitted no later
than 5:00 p.m. on July 24, 2006 to Gene Jarmon, General Counsel and Chief
Clerk, Texas Department of Insurance, P.O. Box 149104, Mail Code 113-2A, Austin,
Texas 78714-9104. An additional copy of the comments must be submitted to
Marilyn Hamilton, Associate Commissioner, Personal and Commercial Lines Division,
Texas Department of Insurance, Mail Code 104-PC, P.O. Box 149104, Austin,
Texas 78714-9104.
The Commissioner of Insurance has jurisdiction over this matter pursuant
to Article 5.13-2 and Article 5.96 of the Insurance Code.
This notice is made pursuant to the Insurance Code Article 5.96 which exempts
it from the requirements imposed by the Administrative Procedures Act of Government
Code Chapter 2001.
TRD-200603283
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Filed: June 14, 2006