The Commissioner of Insurance, under Commissioner´s Order No. 98-0390, has adopted amendments to the rating rules in the Homeowners Section and Dwelling Section of the Texas Personal Lines Manual (Manual) to provide for mandatory credits under a homeowners policy and dwelling policy for metal roof coverings on residential risks which meet the Underwriters Laboratories (U.L.) test criteria under U.L. Standard 2218 that establishes a classification system for measuring the impact resistance of roof coverings.
The Commissioner also adopted Endorsement HO-145, Exclusion of Cosmetic Damage to Roof Coverings Caused by Hail, for attachment to Texas Homeowners Forms (HO-A, HO-B, and HO-C) and Endorsement TDP-022, Exclusion of Cosmetic Damage to Roof Coverings Caused by Hail, for attachment to Texas Dwelling Forms (TDP-1, TDP-2, and TDP-3). These optional endorsements provide for the exclusion of coverage for cosmetic damage caused by hail to roof coverings installed on risks that are eligible for and are receiving premium credits for the installation of a roof covering meeting U.L. Standard 2218 or such other standard as may be approved by the Commissioner.
The above endorsements and amended rules are effective on May 2, 1998. Any questions regarding this notice should be directed to the Residential Property Section, 512-322-2266.
Attached to this bulletin is a copy of the endorsements and amended rules.
David P. Durden
Deputy Commissioner
Automobile and Homeowners Group
DPD:GJ:er
Attachment
Homeowners Manual
VI. Rating Rules
N. Mandatory Roof Covering Credits
1. Residential roof coverings meeting the impact resistance of the Underwriters' Laboratories testing criteria of U. L. Standard 2218 are eligible for the following mandatory credits to be applied to the basic homeowners premium:
| Territory | Class 1 Credit | Class 2 Credit | Class 3 Credit | Class 4 Credit |
|---|---|---|---|---|
| 9 | 1 % | 2 % | 3 % | 4 % |
| 1, 8, 10,11 | 2 | 4 | 5 | 7 |
| 7 | 4 | 8 | 12 | 15 |
| 5, 6, 13, 14, 17 | 4 | 9 | 13 | 17 |
| 2, 4 | 6 | 12 | 17 | 23 |
| 12, 16C, 19C, 19N | 7 | 14 | 21 | 28 |
| 3 | 9 | 17 | 26 | 34 |
| 15C, 15N, 16N, 18, 20 | 9 | 17 | 26 | 35 |
The roof covering credit and applicable premium credit applied must be shown on the declarations page of the policy. The above credits reduce the basic premium and are applied before any other adjustments to the basic premium.
Credits apply only on policies insuring a risk that replacement of the existing roof covering on a residence is with a new roof covering(s) meeting U.L. Standard 2218 or is new residential construction which includes the installation of a roof covering meeting U.L. Standard 2218.
The credits outlined in the table in item N-1 will be reviewed at such time as credible statistical data becomes available but not later than 5 years from the effective date of the implementation of the credits. The credits may be modified if the statistical data indicates modifications are needed.
Note: Other impact or hail resistance testing standards approved by the Texas Department of Insurance may be substituted for the U.L. Standard 2218. Testing to U.L. Standard 2218 or other acceptable standards may be accomplished by a testing facility recognized and approved by the Texas Department of Insurance based on standards for testing laboratories adopted by the Department.
2. A certificate of installation, promulgated by the Texas Department of Insurance, must be provided to the policyholder by the installer of the roof covering. All information on the certificate must be completed and signed by the individual responsible for the installation of the roof covering.
3. A policyholder may present the certificate of installation to an insurer for the application of the mandatory credit as provided in item N-1. Presentation of a certificate of installation does not preclude an insurer from inspecting the risk for verification of roof covering installation.
4. Product Labeling. In order for mandatory roof covering credits to be applicable to homeowners insurance, roof coverings meeting U.L. Standard 2218 or any other test standard for impact resistance approved by TDI which are installed on and after January 1, 1999 must meet the following labeling requirements. All individual shingles, tiles, shakes, panels, sheets, etc., of roof rings must bear the Underwriters' Laboratories label or the label of a testing laboratory approved by TDI indicating the classification of the product under U.L. Standard 2218 and the manufacturer´s name, the year manufactured and the brand name. For roof coverings meeting U. L. Standard 2218 which are installed prior to January 1, 1999, only the package containing the roof covering products is required to be labeled. The package must bear the Underwriters' Laboratories label or the label of a testing laboratory approved by TDI indicating the classification of the product under U.L. Standard 2218 and the manufacturer´s name, the year manufactured and the brand name.
5. It shall be optional with insurers to provide credits for impact resistant roof coverings installed prior to February 17, 1998. The optional credits given for impact resistant roof coverings installed prior to February 17, 1998 shall be within the range of credits outlined in the table in item N-1. Insurers may request from insureds, who apply for this optional credit, information regarding the installation of the impact resistant roof covering including but not limited to the date of installation, verification of the installation, and type of impact resistant roofing material installed. Any roof covering that is replaced on or after February 17, 1998 shall meet U. L. Standard 2218 in order for the property owner to receive the credit.
6. The credits program with its certification process is solely for the purpose of enabling residential property owners to obtain a reduction in their residential insurance premium and it is not intended by the Department to require or create any type of express or implied warranty by the manufacturer, supplier, or installer.
7. Endorsement HO-145, Exclusion of Cosmetic Damage to Roof Coverings Caused by Hail, is an optional endorsement which may be attached only to a policy insuring a risk eligible and receiving premium credit for the installation of an impact resistant roof covering in order to exclude cosmetic damage caused by hail.
a. Endorsement HO-145 may be attached at the inception date of a new policy, the inception date of a renewal policy or during the term of the policy on the date a roof covering premium credit is applied to the policy.
b. Endorsement HO-145 must be signed by the insured before attachment to a policy. The endorsement is void unless signed by the insured. An insurer shall be permitted to attach to a policy a facsimile copy, photocopy or electronic record copy of the endorsement executed by the named insured. A signature is not required on the endorsement attached to the policy if the insurer maintains on file either the original endorsement executed by the insured or a photocopy, microfilm copy, or electronic record copy of the original endorsement executed by the insured.
c. If a risk is eligible to receive a premium credit for the installation of an impact resistant roof covering, but the insured declines to sign for the attachment of the Endorsement HO-145, the insured may offer to issue the policy without the application of a mandatory or optional roof covering credit.
d. An insurer must inform a consumer of the possibility that cosmetic loss or damage may be excluded from the policy in the event any loss occurs to a roof and the damaged roof is replaced with a hail resistant roof covering.
| ENDORSEMENT NO. HO-145 Effective May 2, 1998 | EXCLUSION OF COSMETIC DAMAGE TO ROOF COVERINGS CAUSED BY HAIL |
|---|
| NOTICE This endorsement may be attached only to policies insuring risks eligible and receiving a credit for the installation of impact resistant roof coverings. |
The following Section - I exclusion is added to the policy:
We do not cover cosmetic loss or damage to roof coverings caused by the peril of hail.
Cosmetic loss or damage means only that damage that alters the physical appearance of the roof covering but does not result in damage that allows the penetration of water through the roof covering or does not result in the failure of the roof covering to perform its intended function, to keep out elements over an extended period of time.
We do cover hail damage to roof coverings that results in damage that will allow the penetration of water through the roof covering or that results in the failure of the roof covering to perform its intended function, to keep out elements over an extended period of time.
Roof covering means the roofing material exposed to the weather, the underlayments applied for moisture protection, and all flashings required in the replacement of a roof covering.
This endorsement is void unless signed by the insured, with the exception that the insured´s signature is not required on this endorsement if the insurer maintains on file a hard copy, microfilm copy, or electronic record copy form of this endorsement containing the signature of the named insured.
___________________________________
Signature of the Insured Date
Prescribed by the Texas Department of Insurance
Endorsement No. HO-145 - Exclusion of Cosmetic Damage to Roof Coverings Caused by Hail
Effective May 2, 1998
Dwelling Manual
VI. Rating Rules
K. Mandatory Roof Covering Credits
1. Residential roof coverings meeting the impact resistance of the Underwriters' Laboratories testing criteria of U. L. Standard 2218 are eligible for the following mandatory credits to be applied to the dwelling extended coverage premium:
| Territory | Class 1 Credit | Class 2 Credit | Class 3 Credit | Class 4 Credit |
|---|---|---|---|---|
| 9 | 3 % | 5 % | 8 % | 11 % |
| 1, 8, 10,11 | 4 | 5 | 9 | 13 |
| 5, 6, 13 | 10 | 15 | 25 | 36 |
| 2, 4, 14 | 11 | 16 | 27 | 38 |
| 7, 12, 15C | 12 | 18 | 30 | 42 |
| 3, 15N, 16C, 16N, 17, 18, 19C, 19N, 20 | 13 | 20 | 33 | 46 |
The roof covering credit and applicable premium credit applied must be shown on the declarations page of the policy. The above credits reduce the extended coverage premium and are applied before any other adjustments to the extended coverage premium.
Credits apply only on policies insuring a risk that replacement of the existing roof covering on a residence is with a new roof covering(s) meeting U.L. Standard 2218 or is new residential construction which includes the installation of a roof covering meeting U.L. Standard 2218.
The credits outlined in the table in item K-1 will be reviewed at such time as credible statistical data becomes available but not later than 5 years from the effective date of the implementation of the credits. The credits may be modified if the statistical data indicates modifications are needed.
Note: Other impact or hail resistance testing standards approved by the Texas Department of Insurance may be substituted for the U.L. Standard 2218. Testing to U.L. Standard 2218 or other acceptable standards may be accomplished by a testing facility recognized and approved by the Texas Department of Insurance based on standards for testing laboratories adopted by the Department.
2. A certificate of installation, promulgated by the Texas Department of Insurance, must be provided to the policyholder by the installer of the roof covering. All information on the certificate must be completed and signed by the individual responsible for the installation of the roof covering.
3. A policyholder may present the certificate of installation to an insurer for the application of the mandatory credit as provided in item K-1. Presentation of a certificate of installation does not preclude an insurer from inspecting the risk for verification of roof covering installation.
4. Product Labeling. In order for mandatory roof covering credits to be applicable to dwelling insurance, roof coverings meeting U.L. Standard 2218 or any other test standard for impact resistance approved by TDI which are installed on and after January 1, 1999 must meet the following labeling requirements. All individual shingles, tiles, shakes, panels, sheets, etc., of roof coverings must bear the Underwriters' Laboratories label or the label of a testing laboratory approved by TDI indicating the classification of the product under U.L. Standard 2218 and the manufacturer´s name, the year manufactured and the brand name. For roof coverings meeting U. L. Standard 2218 which are installed prior to January 1, 1999, only the package containing the roof covering products is required to be labeled. The package must bear the Underwriters' Laboratories label or the label of a testing laboratory approved by TDI indicating the classification of the product under U.L. Standard 2218 and the manufacturer´s name, the year manufactured and the brand name.
5. It shall be optional with insurers to provide credits for impact resistant roof coverings installed prior to February 17, 1998. The optional credits given for impact resistant roof coverings installed prior to February 17, 1998 shall be within the range of credits outlined in the table in item K-1. Insurers may request from insureds, who apply for this optional credit, information regarding the installation of the impact resistant roof covering including but not limited to the date of installation, verification of the installation, and type of impact resistant roofing material installed. Any roof covering that is replaced on or after February 17, 1998 shall meet U. L. Standard 2218 in order for the property owner to receive the credit.
6. The credits program with its certification process is solely for the purpose of enabling residential property owners to obtain a reduction in their residential insurance premium and it is not intended by the Department to require or create any type of express or implied warranty by the manufacturer, supplier, or installer.
7. Endorsement TDP-022, Exclusion of Cosmetic Damage to Roof Coverings Caused by Hail, is an optional endorsement which may be attached only to a policy insuring a risk eligible and receiving premium credit for the installation of an impact resistant roof covering in order to exclude cosmetic damage caused by hail.
a. Endorsement TDP-022 may be attached at the inception date of a new policy, the inception date of a renewal policy or during the term of the policy on the date a roof covering premium credit is applied to the policy.
b. Endorsement TDP-022 must be signed by the insured before attachment to a policy. The endorsement is void unless signed by the insured. An insurer shall be permitted to attach to a policy a facsimile copy, photocopy, or electronic record copy of the endorsement executed by the named insured. A signature is not required on the endorsement attached to the policy if the insurer maintains on file either the original endorsement executed by the insured or a photocopy, microfilm copy, or electronic record copy of the original endorsement executed by the insured.
c. If a risk is eligible to receive a premium credit for the installation of an impact resistant roof covering, but the insured declines to sign for the attachment of the Endorsement TDP-022, the insured may offer to issue the policy without the application of a mandatory or optional roof covering credit.
d. An insurer must inform a consumer of the possibility that cosmetic loss or damage may be excluded from the policy in the event any loss occurs to a roof and the damaged roof is replaced with a hail resistant roof covering.
| ENDORSEMENT NO. TDP- 022 Effective May 2, 1998 |
EXCLUSION OF COSMETIC DAMAGE TO ROOF COVERINGS CAUSED BY HAIL |
| NOTICE This endorsement may be attached only to policies insuring risks eligible and receiving a credit for the installation of impact resistant roof coverings. |
The following General Exclusion is added to the policy:
We do not cover cosmetic loss or damage to roof coverings caused by the peril of hail.
Cosmetic loss or damage means only that damage that alters the physical appearance of the roof covering but does not result in damage that allows the penetration of water through the roof covering or does not result in the failure of the roof covering to perform its intended function, to keep out elements over an extended period of time.
We do cover hail damage to roof coverings that results in damage that will allow the penetration of water through the roof covering or that results in the failure of the roof covering to perform its intended function, to keep out elements over an extended period of time.
Roof covering means the roofing material exposed to the weather, the underlayments applied for moisture protection, and all flashings required in the replacement of a roof covering.
This endorsement is void unless signed by the insured, with the exception that the insured´s signature is not required on this endorsement if the insurer maintains on file a hard copy, microfilm copy, or electronic record copy form of this endorsement containing the signature of the named insured.
___________________________________
Signature of the Insured Date
Prescribed by the Texas Department of Insurance
Endorsement No. TDP-022 - Exclusion of Cosmetic Damage to Roof Coverings Caused by Hail
Effective May 2, 1998