The Commissioner of Insurance, by Commissioner´s Order No. 01-0108, dated February 8, 2001, has adopted amendments to the Texas Dwelling Policies (TDP), Texas Homeowners Policies (HO), and the Texas Personal Lines Manual (Manual), and new optional endorsements for use with the TDP and HO relating to coverage for the increased cost of construction when an ordinance, law or the building specifications of the Texas Windstorm Insurance Association´s (TWIA) plan of operation impose specific requirements on the repair or replacement of insured, damaged property.
AMENDATORY MANDATORY ENDORSEMENTS
Pursuant to this order, insurers must attach the following amendatory mandatory endorsements as applicable to the TDP and HO:
- Endorsement No. TDP-024 Dwelling Amendatory Mandatory Endorsement for Increased Cost of Construction - Building Laws - Applicable to Forms TDP-1 and TDP-2 only.
- Endorsement No. TDP-025 Dwelling Amendatory Mandatory Endorsement for Increased Cost of Construction - Building Laws - Applicable to Form TDP-3.
- Endorsement No. HO-134 Homeowners Amendatory Mandatory Endorsement for Increased Cost of Construction - Building Laws - Applicable to Forms HO-A, HO-B, and HO-C.
These endorsements amend the Building Laws exclusion in the policies to provide $5,000 of coverage for the insured´s increased cost of construction due to the enforcement of any ordinance, law, or the building specifications of the TWIA plan of operation. The coverage is provided at no additional premium and the endorsements specify that the coverage is additional insurance and does not reduce the dwelling limit of liability.
An insurer may discontinue the use of these endorsements when the amended language has been incorporated into the applicable policy forms. The amended language must be incorporated into the policy forms on or before April 1, 2002, at which time the amendatory mandatory endorsements will be automatically withdrawn.
OPTIONAL ENDORSEMENTS
The following optional endorsements are adopted for use as applicable to the TDP and HO:
- Endorsement No. TDP-026 Increased Cost of Construction - Building Laws (Forms TDP-1 and TDP-2 only).
- Endorsement No. TDP-027 Increased Cost of Construction - Building Laws (Form TDP-3).
- Endorsement No. HO-135 Increased Cost of Construction - Building Laws (Forms HO-A, HO-B, and HO-C).
These endorsements amend the Building Laws exclusion in the policy to provide additional optional coverage above the included $5,000 in the amount of 10%, 15%, or 25% of the dwelling limit of liability. These endorsements specify that additional premium is to be paid for the percentage of coverage that is selected by the insured and that this coverage is additional insurance above the $5,000 that is included in the policy and the limit of liability that applies to Coverage - A Dwelling.
MANUAL CHANGES
Subsection O is added to Section IV, Optional Endorsements in the Dwelling Section. Subsection 20 is added to Section IV, A. Optional Additional Coverages & Endorsements in the Homeowners Section.
New Premium Chart 19 for dwelling policies, and new Premium Chart 40 for homeowners policies is added to the Dwelling Section and Homeowners Section of the Manual. These premium charts are used to calculate the additional premium when optional endorsements TDP-026, TDP-027, and HO-135 are attached to the appropriate policy.
The Liberalization Clause as contained in each policy form applies to the adopted coverage.
Insurers who currently have approved endorsements for building law or ordinance coverage may continue to use their approved endorsements so long as those endorsements conform with the endorsement approval requirements of Insurance Code, Article 5.35.
The above endorsements and Manual changes are effective on April 1, 2001. Any questions regarding this bulletin may be directed to Gary Julian at 512-322-2266 or Gary.Julian@tdi.state.tx.us.
Marilyn Hamilton, Associate Commissioner
Property & Casualty Program, MC 104-PC