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Texas Department of Insurance
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Review Requirements Checklist – Contractual Liability Reimbursement Policy

(Underlying contracts may include Service Contracts, Vehicle Protection Product Warranties & other products regulated under TDLR, Debt Cancellation Agreements or GAP Waivers)

Updated 11/16/2021 - Return to Index

Refer to Property & Casualty Filings Made Easy for required documentation.


Filing Standards
Review requirements Reference Comments
Policy Forms and Endorsements §2301.001(2), Insurance Code Policy forms and endorsements may not be unjust, unfair, inequitable, misleading or deceptive.
Prior Approval Chapter 2301, Insurance Code An insurance policy form or endorsement may not be delivered or issued for delivery in this state unless the form has been filed with and approved by the commissioner. Each filing shall be made not later than the 60th day before the date of any use or delivery for use.
Large Risk Exemption §2301.004, Insurance Code Policy forms for use with large risks are exempt from filing for prior approval if the forms are to be used with a "large risk." "Large Risk" is defined as an insured that has total insured property values of $5 million or more; an insured that has total annual gross revenues of $10 million or more; or an insured that has a total premium of $25,000 or more for property insurance, $25,000 or more for general liability insurance, or $50,000 or more for multiperil insurance.
Disapproval of Forms; Withdrawal of Approval §2301.007, Insurance Code The commissioner may disapprove a form filed under §2301.006 or withdraw approval of a form if the form (1) violates any law, including a rule adopted under the Texas Insurance Code, or (2) contains a provision or has a title or heading that is unjust or deceptive, encourages misrepresentation, or violates public policy.
Applications   Not Required to be Filed For Approval Unless Being Made a Part of the Policy
Review requirements Reference Comments
Arbitration Chapter 2301, Insurance Code Language used in arbitration agreements is to be consistent with that of the policy: to wit, don't use the word "parties" when you actually mean insured(s) and insurer. Binding arbitration is okay. Arbitration agreements may be mandatory. Arbitration must be held in Texas for Texas policyholders unless mutually agree on an alternate. In general, arbitration language cannot be unjust, misleading or deceptive.
Cancellation & Nonrenewal
Review requirements Reference Comments
Cancellation & Nonrenewal of Certain Liability Insurance Coverage §§551.051-551.055 and §551.004, Insurance Code Cancellation and nonrenewal of certain liability insurance policies.
Elected Officials §§551.151 & 551.152, Insurance Code An insurer may not cancel or refuse to renew an insurance policy based solely on the fact that the policyholder is an elected official.
Insured's Right to Cancel Chapter 2301, Insurance Code Insurance company cannot limit or restrict the insured's right to cancel a policy.
Voiding Coverage Chapter 705, Insurance Code "Void Coverage" language must comply with Chapter 705, Subchapter A, and the misrepresentation must be material.
Choice of Law
Review requirements Reference Comments
Texas Laws Govern Policies Article 21.42, Insurance Code Texas must be choice if filing contains choice of law provision.
Claims Made Coverage
Review requirements Reference Comments
Disclosure Required Chapter 2301, Insurance Code If the policy is a claims made policy a disclosure to that effect must be prominently displayed on either or both the declaration sheet or the first page of the policy. The disclosure must be plainly readable bold type.
30-Day Extended Reporting Period Required Chapter 2301, Insurance Code The insured must be given at least an automatic 30-day extended reporting period to report claims becoming known too late to report before the end of the policy period.
Policy Provision Required Chapter 2301,  Insurance Code A policy provision advising the insureds of a right to purchase an extended reporting endorsement. The policy must give the insured a minimum of thirty days to purchase the extended reporting endorsement and the minimum term of the extended reporting period must be at least one year. An extended reporting period unlimited in time must be available.
Claims Settlement
Review requirements Reference Comments
Prompt Payment of Claims §§542.051 - 542.061, Insurance Code Prompt payment of claims. (1st Party Coverage - "Pay to," "indemnify," or "reimburse" the insured. Not "pay on behalf of.")
Notice of Settlement of Liability Claims §§542.151 - 542.154, Insurance Code Notice of settlement of claim under casualty insurance policy. EXCEPTION - This article does not apply to a casualty policy that requires the insured's consent to settlement of a claim against the insured; or to fidelity, surety, or guaranty bonds.
Contractual Limitations Period - Suits §16.070, Civil Practice & Remedies Except as provided by Subsection (b), a person may not enter a stipulation, contract, or agreement that purports to limit the time in which to bring suit on the stipulation, contract, or agreement to a period shorter than two years. A stipulation, contract, or agreement that establishes a limitations period that is shorter than two years is void in this state. The Texas Third Court of Appeals issued an opinion that acknowledges that the language providing 2 years and 1 day from the date the cause of action first accrues satisfies the statutory requirement of §16.070, Civil Practices and Remedy Code. ( Case #03-08-00408-CV
Notice Requirements §16.071, Civil Practice & Remedies A contract stipulation that requires a claimant to give notice of a claim for damages as a condition precedent to the right to sue on the contract is not valid unless the stipulation is reasonable. A stipulation that requires notification within less than 90 days is void.
Providing Certain Claims Information On Request §§542.101-542.104, Insurance Code; and Commissioner's Bulletin No. B-0043-05 If a policy form or endorsement contains language addressing the request or furnishing of claims information, it would need to comply with the applicable statute(s).
Coverage Issues
Review requirements Reference Comments
Examination Under Oath Chapter 2301, Insurance Code
§151.001(a)(7), Family Code
If policy language requires examination under oath, the provision must also state that a parent or guardian may be present during any examination of a minor.
Limits of Liability Chapter 2301, Insurance Code Reimbursement policy declarations page must contain a limit of liability.
Required Benefit Limitation Language (Debt Cancellation Agreements) Chapter 2301, Insurance Code Contractual liability policies must contain the following or similar language: This insurance shall inure solely to your benefit and shall not benefit any holder of an Approved Agreement, any debtor, or any other party as a loss payee or third party beneficiary. The policy benefits hereof are payable only to you. In the event of your insolvency, benefits will be paid to your statutory representative. You may not advise any holder of an approved agreement or other person that they or any person or entity other than yourself has or may have any interest under this insurance. No person or organization shall have any right under this policy to join us as a party in any action against you to determine your obligations under any approved agreement.
Pay on Behalf of Provision (Debt Cancellation Agreements) Chapter 2301, Insurance Code Neither the insuring agreement nor any other policy provision may contain pay on behalf of the insured wording nor any other cut-through provision that allows the insurance policy to make payments directly to the debtor.
Pay on Behalf of Provision (Products regulated by TDLR) Title 8, Chapter 1304, Occupations Code &
Chapter 2301, Insurance Code
If the insuring agreement pays on behalf of the insured, it must be linked to the insured's nonperformance of obligations assumed under service contracts/vehicle protection products.
Eligible Underlying Service Contracts/ Warranties (Products Regulated by TDLR) Title 8, Chapter 1304, Occupations Code &
Chapter 2301, Insurance Code
Contractual liability policy may only cover obligations assumed under service contracts/vehicle protection product warranties subject to the provisions of Chapters 1304 and 2306 or manufacturer or dealer service contracts regulated by TDLR.
Liability for Contracts Issued Prior to Cancellation Title 8, Chapter 1304, Occupations Code &
Chapter 2301, Insurance Code
Reimbursement insurer must retain liability for contracts issued prior to cancellation of the policy.
Payment/Service Provided to Consumer (Products Regulated by TDLR) Title 8, Chapter 1304, Occupations Code &
Chapter 2301, Insurance Code
Policy must state that if covered service/amounts are not provided/paid by insured within 60 days of proof of loss, payment shall be made/service provided by the reimbursement insurer.
Texas Department of Licensing and Regulation (TDLR) Requirements Title 8, Chapter 1304, Occupations Code (including revisions made by HB 1286, 79th Legislature, Regular Session)  For products regulated by TDLR, policy must comply with TDLR required language. (See Exhibit A - Service Contract Provider (Revised 3/9/2012) and Exhibit B - Vehicle Protection Product Warrantors)
Tie-In Sales Chapter 1806, Insurance Code & 6/1/78 Board Letter Tie-in sales may violate state law.
Credit or Reimbursement Coverage (Debt Cancellation Agreements/ Waivers) Section 348.403, Finance Code A policy form or endorsement cannot provide a reimbursement to the insured in connection with a credit or tender of cash to the customer/borrower. Section 348.403 Finance Code, may prohibit this activity.
General Change Endorsements
Review requirements Reference Comments
May Not Manuscript Coverage Once Approved Chapter 2301, Insurance Code Coverage forms are prior approval. Change endorsements may be used to change insured address, etc. but may not be used to change, alter or "clarify" coverage in any way. Company must provide verification that the endorsement will not be used to change, alter, or clarify coverage.
Disclosure of Guaranty Fund Nonparticipation
Review requirements Reference Comments
Disclosure of Guaranty Fund Nonparticipation 28 TAC §1.1001, Texas Administrative Code, Chapter 461, Insurance Code Disclosure of Guaranty Fund Nonparticipation. NOTE: Texas Property and Casualty Insurance Guaranty Act does not apply to insurance of warranties or service contracts in accordance with §462.007(b)(8).
Rebating or Discrimination
Review requirements Reference Comments
Rebating or Discrimination Chapter 1806, Insurance Code Inducements prohibited.
Political Affiliation and Expression Chapter 544, Subchapter M, Insurance Code Except as provided by Section 544.603, a person may not refuse to insure or provide coverage to an individual, refuse to continue to insure or provide coverage to an individual, limit the amount, extent, or kind of coverage available for an individual, or charge an individual a rate that is different from the rate charged to other individuals for the same coverage because of the individual's political affiliation or expression.
Requirements Not Part of A Listed Category
Review requirements Reference Comments
Copy of Underlying Service Contract/ Vehicle Protection Product Warranty/Debt Cancellation Agreement (DCA) Chapter 2301, Insurance Code Reimbursement insurers must submit a copy of the underlying service contract/vehicle protection product warranty being insured by the reimbursement policy or confirm the policy will only be used with products regulated by TDLR. If used with DCA's, confirm the policy will only be used in connection with the transactions in the Department's position paper. (See Exhibit C - TDI: Regulatory Position Regarding Debt Cancellation/Suspension Agreements) Manual rule required to confirm the policy will be used with products regulated by TDLR or in connection with transactions in Department's position paper regarding DCA's.
Toll Free Information
Review requirements Reference Comments
Notice of Policyholder Complaint Procedures §521.005, Insurance Code A brief written notice of suggested procedure to be followed by the policyholder in the event of a dispute concerning a policyholder's claim or premium.
Toll-Free Information & Complaint Number §§521.051 - 521.056, Insurance Code Toll-Free number for the Texas Department of Insurance.
Insurer's Toll-Free Information & Complaint Number §§521.101 - 521.103, Insurance Code Insurer's requirement to maintain toll-free number to provide information concerning policies issued by the insurer and to accept complaints from policyholder. Article contains an exception for insurers whose gross initial premium receipts collected in this state are less than $2 million a year or to an insurer with regard to fidelity, surety, or guaranty bonds.
Notice of Toll-Free Telephone Numbers and Information & Complaint Procedures 28 TAC §1.601 & §1.602, Texas Administrative Code and Commissioner’s Order 3952 To satisfy requirements for §521.005, §§521.051 - 521.056, and §§521.101 - 521.103 noted above.


Filing Standards
Review requirements Reference Comments
File & Use Chapter 2251, Insurance Code Each insurer shall file with the Commissioner all rates, supplementary rating information, and reasonable and pertinent supporting information for risks written in this state.


Filing Standards
Review requirements Reference Comments
File & Use Chapter 2301 & Chapter 2251, Insurance Code Manual rules should reflect specific requirements for usage of policy forms, endorsements, and disclosures.


Filing Standards
Review requirements Reference Comments
Fees for Paper Checks Prohibited §116.002, Business and Commerce Code An insurer or agent may not charge a fee for issuing payment via a paper check.

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Last updated: 1/13/2022