Exempt Filing Notification pursuant to the Insurance Code, Chapter 5, Subchapter L, Article 5.96

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.

EXHIBIT A

For an included additional premium, the following coverage is added to your policy.

MANDATORY EVACUATION. For the purpose of this endorsement, mandatory evacuation shall mean an evacuation ordered by any civil authority of all or part of the population from an area under its jurisdiction.

When your dwelling is subject to a mandatory evacuation order, we will cover your additional living expense, meaning any necessary and reasonable increase in living expense you incur so that your household can maintain its normal standard of living, less any expenses that do not continue.

Coverage provided by this endorsement is available when the ordered evacuation has been in effect for a period longer than twenty-four (24) consecutive hours, not to exceed fourteen (14)days. The total limit of liability under this endorsement for all loss of use is 10% of the Coverage A (Dwelling) limit of liability. No coverage will be provided under this endorsement for any additional living expense incurred during the first twenty-four ( 24) consecutive hours after the mandatory evacuation. This is additional insurance and does not reduce the Coverage A (Dwelling) limit of liability under this policy.

Any amounts payable for expenses under this endorsement shall be reduced by any amounts paid or payable for the same expenses under this policy.

The deductible clause does not apply to mandatory evacuation coverage.

EXHIBIT B

For an included additional premium, the following coverage is added to your policy.

MANDATORY EVACUATION. For the purpose of this endorsement, mandatory evacuation shall mean an evacuation ordered by any civil authority of all or part of the population from a stricken or threatened area under its jurisdiction.

When the structure you reside in is subject to a mandatory evacuation order, we will cover your additional living expense, meaning any necessary and reasonable increase in living expense you incur so that your household can maintain its normal standard of living, less any expenses that do not continue.

Coverage provided by this endorsement is available while the ordered evacuation is in effect for a period longer than twenty-four (24) consecutive hours, not to exceed fourteen (14) days. The total limit of liability under this endorsement for all loss of use is 10% of the Coverage B (Personal Property) limit of liability. No coverage will be provided under this endorsement for any additional living expense incurred during the first twenty-four (24) consecutive hours after the mandatory evacuation. This is additional insurance and does not reduce the Coverage B (Personal Property) limit of liability under this policy.

Any amounts payable for expenses under this endorsement shall be reduced by any amounts paid or payable for the same expenses under this policy.

The deductible clause does not apply to mandatory evacuation coverage.

Exhibit C

For an included additional premium, the following coverage is added to your policy.

LOSS OF UTILITIES. For the purpose of this endorsement, loss of utilities shall mean the loss or interruption of one or more utility service usually connected to your dwelling on the residence premises . A utility service shall include electricity, water, sewer, and natural gas. Loss of utility service shall not include a loss or interruption of one or more utility service due to your failure to pay for such service.

When your dwelling has a loss of utilities, we will cover your additional living expense, meaning any necessary and reasonable increase in living expense you incur so that your household can maintain its normal standard of living.

Coverage provided by this endorsement is available only if the loss of utilities occurs for a period longer than twenty-four (24) consecutive hours and until the loss of utilities is restored, not to exceed fourteen (14) days. The total limit of liability under this endorsement for all loss of use is 10% of the Coverage A (Dwelling) limit of liability. No coverage will be provided for any additional living expense incurred during the first twenty-four (24) consecutive hours after the loss of utilities. This is additional insurance and does not reduce the Coverage A (Dwelling) limit of liability under this policy.

Any amounts payable for expenses under this endorsement shall be reduced by any amounts paid or payable for the same expenses under this policy.

The deductible clause does not apply to loss of utilities coverage.

EXHIBIT D

For an included additional premium, the following coverage is added to your policy.

LOSS OF UTILITIES. For the purpose of this endorsement, loss of utilities shall mean the loss or interruption of one or more utility service usually connected to the structure you reside in on the residence premises. A utility service shall include electricity, water, sewer, and natural gas. Loss of utility service shall not include a loss or interruption of one or more utility service due to your failure to pay for such service.

When the structure you reside in has a loss of utilities, we will cover your additional living expense, meaning any necessary and reasonable increase in living expense you incur so that your household can maintain its normal standard of living, less any expenses that do not continue.

Coverage provided by this endorsement is available only if the loss of utilities occurs for a period longer than twenty-four (24) consecutive hours and until the loss of utilities is restored, not to exceed fourteen (14) days. The total limit of liability under this endorsement for all loss of use is 10% of the Coverage B (Personal Property) limit of liability. No coverage will be provided for any additional living expense incurred during the first twenty-four (24) consecutive hours after the loss of utilities. This is additional insurance and does not reduce the Coverage B (Personal Property) limit of liability under this policy.

Any amounts payable for expenses under this endorsement shall be reduced by any amounts paid or payable for the same expenses under this policy.

The deductible clause does not apply to loss of utilities coverage.