2005 Texas Insurance Code CHAPTER 2002. POLICY PROVISIONS AND FORMS FOR FIRE INSURANCE AND ALLIED LINES, INCLUDING RESIDENTIAL PROPERTY INSURANCE

INSURANCE CODE

CHAPTER 2002. POLICY PROVISIONS AND FORMS FOR FIRE INSURANCE AND 
ALLIED LINES, INCLUDING RESIDENTIAL PROPERTY INSURANCE

SUBCHAPTER A. POLICY PROVISIONS


	§ 2002.001. ENDORSEMENTS REDUCING AMOUNT OF COVERAGE.  An 
insurer may not use an endorsement to a policy form to which Article 
5.35,  Subchapter B,  or Subchapter B, Chapter 2301,  applies that 
reduces the amount of coverage that would otherwise be provided 
under the policy unless:
		(1)  the insured requests the endorsement;  or                                
		(2)  the insurer provides the policyholder with a 
written explanation of the change made by the endorsement before 
the effective date of the change. 

Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.           


	§ 2002.002. LIEN ON INSURED PROPERTY.  A provision in an 
insurance policy issued by an insurer subject to this subtitle or 
Subchapter C, Chapter 5,  is void if the provision states that the 
encumbrance of the insured property by a lien of any character at 
the time of or after the policy's issuance renders the policy void. 

Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.           


	§ 2002.003. COVERAGES FOR SPOUSES AND FORMER SPOUSES.  A 
homeowners insurance policy or fire insurance policy promulgated 
under Article 5.35 or filed and in effect as provided by Subchapter 
B, Chapter 2301, may not be delivered, issued for delivery, or 
renewed in this state unless the policy contains the following 
language:  "It is understood and agreed that this policy, subject to 
all other terms and conditions contained in this policy, when 
covering residential community property, as defined by state law, 
shall remain in full force and effect as to the interest of each 
spouse covered, irrespective of divorce or change of ownership 
between the spouses unless excluded by endorsement attached to this 
policy until the expiration of the policy or until canceled in 
accordance with the terms and conditions of this policy."

Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.           


	§ 2002.004. JEWELRY COVERAGE.  (a) In this section, 
"personal property insurance" means insurance against damage to or 
loss of tangible personal property, including coverage provided in 
a homeowners insurance policy, residential fire and allied lines 
insurance policy, or farm and ranch owners insurance policy.
	(b)  This section applies to each insurer that provides 
personal property insurance in this state, including a county 
mutual insurance company, farm mutual insurance company, Lloyd's 
plan, and reciprocal or interinsurance exchange.
	(c)  An insurer that provides personal property insurance 
coverage in this state for jewelry may elect to pay either:
		(1)  the stated value of the jewelry item;  or                                
		(2)  the actual cost of replacing the jewelry item with 
one of like kind and quality.

Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.           


	§ 2002.005. COINSURANCE CLAUSES.  (a) Except as otherwise 
provided by this section, an insurer subject to this subtitle or 
Subchapter C, Chapter 5,  may not issue an insurance policy or 
contract covering property in this state that contains a clause 
that:
		(1)  requires the insured to obtain or maintain a 
larger amount of insurance than expressed in the policy or 
contract;  or
		(2)  in any way provides that the insured is liable as a 
coinsurer with the insurer issuing the policy or contract for any 
part of the loss or damage that may be caused by fire to the property 
described in the policy or contract.
	(b)  A clause described by Subsection (a) is void.                             
	(c)  A coinsurance clause may be included in an insurance 
policy written on cotton, grain, or other products in the process of 
marketing, shipping, storing, or manufacturing.
	(d)  An insured may be given an option to accept an insurance 
policy or contract that contains a clause described by Subsection 
(a) covering a class of property other than the property described 
by Subsection (c), a private dwelling, or a stock of merchandise 
offered for sale at retail that has a value of less than $10,000, if 
the insured is allowed a reduction in the premium rate for the 
policy or contract.  A clause to which this subsection applies is 
valid and binding.  The commissioner may promulgate the premium 
rates that apply to a coinsurance clause under this subsection.
	(e)  The commissioner by order may authorize or require the 
use of any form of coinsurance clause in connection with an 
insurance policy that insures against the hazards of tornado, 
windstorm, and hail on any class of property.  The commissioner may 
adopt rules with reference to:
		(1)  coinsurance clauses authorized or required by this 
subsection and the use of those clauses;  and
		(2)  credits in premium rates for the use of 
coinsurance clauses authorized or required by this subsection.

Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.           


	§ 2002.006. PROVISIONS GOVERNING CERTAIN CONDITIONS OR 
RISKS.  (a) This chapter;  Sections 403.002, 2001.001-2001.006, 
2001.009, and 2001.010;  Subchapter H, Chapter 544;  Subchapter D, 
Chapter 1806;  Chapters 2003, 2004, 2006, and 2171;  and Articles 
5.25, 5.25A, 5.25-3, 5.26, 5.27, 5.28, 5.29, 5.30, 5.31, 5.32, 
5.34, 5.35, 5.39, 5.40, and 5.41  govern the following in the same 
manner and to the same extent those provisions govern fire 
insurance and fire insurance rates:
		(1)  insurance coverage for any of the following 
conditions or risks:       
			(A)  weather or climatic conditions, including 
lightning, tornado, windstorm, hail, cyclone, rain, or frost and 
freeze;
			(B)  earthquake or volcanic eruption;                                        
			(C)  smoke or smudge;                                                        
			(D)  excess or deficiency of moisture;                                       
			(E)  flood;                                                                  
			(F)  the rising water of an ocean or an ocean's 
tributary;                 
			(G)  bombardment, invasion, insurrection, riot, 
civil war or commotion, military or usurped power, or any order of a 
civil authority made to prevent the spread of a conflagration, 
epidemic or catastrophe;
			(H)  vandalism or malicious mischief;                                        
			(I)  strike or lockout;                                                      
			(J)  explosion, as provided by Subsection (b);                               
			(K)  water or other fluid or substance resulting 
from:                     
				(i)  the breakage or leakage of a sprinkler, 
pump, or other apparatus erected for extinguishing fire, or a water 
pipe or other conduit or container;  or
				(ii)  casual water entering a building 
through a leak or opening in the building or by seepage through 
building walls;  or
			(L)  accidental damage to a sprinkler, pump, fire 
apparatus, pipe, or other conduit or container described by 
Paragraph (K)(i);
		(2)  premium rates in this state for the insurance 
described by Subdivision (1);  and
		(3)  all matters pertaining to the insurance described 
by Subdivision (1), except as provided by this section with respect 
to marine insurance as defined by Section 1807.001.
	(b)  In this section:                                                          
		(1)  "explosion" includes:                                                    
			(A)  the explosion of a pressure vessel, other 
than a steam boiler of more than 15 pounds pressure, in a building 
designed and used solely for residential purposes by not more than 
four families;
			(B)  an explosion of any kind originating outside 
of an insured building or outside of the building containing the 
insured property;
			(C)  the explosion of a pressure vessel that does 
not contain steam or that is not operated with steam coils or steam 
jets;  and
			(D)  an electric disturbance causing or 
concomitant with an explosion in public service or public utility 
property;  and
		(2)  insurance coverage for explosion does not include 
coverage for loss of or damage to any property of the insured 
resulting from the explosion of or injury to:
			(A)  a boiler, heater, or other fired pressure 
vessel;                     
			(B)  an unfired pressure vessel;                                             
			(C)  a pipe or container connected with a boiler 
or vessel described by Paragraph (A) or (B);
			(D)  an engine, turbine, compressor, pump, or 
wheel;                       
			(E)  an apparatus generating, transmitting, or 
using electricity;  or      
			(F)  any other machinery or apparatus connected 
with or operated by a boiler, vessel, or machine described by 
Paragraphs (A)-(E).
	(c)  This section does not apply to:                                           
		(1)  a farm mutual insurance company operating under 
Chapter 911;           
		(2)  a county mutual insurance company operating under 
Chapter 912;         
		(3)  a mutual insurance company engaged in business 
under Chapter 12, Title 78, Revised Statutes, before that chapter's 
repeal by Section 18, Chapter 40, Acts of the 41st Legislature, 1st 
Called Session, 1929, as amended by Section 1, Chapter 60, General 
Laws, Acts of the 41st Legislature, 2nd Called Session, 1929, that 
retains the rights and privileges under the repealed law to the 
extent provided by those sections;
		(4)  the making of inspections or issuance of 
certificates of inspections on a boiler, apparatus, or machinery 
described by Subsection (b)(2), whether insured or otherwise;  or
		(5)  the insurance of a vessel or craft, its cargo, 
marine builder's risk, marine protection and indemnity, or another 
risk commonly insured under a marine insurance policy, as 
distinguished from an inland marine insurance policy.

Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.           

SUBCHAPTER B. POLICY FORMS


	§ 2002.051. POLICY FORMS AND ENDORSEMENTS FOR RESIDENTIAL 
PROPERTY INSURANCE.  Notwithstanding Subsections (a)-(j), Article 
5.35, policy forms and endorsements for residential property 
insurance in this state are regulated under Subchapter A, Chapter 
2301, and Article 5.13-2. 

Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.           


	§ 2002.052. APPLICABILITY OF OTHER LAW TO RESIDENTIAL 
PROPERTY INSURANCE.  An insurer may continue to use a policy form 
or endorsement promulgated, approved, or adopted by the 
commissioner under Article 5.35  before June 11, 2003, on 
notification in writing to the commissioner that the insurer will 
continue to use the policy form or endorsement.

Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.           

SUBCHAPTER C. ITEMS PROVIDED TO POLICYHOLDER IN CONNECTION WITH 
INSURANCE POLICY


	§ 2002.101. RATE ANALYSIS.  (a) On issuing a fire 
insurance policy, an insurer engaged in the business of fire 
insurance in this state shall provide the policyholder with a 
written analysis of the rate or premium charged for the policy 
showing the items of charge and credit that determine the rate or 
premium.
	(b)  Subsection (a) does not apply if the insurer has 
previously provided the policyholder with an analysis of the rate 
or premium.

Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.           


	§ 2002.102. NOTICE OF RENEWAL.  (a) An insurer, including 
a farm mutual insurance company, county mutual insurance company, 
Lloyd's plan, or reciprocal or interinsurance exchange, that renews 
a homeowners insurance policy, fire and residential allied lines 
insurance policy, farm and ranch owners insurance policy, or farm 
and ranch insurance policy must provide the policyholder with 
written notice of any difference between each form of the policy 
offered to the policyholder on renewal and the form of the policy 
held immediately before renewal.
	(b)  A notice provided under this section must be written in 
plain language. 
	(c)  The commissioner may adopt rules as necessary to 
implement this section.

Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.