TDI TARGETS COVERAGE DENIALS

TDI has proposed a rule that would limit insurer’s ability to deny homeowners insurance coverage based solely on a history of water damage claims. Insurance Commissioner Jose Montemayor previewed the new rule to state legislators at a hearing before the Senate Insurance Committee a few days before the proposal was filed. According to TDI, Proposed Subchapter J. Prohibited Trade Practices 28 TAC §21.1007, is designed to eliminate unfair competition and unfair discrimination and to promote the availability and affordability of residential property insurance. It prohibits an insurer from using water damage claim history as an underwriting guideline or to rate a new policy if an inspection has not been conducted by the insurer to
determine the condition of the property. TDI asserted that some insurance companies are rating and declining to write residential property insurance policies based on the existence of a prior water damage claims in order to offset losses resulting from and to avoid future claims for mold damage. The department contended that whether or not prior water damage has been repaired can only be determined by an inspection of the property. A public hearing on the
rule is scheduled for October 22. The Alliance of American Insurers was one of the first insurance industry groups to oppose the proposed rule. An Alliance asserted the proposal would put undue requirements on the insurance company and maintained that insurance companies must be able to underwrite risks using the characteristics they believe are relevant. It noted also that the free market, not the government, should control “what coverage should be offered and at what price.”

Topics Carriers