Q. We recently had an insurance carrier exclude windstorm by adding BP 01 20 to a BOP policy and CP 10 57 to a commercial package policy and both policies were for locations not on the Texas coast. Can the carrier do that?
A. Both of those endorsements require the insured’s signature and even if attached would not apply outside of the coastal area since the wording on the endorsements have the following statement:
“THIS ENDORSEMENT APPLIES TO PREMISES INDICATED IN THE SCHEDULE. PREMISES MAY BE INDICATED IN THE SCHEDULE ONLY IF THEY ARE LOCATED IN THE CATASTROPHE AREA DESIGNATED BY THE TEXAS DEPARTMENT OF INSURANCE, AND NOT ELSEWHERE.”
The catastrophe area designated by the Texas Department of Insurance, only includes coastal areas.
The TDI website states the following requirements for Windstorm, Hurricane, Hail Exclusion commercial property filings:
Windstorm, hurricane, or hail may only be excluded in the catastrophe area as designated by the Texas Department of Insurance. The endorsement must limit the exclusion to the catastrophe areas as designated by the Texas Department of Insurance and the windstorm, hurricane, or hail exclusion endorsement must be signed by the insured. In lieu of the signature being required on the endorsement, the Department will consider a signed disclosure form that clearly explains coverage for windstorm, hurricane or hail is excluded from the policy. The Department will also consider optional windstorm, hurricane, or hail exclusions outside the designated catastrophe area only if there is proper rate consideration for the exclusion and the insured signs the endorsement or disclosure form as noted above. Must be optional from the insureds perspective and this should be reflected in the endorsement or in a rule. The Department will also consider windstorm, hurricane, or hail exclusions in the policy itself if such coverage is made available to the consumer through a buy-back option and there is proper rate consideration for the exclusion and the buy-back option.
Insurers are responsible for maintaining documentation in their underwriting files that supports that the coverage was made available to the insured. Forms and/or endorsements will not be approved until P&C Actuarial acknowledges that the rates are acceptable.