Section 5.9916 - Application Forms, Underwriting Rules, Rates, Policy Forms, and Endorsements(a) FAIR Plan must adopt application forms. The forms must be designed to obtain all of the information necessary for underwriting and rating the risk. The forms may also elicit additional information that FAIR Plan may use to revise its rates, underwriting rules, policy forms, and endorsements. An application is considered complete when every question on the application form is answered fully, is signed by a proposed named insured, and is submitted by the agent. FAIR Plan may independently verify the information in an application or request additional information from the applicant or other sources.(b) FAIR Plan must file with the commissioner for approval the underwriting rules for FAIR Plan policies before use. The underwriting rules must determine whether a property is an insurable risk eligible for FAIR Plan coverage, and if eligible, what coverages, policy forms, and endorsements can be offered for that risk. The underwriting rules are subject to the underwriting standards set forth in §§ 5.9914, 5.9915, and 5.9917 of this subchapter (relating to Maximum Limits of Liability and Limitations; Inspections; and Application, Binder, Policy Issuance, Renewal, and Cancellation) and any other requirements set forth in the underwriting rules. The rules must include under what circumstances FAIR Plan may grant an agent permission to bind coverage.(c) FAIR Plan must file with the commissioner for approval the proposed rates and supplemental rate information, including a manual of rating rules, to be used in connection with the issuance of FAIR Plan policies or endorsements. No policies or endorsements may be issued unless the commissioner has approved the rates to be applied to the policy or endorsement. (1) FAIR Plan rates must be set in an amount sufficient to carry all claims to maturity and to meet all expenses incurred in the writing and servicing of the business.(2) The rate filing must also provide for: (A) premium installment payment plans, including a servicing fee for those policyholders electing to use such a plan; and(B) deductible options, such as different dollar amounts or different percentages of property coverage limits that may vary by coverage or peril insured against.(d) FAIR Plan must file with the commissioner for approval policy forms and endorsements before use. The policy forms and endorsements that FAIR Plan will offer to applicants are governed by its underwriting rules. FAIR Plan may offer its policy forms on either an actual cash value or a replacement cost value basis, based on its underwriting rules. Residential property insurance policies may not cover businesses or commercial risks, even if they are operated in or from a residence. FAIR Plan policies may not cover motor vehicles.28 Tex. Admin. Code § 5.9916
The provisions of this §5.9916 adopted to be effective May 28, 2003, 28 TexReg 4153; Amended by Texas Register, Volume 49, Number 41, October 11, 2024, TexReg 8387, eff. 10/15/2024