The homeowners forms, coverages and perils are covered in the national Homeowners guide. Texas adds detailed rules on cancellation, nonrenewal and claims history for homeowners and dwelling policies (TIC Chapter 551, Subchapter C). It also has a liquidated demand rule for fire losses and its own coastal and residual markets. This guide covers those rules.

Which policies these rules cover (TIC 551.102)

• personal auto
• homeowners
• farm and ranch owners
• standard fire policies on a one-family dwelling or duplex, or their contents

Cancellation (TIC 551.104; 28 TAC 5.7002)

Early cancellation window

• Homeowners: may be cancelled during the first 60 days only if:
  • an undisclosed condition that increases the hazard is found, and it wasn't the subject of a prior claim, or
  • a required inspection report isn't accepted
• Other covered policies, such as dwelling fire: may be cancelled for any reason during the first 90 days.

After the early window, cancellation is allowed only for:

• nonpayment
• a fraudulent claim
• a TDI finding that continuing the coverage would be illegal
• an increase in hazard within the insured's control that would raise the rate

Notice and effect

• Cancellation takes effect no earlier than the 10th day after notice is mailed.
• A cancellation that violates these rules has no effect (551.111).

Nonrenewal and claims history

• The insurer gives 60 days' notice of nonrenewal, or it must renew (551.105).
• Claims-based nonrenewal (551.107) requires that the insurer:
  • had at least three countable claims in three years, and
  • sent a warning letter after the second claim
• Claims that don't count:
  • natural-cause (weather) claims
  • unpaid claims
• A surcharge may apply for two or more countable claims in the past three policy years.
• An appliance water claim can't be used if the damage was properly remediated, inspected and certified (544.353).
• A customer inquiry that doesn't lead to a claim or investigation can't be used to decline, cancel or nonrenew (551.113).
• No cancellation or nonrenewal solely because the policyholder is an elected official (551.152).
• Material changes on renewal need 30 days' notice (551.1055).
• Insurers must give the TDI Homeowners, Dwelling and Renters Bill of Rights with each new policy (28 TAC 5.9971).

Liquidated demand (TIC 862.053)

If insured real property is a total loss by fire, the policy amount is a liquidated demand for the full face amount. The rule doesn't apply to personal property.

Residual markets

• Texas FAIR Plan Association: residential property coverage in underserved areas for applicants with two declinations (2211.051, 2211.151).
• Texas Windstorm Insurance Association (TWIA): wind and hail coverage on the coast for applicants with one declination (2210.202).

See the Texas Other Personal Lines guide for details on both.

Common exam traps

• The homeowners early-cancellation window is 60 days. Dwelling fire's is 90 days.
• After the window, there are four cancellation grounds. Notice takes effect on the 10th day.
• Nonrenewal: 60 days' notice.
• Claims-based nonrenewal needs 3 countable claims and a warning after the second. Weather claims don't count.
• A coverage question isn't a claim.