CurrentTexas Department of InsurancePolicy 08-0756

Restrictions on the Use of Unfair Underwriting Guidelines Involving Water Damage Claims, Previous Mold Damage, or Mold Damage Claims

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This Texas rule governs insurers' and agents' use of underwriting guidelines, rating decisions, and policy issuance, renewal, or cancellation decisions for residential property insurance. It protects applicants and insureds from unfair stigmatization based on certain prior water damage claims, appliance-related claims, previous mold damage, or mold damage claims, and establishes inspection, certification, notice, and filing requirements.

Policy Summary

PayerTexas Department of Insurance

PolicyRestrictions on Unfair Underwriting Guidelines

Policy CodePolicy 08-0756

Change TypeAmendment

Effective DateN/A

Next Review DateN/A

Key ActionFile all underwriting guidelines concerning water damage claims, previous mold damage, or mold damage claims with the Texas Department of Insurance.

SourceLink

POLICY UPDATE CHANGES

The definition of an appliance-related claim was expanded to include household devices operated by gas or electricity and hoses directly attached to those devices.

The mold remediation certification standard was revised to require reasonable certainty that the underlying cause or causes of mold have been remediated.

The rule was updated to replace obsolete statutory citations and former Texas Department of Health references with current Insurance Code citations and Department of State Health Services nomenclature.

1Single prior water damage claim that may not alone support an underwriting guideline

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CurrentTexas Department of InsurancePolicy 08-0756

Restrictions on the Use of Unfair Underwriting Guidelines Involving Water Damage Claims, Previous Mold Damage, or Mold Damage Claims

Customize your policy alerts

Sign up for Texas Department of Insurance Policy 08-0756 alerts

Get alerted when Policy 08-0756 changes without checking for updates manually.

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Policy Summary

PayerTexas Department of Insurance

PolicyRestrictions on Unfair Underwriting Guidelines

Policy CodePolicy 08-0756

Change TypeAmendment

Effective DateN/A

Next Review DateN/A

Key ActionFile all underwriting guidelines concerning water damage claims, previous mold damage, or mold damage claims with the Texas Department of Insurance.

SourceLink

POLICY UPDATE CHANGES

The definition of an appliance-related claim was expanded to include household devices operated by gas or electricity and hoses directly attached to those devices.

The mold remediation certification standard was revised to require reasonable certainty that the underlying cause or causes of mold have been remediated.

1Single prior water damage claim that may not alone support an underwriting guideline

10 daysDays to issue a WDR-1 after inspection when remediation is properly performed

15 daysDays to provide written inspector-selection rights notice

2Alternative mold-damage conditions prohibiting use as an underwriting basis

AllUnderwriting guidelines that must be filed with the Texas Department of Insurance

Protected Claim Histories and Applicability

Appliance-Related Claim Protection

A prior appliance-related claim may not be used for residential property insurance rating, issuance, renewal, or cancellation when the consumer satisfies the applicable inspection and certification requirements.

Protection applies when ALL of the following are satisfied

The claim is an appliance-related claim: a request for indemnification for loss arising from the discharge or leakage of water or steam directly caused by failure of a household gas- or electric-powered device, including directly attached hoses.
The consumer complies with the requirements specified in Texas Insurance Code §544.353(c) and (d).
Except as provided in §544.353(e), the prior claim may not be used to determine the rate or whether to issue, renew, or cancel a residential property insurance policy.
The consumer may elect to have the appliance-related claim inspected and certified.
Inspection and certification are optional, but the consumer is responsible for their cost.

If certification is not obtained

The appliance-related claim is not inspected and certified.
The claim is then subject to the restrictions applicable to a single prior water damage claim under subsection (c).
The appliance-related claim is inspected and certified, preserving the underwriting and rating protection described above.

Mold Damage and Mold Claim Underwriting Protection

An insurer may not use previous mold damage or a prior mold damage claim filed by the applicant or on the covered property as an underwriting guideline when ALL eligibility, remediation, and certification conditions are met.

Certification form and availability

The Certificate of Mold Damage Remediation (MDR-1) is the Department-prescribed form for mold remediators, assessors, and adjusters providing certifications.
The MDR-1 may be obtained from the Texas Department of Insurance website, the Automobile/Homeowners Section, or the Department of State Health Services.

Preserved Provisions and Applicability

The restrictions do not eliminate specified surcharge and renewal provisions, and related underwriting guidelines remain subject to filing and applicability requirements.

Preserved provisions

Nothing in the water damage claim restriction precludes an insurer from applying the surcharge and renewal provisions of Texas Insurance Code §551.107.
Nothing in the mold damage and mold claim restriction precludes an insurer from applying the surcharge and renewal provisions of §551.107.
A water damage claim is a request for indemnification for loss arising from discharge or leakage of water or steam directly caused by failure of a plumbing system or another system containing water or steam.
An insurer may not use an underwriting guideline based solely on a single prior water damage claim filed by the applicant or on the covered property.

Filing requirements

Insurer Duties, Inspections, and Filing Requirements

Denial Risk

Single Prior Water Damage Claim Restriction

An insurer may not use an underwriting guideline based solely on a single prior water damage claim filed by the applicant or involving the covered property. This restriction does not preclude applicable surcharge and renewal provisions under Insurance Code §551.107.

Denial Risk

Certified Appliance-Related Claim Protection

Except as provided by Insurance Code §544.353(e), an insurer may not use a prior appliance-related claim to determine the rate or whether to issue, renew, or cancel a residential property insurance policy when the consumer complies with §544.353(c) and (d). An appliance-related claim concerns water or steam discharged or leaked directly because of an appliance failure, including failures involving air conditioning or heating units, refrigerators, dishwashers, icemakers, clothes washers, water heaters, disposals, and directly attached hoses.

The restriction applies to rating and policy issuance, renewal, and cancellation decisions.
An appliance-related loss is a special class of non-weather-related loss and remains subject to the specific notice requirements of §551.107(e).

Defined Terms

Residential property insurance

DefinitionInsurance against loss to residential real property at a fixed location or tangible personal property provided in a homeowners policy.

Included policiesIncludes tenant policies, condominium owners policies, and residential fire and allied lines policies.

Covered propertyResidential real property at a fixed location and tangible personal property provided under the applicable homeowners policy.

Underwriting guideline

DefinitionA rule, standard, guideline, or practice used to make residential property insurance underwriting or classification decisions.

FormsThe guideline may be written, oral, or electronic.

Policy Summary

PayerTexas Department of Insurance

PolicyRestrictions on Unfair Underwriting Guidelines

Policy CodePolicy 08-0756

Change TypeAmendment

Effective DateN/A

Next Review DateN/A

Key ActionFile all underwriting guidelines concerning water damage claims, previous mold damage, or mold damage claims with the Texas Department of Insurance.

SourceLink

On This Page

All underwriting guidelines relating to water damage claims, previous mold damage, or mold damage claims must be filed with the Texas Department of Insurance.

The guidelines must comply with §21.1007 and any rules relating to underwriting guidelines adopted by the Commissioner.

Guidelines must be submitted to the Texas Department of Insurance, Property and Casualty Intake Unit, Mail Code 104-3B, P.O. Box 149104, Austin, Texas 78714-9104, or 333 Guadalupe Street, Austin, Texas 78701.

Applicability

Subsection (c), concerning the use of a single prior water damage claim, applies only to a residential property insurance policy delivered or issued for delivery based on an application submitted on or after the effective date of §21.1007.
The appliance-related claim provisions apply the subsection (c) restrictions to an appliance-related claim that is not inspected and certified.

Documentation Required

Appliance-Related Claim Inspection Option

The consumer may choose whether to have an appliance-related claim inspected and certified, but must pay the inspection and certification cost. If the claim is not inspected and certified, it is subject to the single-prior-water-damage-claim provisions of subsection (c); a qualifying inspector who finds proper remediation must issue the Department-prescribed WDR-1 Certificate of Appliance-Related Water Damage Remediation within 10 days after completing the inspection.

Qualifying inspectors may include Voluntary Inspection Program inspectors, licensed real estate property inspectors, Department of State Health Services-licensed assessors or remediators, licensed Texas professional engineers, and persons authorized by the insurer to perform appliance-related water damage remediation inspections.
The WDR-1 form and information about potentially qualified inspectors are available from the Texas Department of Insurance and, for inspector information, the Automobile/Homeowners Section.

Documentation Required

Inspector Selection Notice

If an insurer provides a list of authorized inspectors, it must tell the claimant verbally at the time of the claim-reporting call and in writing within 15 days after receiving notice of the claim that the claimant may select the inspector. The claimant may choose an inspector who is not on the insurer’s list; if the claimant uses an insurer-listed inspector, the insurer may not reject or challenge that inspector’s certification.

Written notice must specifically address the claimant’s appliance-related loss history and right to select an inspector.

Denial Risk

Challenge to Outside Inspector Certification

When a consumer uses a qualified inspector who is not on the insurer’s list, the insurer may not reject or challenge the certification unless it first reinspects the property and gives the consumer written specifications of the deficient areas. The insurer must retain all reinspection documentation, including support for the deficiencies identified and communicated.

The reinspection and written deficiency explanation are prerequisites to challenging an outside inspector’s certification.

Unsupported block type: denial_risk

Unsupported block type: documentation

UsesAn insurer or its agent may use it to accept or reject an application or classify accepted risks for determining a rate.

Consumer

DefinitionThe person making the application to insure a property.

Existing insuredsThe term includes existing insureds.

ApplicantsThe term includes applicants for insurance.

Insurer

DefinitionAn insurance company or other entity writing residential property insurance in Texas.

Included entitiesIncludes insurance companies, reciprocal or interinsurance exchanges, mutual and capital stock companies, county mutual and farm mutual insurance companies, associations, Lloyd’s plan companies, and qualifying affiliates authorized to write and writing residential property insurance in Texas.

Excluded entitiesDoes not include the Texas Windstorm Insurance Association, the FAIR Plan, or an eligible surplus lines insurer regulated under Chapter 981.

Appliance-related claim

DefinitionA request by an insured for indemnification from an insurer for a loss arising from the discharge or leakage of water or steam from an appliance.

Required causeThe discharge or leakage must be the direct result of the failure of the appliance.

Appliances covered by the definitionAn appliance is a household device operated by gas or electric current, including directly attached hoses; examples include air conditioning units, heating units, refrigerators, dishwashers, icemakers, clothes washers, water heaters, and disposals.

Water damage claim

DefinitionA request by an insured for indemnification from an insurer for a loss arising from the discharge or leakage of water or steam.

Required causeThe discharge or leakage must be the direct result of the failure of a plumbing system or another system that contains water or steam.

ClaimantThe request is made by an insured to an insurer for indemnification of the resulting loss.

Inspector

Voluntary Inspection ProgramInspectors licensed or certified through the Voluntary Inspection Program under Article 5.33B of the Insurance Code.

Real estate property inspectorsPersons licensed to perform real estate property inspections under the Real Estate Licensing Act.

Mold professionalsPersons licensed as assessors or remediators by the Department of State Health Services under Chapter 1958 of the Occupations Code.

Professional engineersLicensed Texas Professional Engineers.