180-Day Minimum Retained Premium on TWIA Policies in Effect Nov. 1

The Texas Windstorm Insurance Association (TWIA) has reminded agents that on or after Nov. 1, 2009, all TWIA policies will have a minimum retained premium equal to the greater of 180 days of the annual policy term or $100, unless one of the six exceptions listed below applies.

Exceptions:

1. Replacement of the TWIA policy with similar coverage in the voluntary market;
2. Change in majority interest, including sale of the property to an unrelated party;
3. Foreclosure of the property insured in the TWIA policy;
4. Death of the policyholder;
5. Total loss of the property insured, including demolition; or
6. Builder’s risk policies.

The minimum retained premium does not apply to policies cancelled by TWIA.

Premium Financed Policies
Policies canceled by a premium financier will be refunded to the premium financier on a pro rata basis, subject to a $100 minimum retained premium; however, the policyholder will owe TWIA the unpaid balance of the 180-day minimum retained premium resulting from the cancellation and will not be eligible for new coverage until the balance is paid.

Payment of the balance due for the 180-day minimum retained premium will not create or extend coverage beyond the policy’s effective cancellation date resulting from the premium financier’s request to cancel coverage.

Additionally, on future policies for that insured, TWIA will no longer make a pro-rata refund to any premium financier based on a $100 minimum retained premium.

Consequently premium financiers are subject to the 180-day minimum retained premium provision for insureds that have had a prior premium financed policy canceled within 180 days of the policy’s inception.

Premium financiers can contact TWIA to determine if an insured had a prior TWIA policy financed where there is an unpaid balance due to the association.

All TWIA policy forms (edition date 11/01/2009) have been changed to reflect the new minimum retained premium.

Source: Texas Windstorm Insurance Association, www.twia.org