Texas Windstorm Insurer’s Request to Hike Liability Limits Denied

Texas Insurance Commissioner Kent Sullivan has declined to approve the request by the state’s property insurer of last resort for wind and hail along the Texas coast to increase maximum limits of liability for certain types of property.

The Texas Windstorm Insurance Association (TWIA) is required by law to annually file proposed inflation adjustments on the maximum liability limits for its windstorm and hail policies. The adjustments are supposed to track the BOECKH Index, which measures changes in construction costs.

In an order dated Oct. 11, Sullivan said that since 1997, the cumulative adjustments to the maximum liability limits for TWIA policies have greatly exceeded the increases in the weighted average BOECKH Index.

The Texas Department of Insurance held a public hearing Oct. 8 to consider TWIA’s request to increase the existing maximum liability limits for residential dwelling and individually owned townhouses and associated contents; contents of apartments, condominiums, or townhouses; commercial structures and associated contents; and governmental structures and associated contents.

TWIA had requested an increase of approximately 4.2 percent, from $1,773,000 to $1,847,000, for a dwelling, including an individually owned townhouse unit, and the movable property located in or about the dwelling, and as an extension of coverage, away from those premises, as provided under the policy. According to the commissioner, however, if TWIA’s historical increases had tracked the BOECKH Index, the maximum liability limit on those properties in 2019 would be $634,000.

TWIA also had requested an approximate 4.5 percent increase, from $374,000 to $391,000, for individually owned movable property located in an apartment unit, residential condominium unit or townhouse unit that is occupied by the owner of that property, and as an extension of coverage, away from those premises, as provided under the policy. If historical liability limit increases for these properties had tracked the BOECKH Index, the maximum liability limit in 2019 would be $229,000, TDI said.

TWIA additionally requested an approximate 3.9 percent, from $4,424,000 to $4,495,000, for a commercial buildings and the movable property located in those structures, and as an extension of coverage, away from those premises, as provided under the policy. The maximum liability limit in 2019 would be $2,779,000 for commercial buildings if increases since 1997 had tracked the BOECKH Index.

The maximum liability limit applicable for governmental buildings is indexed the same as the maximum liability limit for commercial buildings.

TWIA’s requested changes, if they had been approved, would have been effective Jan. 1, 2019.

Source: TDI

Topics Catastrophe Carriers Natural Disasters Texas Windstorm Property