September 27, 2021

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Texas Department of Insurance Commissioner’s Bulletins Re: Severe Winter Weather Claims

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Commissioner’s Bulletins issued by the Texas Department of Insurance (“TDI”) do not have the force of law of a statute, but they do express and declare TDI’s interpretation or position on certain issues and existing laws. These bulletins also contain recommendations and help insurers and consumers understand how the business of insurance should be conducted in Texas. A review of the most recent Commissioner’s Bulletin B-0010-21 issued on March 9, 2021, provides a good example of a bulletin’s purpose.

Commissioner’s Bulletin B-0010-21 entitled “Severe Winter Weather Adjusting Claims for Losses Caused by Freezing” presents the following statements directed to Texas insurance companies:

The Texas Department of Insurance (TDI) expects insurers to consider the severity and unprecedented nature of the February 11-19, 2021, weather event when adjusting claims for frozen pipes and communicating with policyholders. (Emphasis in the Original.)

When communicating with policyholders about losses not covered by their policies, TDI encourages insurers to provide information about the availability of federal assistance. Information provided to policyholders should include the FEMA application website, disasterassistance.gov, and FEMA Disaster Assistance Helpline at 800-621-3362.

Bulletin B-0010-21 further states that property policies of homeowners, renters, and others, “may include provisions that loss caused by freezing is covered if the policyholder took ‘reasonable care’ to maintain heat or shut off the water supply and drain pipes.” The Bulletin then recommends the following five factors, among others, that insurers should consider when determining whether a policyholder took “reasonable care” to prevent a loss. According to TDI, insurers should consider:

  1. Whether the frequency and length of power outages which prevented many policyholders from maintaining heat in their homes and other covered properties. “This was beyond the control of policyholders.”
  2. Whether policyholders may have been told that power outages would be short and intermittent, making it less likely for policyholders to believe shutting off water was necessary.
  3. Whether renters may not have had access to water mains or have any control over the power of water supplies to their unit.
  4. Whether confusion on best practices for caring for pipes in freezing weather may have been caused from listening to differing advice and sources,
  5. Whether icy conditions may have created a risk of injury if policyholders had attempted to shut off the water at a water main.

Knowing that these factors may be considered by an insurer, helps insureds to be better prepared to provide information and potentially evidence when a claim for winter weather damages is filed.

The final paragraph of this Bulletin reminds Texas insurers that an enforcement action may be pursued by TDI if an insurer fails to comply with Texas Insurance Code §541.060, which prohibits unfair claim settlement practices by “failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim once liability on the claim becomes reasonably clear.”

Commissioner Bulletins ## B-0005-21, B-0006-21 and B-0007-21, issued in February 2021, immediately after the week of severe, frigid weather in Texas, provide further examples of valuable information relayed by TDI. Each state: “TDI expects insurers to work with their policyholders as they recover from the disaster.” These three bulletins then recommend insurance procedures and advice for responding to this freezing weather event.

Bulletin # B-0005-21 requests two procedures for insurers to take: (1) to suspend vacancy provisions in homeowner policies “as long as reasonably necessary” because many policyholders had been temporarily displaced by the freezing disaster; and (2) to provide a grace period for policyholders who needed more time to pay premiums.

Bulletin # B-0006-21 reminds insurers, that they can use nonresident adjusters to handle disaster-related claims but that licensed adjusters may not adjust roofing losses for an insurer if the adjuster is a roofing contractor or provides or sells roofing services or products or is a controlling person in a roofing-related business. Likewise, a roofing contractor may not act as an adjuster for any property for which the contractor is providing or may provide roofing services. Also, in this Bulletin, the TDI, with citations in the bulletin to various Texas statutes/codes, reminds insurers, adjusters, and contractors that:

  • Policyholders are entitled to have their home repaired by their choice of contractor.
  • Insurers and/or their agents are not permitted to misrepresent the terms/provisions of a policy.
  • Insurers must not engage in any unfair settlement practices.
  • If a contractor knows that his payment is coming from an insurance policy proceeds, he must not knowingly allow the insured person to fail to pay or assist that person in failing to pay the applicable insurance deductible.
  • If a contractor has not maintained an address in the county or adjacent county of the damaged property in a disaster situation for at least a year, the contractor is prohibited from requiring full or partial payment prior to starting work.

Bulletin # B-0007-21 speaks to underwriting, rating, and nonrenewing of policies after the week of severe weather and of particular importance is TDI’s expectation that insurers would not rerate, cancel, non-renew, refuse to provide coverage or change a policyholder’s classification or premium “solely because a policyholder is a victim of the disaster.” Further, this Bulletin states: “TDI expects insurers to avoid placing additional burdens on victims of the disaster and encourages insurers to accept verbal requests for reasonable exceptions in lieu pf written requests.”

This review of recent Texas Insurance Commissioner’s Bulletins provides helpful information to insurers and insureds alike in the aftermath of Texas’ worst ever week of severe winter weather.

To read these or other Texas Insurance Commissioner’s Bulletins, go to https://www.tdi.texas.gov/bulletins/index.html. Help for winter weather insurance policy problems can also be found by calling Merlin Law Group in Houston, Texas, at 713-626-8880.

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