THE ATTORNEY GXNERAL 

op TEXAS 

JUU~ 23, 1950 

Hon. George B. Butler, Chairman 

Board of InSuranoe Commissioners 

Austin, Texas Opinion No. v-1074 

Re: Whether 8 farm mutual 

insurance aompany may 

wrPrite the addItIona 

cover 

Art. 4 36 

es-'extended b$ 

08-20, Sec.la, 

V.C.S., coexteneive with 

the coverage that any 

fire or w3.ndsto~lnsurDear sir: ante oompany may write. 

Your inquiry relates to 8 farm mutual liisuranoe company, organized snd'operetlng under Article ~4860a-20, V.C.S. 

Speclf$cally, you IWJP~.XW whether such company may write the 

addltion+l'coverage extended to county mntual insurance conipanics by virtue~of the provisions of Sec. 1s of Atit. 48608-20, 

8s added by Acts ,5Oth Jag., 1947, 'tih. 367, p. 739, titled House 

Bill 155. 

,hLh&& A study.of,the ~problem should include some of Its 

.,. 

County mutual insurance companies, 8s first defined, 

authorized and regulated in 1937 by the 45th Legislature in an 

act codiiied 8s Art. 40608-20, V.C.S., had but 8 modicum of 

statutory regulation attached to their organlzstlon and oper8- 

tion, when compared with that of other types of insurance eoml.mnNs. Their rate8 were not regulated 8s are other oomp8nles; 

they were not subject to the rlgld lreserve requlreanents; their 

financial status for orgtilsatlon end'for continued operation 

was less exacting. The possible coverage they were authorized 

to write ~8s very limited, however. Such eoverege was found 

in Sec. 1 61 Art. 48608-20, Snd was as follows: 

'County Mutual Insuranae Companies are cornpanles organtied for the purpose of lnsuranee on the 

mntual or cooperative plan against loss or dam8R 

by fire. linhtninn. uas exx)loslon, theft, winds&m 

and hall, and for all or either of such purposes. 
Hon. George 'B. Butler, page 2~(V-1074) 

qnless they are restrioted by the&r charters, 

they may write insurance against said hazards: 

"(8) On both rural and urban dwellings and 

Sttendant out-hOUSeS 8nd yard buildlngsiand 811 

their contents ior home and personal use -- including ftmt&y vehloles, mSiC81 instruments 8nd 

libraries; 

*(b) On barns and other farm, dairy, truok 

garden, hehnery and ranuh bulldings and lmprovements of every desariptlcin; 

'(0) On 811 vehicles, harness, Implements, 

tools and machlnery,of every kind Snd description 

used on and about'~farms, truck gardens, d8irieS, 

hennerles or ranohes. 

~- “id),Ozi all fr&s and products, other than 

&rmring'or6ps, azu,,a&l fovls, domestic aalmals. 

Wui 'llvestook~of every description, prodnoed, 

raised, grown, kept.or used on truok gardens, hennerles; ~farms; ranohes and dairies; Snd 

"(e) On chureh:hduses, oountry sohool houses, 

. country lodge glooms and country~recreatlon halls, 

other than road houses and publio~darice halls and 

shelr c6utents." 

opinion.) 

(Emphesls supnlied throughout this 

: Thereafter~~~iP~~~l~~, the 50th~ bgislsture, by the pSssag& of Its E&se Bill 155, 8s noted heretofore, extended the 

coverage $n th&following respects and with the following WalifiC8tiOnS: 

n Seotlon 1. Senate Bill Ho. I.21 psssed by the 

Forty-fifth bglslstnre of the State of Texas St 

Its Regillar gessiod in 1937, and known 8s Artlole 

486OS~20, Veruonts Civil StStUt9S of the State of 

Texas,~~ls hereby smended so 8s to add thereto St 

th6 end thereof the following: 

-Ya ~Sec . la. County Nutnal Insuranoe Cola dies 

operating under the provlslons of Artlole 4 E Oa-20 

shall after.th& passage of this Act be authorised 

to write lnsuranoe against loss or damage from any 

hazard provided therein or thatrz otynr 

wlndstorm~insur8nce comrmny 0Dc) inn 

fg; 2 

T P 
Eon. George B. Butler, page 3 (V-1074) 

write on 

Artiole 4 

operty described in Section 1 of 

' 'Sec. 28. Any oom 

pro+zislous of Ax%dcle 4 E? 

y operating undbr the 

OS-20 or subjeat:to the 

provisions of said Article, -exceptLng those companies which out of the total amount of insurance 

in force maintain more than sixty per cent (6@) 

In force on rural property. . . which shall hereafter be known as ‘Farm Mutual Insurance Companies,' 

Shall become subject to the urovislons of this Act 

and shall comply with the following requirements, 

to wit: 

t ermx when used ln this 

""company" shall refer to and Include all types 

of orgaulxstlons, corporations, asxociatlons, aompanle,s or.:groups subject to the provlslons of this 

Act. ;~ 

" 

. . . . 

""Ruril Property" as the term 1s used In this 

kw shall mean any property which h8s at least 

five (5) acres of'oultlvated or grating lend used 

exclusively with such insured property." 

Speciflo8lly, then, your question Is whether 8 fsrti 

mutual insmoe company, as defined imSec. 2s of Rouse Bill 

155 set out 8bov6, IS entitled to write the additional coverage extended tc:oounty mutual lusuranoe companies by Sec. la 

of House Bill 155. 

Until the passage of Rouse Bill 155, connty mutual 

lnsur8nce companles'could write only the perils of fire, 

lightning, g88 explosion, theft, windstorm and hall on the 

enumerated risks. 

Thereafter, they were authorlxed to write Insurance 

against all of the perils that 8 fire or windstorm lnsurauoe 

company may write, 8 recitation of whioh perils ls unnecessary 

herein. 

An examination of the precise language of Rouse Bill 

155 will show the exclusion of farm mutual lneuranoe Companies 

both from Its benefits and from Its exactions. Thus it provides that: 
Hon. George B. Butler, page 4 (V-1074) 

"Any corn ny.operatlng under the provisions 

of Article r 8608-20. . . , excepting those companlea which out of the total amount of lnsurance In force maintain more th8n sixty per cent 

(60s) In force on rural property. . . which 

shall hereafter be known ~88 *Farm Mu& Insurance Companies.' shall become subject to the 

provisions of this Act. . . ." 

Obviously, farm mutual Insurance companies are removed from the-'operation of the entire Act by the foregtilng 

provision. That psrt of the Act whloh extends additional 

coverage to county mutual insurance companies, though deslgnated therein 8s Sec. la, Is no less removed from the effect 

of the quoted exemptloU of farm mutual insurance OOmp8UitiS 

from the operation of the Act by virtue bf Its bdlng In 8 

separate-section. The Act Is entire. Farmmutualina~ranae 

compenles are not subject to any part of it. !i'hey do not 

obtain the advantage of wrltlng the additional cover8ge,but 

by the same token, they aide not siibjeot to the exactions made 

thereafter. And these exactions are considerable. For example, the additional exactions include the requirements of 

approval of policy forms, flllUg of rate schedules, llceuslng ( 

of agents, officers bonds and pens1 provisions, solvency definition and supervlslon,sn&max~ contingent liability, to 

point out some of the more sUbStSUtl81 changes. 

SUMMARY 

Farm mutual lnsursnce comp8nles brgenlxed, 

~ defined and operating under Art. ~&OS-20, V.C.S., 

are not authorlsed to cover the additional perils. 

extended by the provisions of House Bill 155, Acts 

50th.-Leg., 1947, ch. 367, p-739 (Sec. la, Art. 

486Os-2O;V.C.S.) but are, Instead, confined to 

the iiuthorlted perils set out In Sea. 1 of Art. 

4060a-20. 

Yours very truly 

APPROVBD: 

Red McDaniel 

State Affairs Dlvislou 

PRICE DZXEL 

Attorney General 

Joe R. Greenhill 

First Assistant 

DJC/rt