### 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 36es-'extendedb$ 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 farmmutual liisuranoecompany, organized snd'operetlng under Article ~4860a-20,V.C.S. Speclf$cally, you IWJP~.XWwhether such company may write the addltion+l'coverage extended to county mntual insurance conipanics by virtue~of the provisions of Sec. 1s ofAtit.48608-20, 8s added by Acts ,5OthJag., 

### 1947,'tih. 

### 367,p. 739, titled House Bill 155. ,hLh&& A study.of,the ~problemshould 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 8modicum 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 lreserverequlreanents; 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 61Art. 48608-20, Snd was as follows:

'CountyMutual 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, theymay write insurance against saidhazards: "(8)On both rural and urban dwellings and Sttendant out-hOUSeS 8nd yard buildlngsiand 811 their contents ior home and 

### personaluse 

### --including ftmt&y vehloles, mSiC81 instruments 8nd libraries; *(b)On barns and other farm, dairy, truok garden, 

### hehneryand 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&lfovls, domestic aalmals. Wui 'llvestook~ofevery description, prodnoed, raised, grown, kept.or used on truok gardens, hennerles; ~farms;ranohes and dairies; Snd "(e)On chureh:hduses, oountry sohool houses,

. country lodgegloomsand country~recreatlon halls, 

### otherthan road houses and publio~daricehalls and shelr c6utents." opinion.) (Emphesls supnlied throughout this

: Thereafter~~~iP~~~l~~,the 50th~bgislsture, by the pSssag& of ItsE&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.21psssed by the Forty-fifth bglslstnre of the State of Texas St ItsRegillargessiod in 1937, and known 8s Artlole 486OS~20, Veruonts Civil StStUt9S of the State of Texas,~~lshereby smended so 8s to add thereto St th6 end thereof the following:
-Ya ~Sec.la. County Nutnal Insuranoe Cola dies operating under the provlslons ofArtlole 4E Oa-20 shall after.th& passage of thisAct be authorised towrite lnsuranoe against loss or damage from any hazard provided therein or thatrz otynr wlndstorm~insur8nce comrmny 0Dc) inn fg; 2 T PEon. George B. Butler, page 3 (V-1074)

write on Artiole 4 operty described in Section 1 of

''Sec. 28. Any oom pro+zislousofAx%dcle 4E? y operating undbr the OS-20 

### or subjeat:to the provisions of said Article, -exceptLngthose 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 ‘FarmMutual Insurance Companies,' Shall become subject to the urovislons of thisAct and shall comply with the following requirements, towit:

t ermx when used ln this

""company" shall refer to and Include all types of orgaulxstlons, corporations, asxociatlons, aompanle,sor.:groupssubject to the provlslons of this Act. ;~ "

. . . . ""Ruril Property" as the term 1sused 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 Iswhether 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 ofHouse 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 orwindstorm lnsurauoe company may write, 8 recitation ofwhioh perils lsunnecessary herein.
An examination of the precise language of Rouse Bill 155 will show the exclusion of farm mutual lneuranoe Companies both from Itsbenefits and from Its exactions. Thus itprovides that:Hon. George B. Butler, page 4 (V-1074)

"Anycorn ny.operatlng under the provisions ofArticle 8608-20. . . ,excepting those comr panlea 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*FarmMu& Insurance Companies.' shall become subject to the provisions of this Act. . . ." Obviously, farmmutual Insurance companies are removed from the-'operationof the entire Act by the foregtilng provision. That psrt of theAct whloh extends additional coverage to county mutual insurance companies, though deslgnated therein 8s Sec. la, Isno less removed from the effect of the quoted exemptloU of farmmutual insurance OOmp8UitiS from the operation of theAct by virtue bf Itsbdlng In 8 separate-section. TheAct Isentire. 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 aidenot siibjeotto 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 themore 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 iiuthorltedperils set out In Sea. 1 ofArt. 4060a-20.
Yours very truly
APPROVBD:
Red McDaniel State Affairs Dlvislou PRICE DZXEL Attorney General

JoeR. Greenhill First Assistant DJC/rt