Court Opinion

ID: 4136969
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:19:33.442988+00
Date Added: 2024-06-11T14:21:46.062344
License: Public Domain

Hon. John Osorio, Chairman
Board of Insurance Commissioners
International Life Building
Austin, Texas

                                           Opinion   No. WW-12

                                           Re:   Whether the Board of Insurance
                                                 Commissioners     may authorize
                                                 the use of the “Homeowners
                                                 Policy” in the State of Texas by
                                                 following the procedures    used
                                                 in authorizing  the sale of the
                                                  “Comprehensive    Dwelling  Poli-
Dear   Sir:                                      CY."

                 You have requested    our opinion as to whether the Board
.of Insurance Commissioners     may authorize the use of the “Homeowners
 Policy” within this State by following the procedures    used in authorizing
,~thesale of the “Comprehensive    Dwelling  Policy”, commonly referred      to
 as GDP.

                  The CDP form approved by the Board is a single contract
 which includes coverage       for perils defined and regulated by Articles         5.25
 through 5.52 (Fire Insura~nce and Allied Lines) of the Texas Insurance
 Code, and also includes certain perils defined and regulated by Articles
 5.53 (Inland Marine Insurance) and 5.13 through 5.24 (Casualty              Insurance).
 Thus the GDP form is considered           to be a combination    “package’ cover-
.age of fire, inland marine, and casualty insurance.            The procedures     ap-
 plicable to the promulgation       and filing of forms and rates .for these sep-
 arate respective    coverages     have been followed by the Board in adopting
 and authorizing   the use of the CDP.        In other words, the CDP was devel-
 oped and authorized     through the Board’s       promulgation    of the portions of
 the contract applicable     to fire insurance,     and the Board’s    simultaneous
 acceptance of the filings covering those portions of the contract applica-
 ble to casualty insurance      and inland marine insurance.         While the fire,
 casualty, and inland marine coverages           are combined in one contract un-
 der the GDP. there is a separate charge for each type of coverage,               and
 the rate attributable    to that coverage     is set forth on the face of the policy.
 The total of these separate charges is then collected as the premium.
Hon. John Osorio,    page 2 (WW-12)

                   You have indicated that the Homeowners          Policy does not
differ in any of its essential elements        or cover-ages from the CDP.      It,
too, will insure certain fire, inland marine, and casualty risks in one
contract.    However,    the Homeowners       Policy will evidence on its face a
single, indivisible    premium for all of the coverages        of the policy, while
the CDP, as stated above, specifies         the amount of the premium that is
attributable~ to the fire, casualty, and inland marine risks separately.
You have further indicated that if authorized         to do so by the Board the
companies     issuing the Homeowners        Policy can and will arrive at the
single indivisible    premium to be charged for the policy,by combining
the separate rates which have been promulgated             by and filed with the
Board for the separate coverages,         just as in the case of the~CDP.      You
have also informed us that the companies           that write the Homeowners
Policy will experience      no difficulty in filing with the Board the informa-
tion necessary     for the Board to continue to compile and tabulate loss ex-
perience so that it’may promulgate         and fix rates and policy forms on the
separate coverages.

                As we understand your request, you are not asking us
whether the Board may adopt and authorize the use of the Homeowners
Policy by promulgating    and fixing a single indivisible premium to be
charged therefor.   but whether the Board may authorize the use of the
Homeowners    Policy and the ultimate premium to be charged therefor by
following the same method as was used in determining       the premium to
be chargedtor   the CDP.

                After~a sea.rch,of the applicable       insurance   statutes, and in
view of the foregping,    we can find nothing that would make a distinction be-
tween the CDP and the Homeowners          Policy.    The Board has very broad
and extensive authority under the insurance         statutes to promulgate      and
fix rates and policy forms in the fields of fire, casualty, and inland ma-
rine insurance.    (Articles   5.13-5.24,  5.25-5.52, and 5.53). Under this
authority it has approved the use of the GDP by establishing            the form and
ultimate premium to be charged therefor          by following the procedures        ap-
plicable to the respective    coverages    of the policy, and then authorizing
these separate   coverages    to be combined in a single contract.          The mere
fact that the Homeowners      Policy carries    on its face only a single, indi-
visible premium would not, in itself, .exclude it from the same authDrity
of or procedure   and treatment by the Board as was resorted             to in pro-
mulgating the CDP.      The single indivisible     premium     could be arrived     at
by the procedures    applicable   to the respective    coverages    under the poli-
cy just as was done in adopting and authorizing          the GDP.

                If the Board had authority to approve the Comprehensive
Dwelling Policy, it has the authority .to authorize ,the use of the Home-
owners Policy.    The policies do not differ in essential  elements,   and the
ultimate premium to be ‘charged for each may be arrived       at in the same
manner.
Hon.   John Osorio,     page 3 (WW-12)

                                    SUMMARY

       .’ The Board of Insurance Commissioners         has authorized
         the use of the Comprehensive       Dwelling  Policy by follow-
         ing the procedures   applicable    to the promulgation   and
         filing of forms and rates for the separate coverages         of
         fire, inland marine, and casualty insurance.        There is
       ’ nothing in the Insurance Code of Texas that would pre-
         vent the Board from approving       the use of the Home-
         owners Policy by,following      the same method as was
         used’in approving   the Comprehensive       Dwelling Policy.

                                         Very   truly yours,

                                         WILL WILSON
                                         Attorney General

                                           y&/g             /G.
                                         BY
                                              Will D, Davis’
                                              Assistant

WDD:cm

APPROVED:

OPINION     COMMITTEE

‘Hi ~Grad’y Chandler,    Chairman