Texas Statutes — P&C Specific

Correct

The answer is B: Farm mutuals are limited in coverage and serve mainly rural risks

Farm mutual insurance companies in Texas have limited authority. They may insure only the kinds of property listed in Insurance Code §911.151 (such as dwellings, barns and ranch buildings, and farm products), they may not insure commercial motor vehicles (§911.152), and most of their insurance in force must be on rural property (§911.301). They also have lower capital requirements than stock insurers (§911.308). Unlike county mutuals (which can write multiple P&C lines statewide), farm mutuals have more restricted authority and typically operate within defined geographic areas (§911.302). They are regulated by TDI, not federal agencies.

Source: Insurance Code §911.151 · Insurance Code §911.152 · Insurance Code §911.301 · Insurance Code §911.308

Correct

The answer is C: A windstorm certificate of compliance

A reroof is an alteration that TWIA requires to be certified. The roofer or owner notifies TDI on Form WPI-1 before the work starts, and TDI issues a WPI-8 certificate of compliance once the inspected work passes; if the roof is already on, a Texas-licensed engineer can evaluate it and TDI issues a WPI-8E. The same two certificates cover new construction and alterations alike, so there is no separate renovation form. Without a certificate, TWIA generally may not insure the reroofed structure (§2210.258).

Source: Insurance Code §2210.258

Correct

The answer is C: The line is exempt from Texas rate-filing rules

Insurance Code §2251.0031, added by S.B. 1367 in 2021, exempts a list of specialty commercial lines from the rate-filing requirements of Chapter 2251. Environmental impairment or pollution liability is on that list, along with lines such as directors' and officers' liability, commercial cybersecurity, and product liability. The insurer can therefore price this hazardous risk without filing the rate, although the Commissioner may temporarily require filings for a listed line after a hearing finds that competition is lacking. Texas's rating law has no consent-to-rate procedure; file-and-use, and prior approval when the Commissioner orders it, apply to lines that must file.

Source: Insurance Code §2251.0031

Correct

The answer is A: Prior approval

Prior approval is the most restrictive form of rate regulation: the insurer must submit proposed rates to TDI and receive approval before using them. Most Texas P&C lines, including personal auto, residential property, and workers' compensation, use file-and-use instead, but under Insurance Code §2251.151 the Commissioner can order an insurer to file its rates for prior approval when its financial condition or rating practices require supervision, or during a statewide insurance emergency.

Source: Insurance Code §2251.151