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Texas Insurance Code - INS § 981.101. Requirements for Surplus Lines Documents

Current as of January 01, 2024 | Updated by Findlaw Staff

(a) In this section, “surplus lines document” means each new or renewal insurance contract, certificate, cover note, or other confirmation of insurance obtained and delivered as surplus line coverage under this chapter.

(b) A surplus lines document must state, in 11-point type, the following:

This insurance contract is with an insurer not licensed to transact insurance in this state and is issued and delivered as surplus line coverage under the Texas insurance statutes.  The Texas Department of Insurance does not audit the finances or review the solvency of the surplus lines insurer providing this coverage, and the insurer is not a member of the property and casualty insurance guaranty association created under Chapter 462, Insurance Code.  Chapter 225, Insurance Code, requires payment of a __________ (insert appropriate tax rate) percent tax on gross premium.

(c) A surplus lines document must show:

(1) the description and location of the subject of the insurance;

(2) the coverage, conditions, and term of the insurance;

(3) the premium and rate charged, and premium taxes to be collected from the insured;

(4) the name and address of:

(A) the insured;

(B) the insurer;  and

(C) the insurance agent who obtained the surplus line coverage;  and

(5) if the direct risk is assumed by more than one insurer:

(A) the name and address of each insurer;  and

(B) the proportion of the entire direct risk assumed by each insurer.

(d) A surplus lines insurance contract for a risk located wholly in this state and that contains an arbitration agreement must provide that:

(1) the arbitration will be:

(A) conducted in this state;  and

(B) governed by the laws of this state;  and

(2) the insurance contract will be interpreted in accordance with the laws of this state unless:

(A) the insurer and policyholder agree to a different venue after the insurer provides written notice to the policyholder of the insurer's request for a different venue;  and

(B) the insurer provides the policyholder with a premium credit for the costs incurred by the policyholder as a result of the change in venue.

(e) Notwithstanding Subsection (d), for surplus lines insurance contracts for over $2 million in insured value, the insurer and policyholder may agree by mutual consent to a different arbitration venue and governance under another state's laws, provided the agreement is in a form.

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Cite this article: FindLaw.com - Texas Insurance Code - INS § 981.101. Requirements for Surplus Lines Documents - last updated January 01, 2024 | https://codes.findlaw.com/tx/insurance-code/ins-sect-981-101/

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