Texas Monitoring for Fairness in Treatment of Ike-Affected Policyholders

October 23, 2008

In the aftermath of Hurricane Ike, the Texas Department of Insurance (TDI) reported it has received complaints from consumers indicating that through the words, tone, demeanor or actions of their insurance adjusters, they are feeling inappropriately pressured to engage the services of certain building and repair contractors identified by the adjuster.

A bulletin released by TDI reminds all persons, including adjusters, building and repair contractors and insurers, that in Texas, an insurer, its representative or any other person may not misrepresent the terms and provisions of a policy. Further, persons insured under a homeowners or dwelling policy are entitled to have their home repaired by the person of their choice. In addition, an insurer doing in business in Texas may not engage in an unfair claim settlement practice.

Not attempting in good faith to effect a prompt, fair, and equitable settlement of a claim submitted in which liability has become reasonably clear constitutes an unfair claim settlement practice under the Insurance Code §542.003(b)(4), the department said.

Vacancy Provisions
In a separate bulletin, the department encouraged insurers to use all available means to provide prompt and immediate relief to those residents and policyholders in counties declared disaster areas due to the devastation resulting from Hurricane Ike. Due to the relocation of hurricane victims and other personal hardships sustained by residents in the affected counties, TDI recommended that, among other things, insurers suspend any vacancy provision contained in the policy forms to allow continuing insurance coverage.

The affected counties are Angelina, Austin, Brazoria, Brazos, Chambers, Cherokee, Fort Bend, Galveston, Gregg, Grimes, Hardin, Harris, Houston, Jasper, Jefferson, Liberty, Madison, Matagorda, Montgomery, Nacogdoches, Newton, Orange, Polk, Sabine, San Augustine, San Jacinto, Rusk, Trinity, Tyler, Walker, Waller, Washington and Wharton.

TDI said it will monitor any attempt by an insurer to invoke the vacancy provision for policyholders who have not moved from their home or business but who have been temporarily displaced from their home or business due to damage caused by Hurricane Ike. The department noted, however, that the intent is not to limit the application of a vacancy provision for policyholders who have moved permanently from their home or business to another location. Rather, it is intended that the insurer grant the policyholder an extended grace period for the home or business due to temporary displacement.

The TDI also strongly encourages all agents to contact each insurer they represent to verify compliance with the spirit and intent of this bulletin and to advise policyholders accordingly.

Additional information regarding adjusters is available on the Hurricane Ike Consumer Resource Page located on TDI’s Web site at
www.tdi.state.tx.us/consumer/storms/cpmhurrike.html.

TDI bulletins may be found online at: www.tdi.state.tx.us/bulletins/index.html.

Source: Texas Department of Insurance

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