TX Property & Casualty key terms

The state agency that licenses insurers, agents, and adjusters, reviews policy forms and rates, examines company finances, and enforces the Texas Insurance Code and the Commissioner's rules.

The official appointed by the Texas governor to head the Department of Insurance; the Commissioner adopts rules, issues orders, and enforces state insurance law.

A license granted by the Texas Department of Insurance that lets an insurer legally transact specified lines of insurance in the state.

An insurer's written authorization allowing a licensed agent to sell and service policies on its behalf; the insurer must file the appointment with TDI.

A residual-market insurer created by Texas law that provides windstorm and hail coverage to coastal property owners who cannot obtain it from the voluntary market.

A residual market program that offers basic residential property coverage to Texas homeowners who cannot buy it from admitted insurers in the voluntary market.

Coverage written by non-admitted insurers for unusual or high-risk exposures that admitted companies decline; it must be placed through a licensed surplus lines agent after a diligent search.

A statutory entity funded by member insurers that pays covered claims of policyholders when a licensed property and casualty insurer becomes insolvent, up to set limits.

A Texas law setting deadlines for an insurer to acknowledge, investigate, and pay or deny a claim; missed deadlines can trigger statutory penalties and interest.

Giving a policyholder anything of value not stated in the policy, such as part of the agent's commission, to persuade them to buy; it is prohibited as an unfair trade practice in Texas.

A financial stake in the person or property insured such that the insured would suffer a genuine economic loss if a loss occurred; required at the time of loss for property insurance.

The idea that insurance should restore an insured to roughly the same financial position as before a loss, no better and no worse, which limits recovery to the amount of loss.

The high duty of honesty between insurer and applicant, requiring full and accurate disclosure of material facts; a material misrepresentation can let the insurer void the policy.

A contract in which the amounts exchanged by the parties are unequal and depend on chance; the insured pays a modest premium and may receive a large payment or none at all.

A policy drafted by the insurer and offered to the buyer on a take-it-or-leave-it basis; because the insurer writes the wording, ambiguities are generally construed against it.

The insurer's right, after paying a claim, to pursue the party that caused the loss and recover what it paid, using the insured's legal rights against that party.

An unbroken chain of events, starting with a covered peril, that produces a loss without an intervening excluded cause; used to decide whether a loss is covered.

A condition that increases the chance or severity of a loss, such as a frayed wire (physical), dishonesty (moral), or carelessness (morale).

The value of damaged property at the time of loss, commonly calculated as replacement cost minus depreciation; it is the default valuation method in many property policies.

A temporary written or oral agreement that provides immediate insurance coverage until the formal policy is issued; it is subject to the same terms as the policy to follow.

The homeowners policy part that insures the house and attached structures on the residence premises, usually on a replacement cost basis, up to the limit on the declarations.

The homeowners coverage for the insured's household contents and personal belongings, both on and away from the residence, typically on an actual cash value basis unless endorsed.

Homeowners coverage that pays the extra cost of temporary housing and living expenses, plus lost fair rental value, when a covered loss makes the home uninhabitable.

A Texas homeowners form that covers the dwelling on an open-peril basis and personal property for named perils; it is the broad form many Texas insurers offer instead of the HO-3.

A policy provision that protects the lender's interest in insured property: the lender receives loss payment to the extent of its debt and advance notice of cancellation or nonrenewal.

A commercial property provision requiring the insured to carry insurance equal to a stated percentage of the property's value or face a reduced claim payment.

Commercial coverage that replaces lost net income and pays continuing normal operating expenses when a covered property loss shuts down or slows the business.

Property coverage that pays the extra cost to rebuild in compliance with current building codes, and to cover the undamaged portion that must be demolished.

A percentage-based deductible on Texas coastal property policies that applies to hurricane, windstorm, or hail losses and is calculated from the dwelling limit.

The standard auto policy for individuals covering liability, medical payments, uninsured motorists, and physical damage to the insured's own car.

Auto liability limits stated as three numbers: per-person bodily injury, per-accident bodily injury, and per-accident property damage, such as 30/60/25.

Texas auto coverage that pays medical bills, lost wages, and similar expenses for the insured and passengers regardless of fault; insurers must offer at least $2,500.

Auto coverage that pays the insured's damages when a hit-and-run, uninsured, or underinsured driver causes an accident; Texas insurers must offer it.

The standard business liability policy covering third-party bodily injury, property damage, and personal and advertising injury arising from the insured's premises, operations, and products.

CGL coverage for bodily injury or property damage occurring away from the insured's premises and arising from products sold or work completed by the insured.

The most a CGL policy will pay for all covered losses other than products-completed operations during the policy period, regardless of the number of claims.

A person or organization added by endorsement to another's liability policy so that they share the insured's protection for their interest in the insured's operations.

A policy that pays after underlying liability limits are exhausted, adding a higher limit and sometimes broader coverage for exposures the primary policy excludes.

Coverage that pays medical costs and lost wages for employees injured on the job; Texas employers may opt out, but those who carry coverage gain immunity from most injury lawsuits.