TEXAS APPROVES MANDATORY ENDORSEMENT

Texas Insurance Commissioner Jose Montemayor has approved changes to residential property insurance policies that will provide additional coverage when compliance with building codes and local ordinances drive up the cost of repairing or rebuilding damaged property. The mandatory endorsements will provide up to $5,000 in coverage with no additional premium to cover the increased costs of construction arising from ordinances, laws or Texas Windstorm Insurance Association building code specifications. The new endorsements will take affect April 1.

The coverage also allows homeowners to use all or part of the $5,000 for the increased cost of debris removal. The endorsements provide additional insurance and do not reduce the amount of coverage on a dwelling. Currently, a “building laws” exclusion in standard residential property policies makes the property owner-not the insurance company-responsible for any additional costs of repairing or rebuilding a home due to compliance with building code requirements.

The additional coverage approved by Montemayor will be available only if the house is rebuilt or repaired within a year of the damage. Insurers that currently have similar endorsements in place may continue to use them as long as they conform to the newly adopted coverages. Property owners will be able to buy more than the basic $5,000 of coverage.