Your Insurance Policy Could Change, But That Doesn’t Mean Your Coverage Should

Recently, the Texas Commissioner of Insurance issued general remarks and official action outlining state law requiring a clear, conspicuous notice at least 30 days in advance when an insurance company offers a renewal policy that reduces coverage. Insurers who do not place these notices conspicuously are subject to administrative penalty fees.

We know that a Replacement Cost Value (RCV) policy is considered to be better than an Actual Cash Value (ACV) policy because, even though the premiums may be higher, 100% of the roof is covered. What you may not know is that your RCV policy could one day change into an ACV policy. When this change occurs, it is your insurer’s responsibility to notify you promptly. If they don’t, they could face administrative penalties.

It is good practice to routinely check your insurance policy once it is annually renewed. The Chad T. Wilson Law Firm recommends this because there is a chance your RCV policy changed to an ACV without your knowledge or consent. Although it is the insurer’s responsibility to notify you when the policy changes to an ACV, sometimes they forget to notify you.

Keep in mind that there may be endorsements on your ACV policy. A twenty-year-old roof has more wear and tear than a new one. The granules have diminished over time. You wouldn’t insure an old car the same way you would a brand-new Maserati. Simply stated, RCVs aren’t typically written for old roofs.

The Texas Commissioner of Insurance has been straightforward with the requirements. For your insurance company to be compliant with modifying your RCV policy to an ACV, your insurer must:

  • Provide you a notice in writing 30 days before the policy changes.
  • Language must be in bold and clearly, conspicuously placed in the notice.
  • Your signature must be on the notice.

Texas Insurance Code 551.1055

Section 551.1055 of the Texas Insurance Code prohibits an insurer from using an endorsement or policy provision that makes a material change to a covered policy, unless the insurer provides the insured timely written notice with an explanation of the change that is conspicuously placed and clearly indicates every material change in the policy, written in plain language.

For example, changing a deductible by $50 is not a material change. Adding an appliance coverage to your overall homeowners insurance policy is not a material change.

Examples of a material change are:

  • Reduction in coverage.
  • Changes in coverage conditions (RCV to an ACV).
  • Changes in the duties of the insured.

Insurance companies don’t want to pay for old roofs because paying for old roofs cuts into an insurance company’s profits, and losing profits is why they deny insurance claims in the first place. If your property insurance claim has been denied, delayed, or underpaid, call the Chad T. Wilson law firm today at (832) 415-1432 and get your case reviewed for free by an expert property litigation attorney.

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