Pursuant to Texas Administrative Code §5.4902–§5.4903, the agent submitting an application to TWIA for the subject property MUST maintain proof of declination from an authorized insurer and provide such proof to the Association, if requested.
Agents may use this Proof of Declination of Coverage form for each TWIA application submitted to confirm compliance with TWIA standards.
Summary of Key Criteria for Proof of Declination
A. The insurer must:
- Be authorized to engage in the business of property insurance in the state of Texas. Surplus lines companies do not qualify.
- Be offering new or renewal coverage for windstorm and hail insurance in the first tier coastal counties.
- Refuse to either:
- Offer (or renew) windstorm and hail insurance coverage for the subject property, or
- Provide basic insurance coverage sought by the applicant that is substantially equivalent to that offered by the Association. For example, if the lowest deductible offered by the insurer is greater than that which can be obtained from TWIA.
B. Proof of declination must:
- Document the refusal and include the name of the authorized insurer and the date of the declination. For example, a note in the file by the agent on what he or she relied upon (e.g., insurance guidelines, etc.) to meet the declination requirement as well as the name of the insurer and the date of declination.
- Be obtained for new coverage and then every three calendar years for renewal coverage.
- Be maintained either in writing or in electronic format.
- Be maintained for a period of not less than five years following the date of the submission of the application for Association coverage.
Frequently Asked Questions About Declinations
What is a declination?
A declination is either A. or B. below:
- A. An authorized insurance company refuses to offer new or renewal coverage for windstorm and hail, or
- B. An authorized insurance company offers coverage for windstorm and hail, but this coverage is more restrictive than coverage available from TWIA. For example, the authorized insurance company offers only a high deductible or no replacement cost coverage.
From which authorized insurance company must a declination be obtained?
A declination must be obtained from an authorized insurance company that is offering new or renewal coverage for windstorm and hail somewhere within the first tier coastal counties. A surplus lines insurance company does not qualify. You may wish to check www.helpinsure.com for additional information about which commercial and residential insurance companies offer new or renewal coverage with windstorm and hail in the first tier coastal counties. If necessary, please contact these companies directly to verify that they are authorized to, and do, offer windstorm and hail coverage in those counties.
What is proof of declination?
Proof of declination is confirmation that a declination complies with all elements of TWIA’s declination of coverage requirements through the documentation of the following facts:
- The fact that the declination occurred;
- The date of the declination; and
- The name of the authorized insurance company offering new or renewal coverage for windstorm and hail somewhere within the first-tier coastal counties
Agents may use the Proof of Declination of Coverage form to confirm compliance with TWIA standards. Please note, by completing and submitting the Proof of Declination of Coverage form you are affirming that the declination described on the form complies with all elements of TWIA’s declination of coverage requirements.
How many declinations of coverage are required by TWIA?
One declination is required for new coverage, and a new declination is required every three years thereafter for renewal coverage.
What coastal counties are included in the first tier?
The coastal counties within the first tier are Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy. The following portions of Harris County are included when located inside the city limits and east of Highway 146, (i.e., including La Porte, Morgan’s Point, Pasadena, Seabrook and Shore Acres).
What can happen if TWIA determines that a property does not have a declination?
TWIA has the authority to cancel the windstorm policy. TWIA will provide the agent and insured a 30-day Notice of Cancellation prior to cancellation. The cancellation may be rescinded if the agent or insured provide a compliant declination prior to cancellation.
Must an agent have an appointment with the authorized insurance company that provides the declination?
No. A declination can be obtained by either the agent or insured.
Is an agent expected to provide TWIA a copy of their company’s insurance guidelines as proof of declination?
No. Insurance guidelines are generally confidential and proprietary. Agents may use the Proof of Declination of Coverage form to confirm compliance with TWIA standards.
Is a windstorm and hail exclusion endorsement (or evidence of this exclusion on a policy declarations page) adequate proof of declination?
No. A windstorm and hail exclusion endorsement may be construed as the insured’s election to exclude coverage. Agents may use the Proof of Declination of Coverage form to confirm compliance with TWIA standards.
If the cost (or premium) for windstorm coverage from a TWIA policy is less than the cost for windstorm coverage offered by the insured’s companion policy, does this difference in premium qualify as a declination?
No. A declination involves either a refusal of windstorm coverage or a difference in windstorm coverage. Please refer to the definition of a declination in the requirements.