Insurance from A to Z

This document is for informational purposes only. It is not intended to alter or replace the insurance policy, endorsements, the Plan of Operations, or applicable law.

Additionally, this information is not intended to establish or describe policyholders’ rights or obligations or the rights or obligations of TWIA. If you have questions about your insurance, you should consult your insurance agent, TWIA, or the language of your insurance policy.


Actual cash value (ACV) - The value of your property, based on the current cost to replace it minus depreciation. Also see "replacement cost."

Additional Living Expense (ALE) – If a policyholder is unable to inhabit the residence due to a covered loss, ALE coverage reimburses the policyholder for the additional necessary and reasonable costs to maintain a normal standard of living

Adjuster - An individual assigned by an insurer to evaluate losses and settle policyholder claims

Agent - A person who sells insurance policies

Application - A form your agent fills out with information about you that TWIA will use to determine whether you are eligible for a policy

Appraisal - An evaluation of a property claim by an authorized person to determine property value or damaged property value

Assignment of Interest – The transfer of all or part of a policyholder’s rights to a policy to another person. It is possible to change this type of transfer at a later date.

Assumption Reinsurance Depopulation Program –  Participating carriers will select TWIA policies; agents will have the opportunity to review and approve or reject any offers; and policyholders will have the ability to opt out of the depopulation process. Any policyholders that do not opt out will automatically have their TWIA policy assumed by the participating carrier.

Board of Directors - TWIA is governed by a 10-person Board of Directors appointed by the Commissioner of Insurance.

Building Code Requirements – With limited exceptions, eligibility for TWIA coverage for any property constructed after January 1, 1988 requires certification that the property was built in compliance with the applicable building code in effect at the time of the property’s constructions or when any repairs to the property were made.

Building Code Standards - Within the TWIA coverage area there are three different building code standards, varying generally by distance to the coast. The three standards are Seaward, Inland I and Inland II.

Cancellation - Termination of an insurance policy by TWIA or the policyholder before the renewal date

Catastrophe (CAT) Plan - TWIA’s Catastrophe Plan is a dynamic document detailing the roles and responsibilities of each department in response to a storm

Certificate of Compliance - Texas Insurance Code Chapter 2210 states that any building constructed, altered, or repaired on or after January 1, 1988 must meet the windstorm building code construction requirements for its area in order to be insured by TWIA. Compliance with these requirements is demonstrated by obtaining a Certificate of Compliance (WPI-8 or WPI-8-C).

Claim- A policyholder's request for reimbursement from a TWIA policy for a loss to property

Claimant - A person who makes an insurance claim

Contract – As used in most cases on this website, an insurance policy. A TWIA policy is considered to be a contract between the insurance association and the policyholder.

Coverage Area - TWIA policies provide coverage for residential and commercial property located within the area designated by the Commissioner of Insurance. This area currently includes all 14 first-tier coastal counties and parts of Harris County (Tier 2) east of Highway 146. Also see "Tier 1 Counties" and "Tier 2 Counties."

Covered Loss - The amount TWIA owes for damages covered under a policy Loss History – Generally, TWIA does not use loss history to underwrite a policy but can provide one for the applicant at his or her request

Declarations Page - The page in a policy that shows the name and address of the insurer, the period of time a policy is in force, the amount of the premium, and the amount of coverage

Deductible - The amount the insured must pay in a loss before any payment is due from the association

Depopulation - The process of transferring current TWIA policies to private market carriers

Depopulation Insurer/Participating Insurer - Any eligible carrier participating in the depopulation process

Depreciation - Decrease in the value of property over time due to use or wear and tear

Dwelling - A dwelling is the main residential home on the premises

Earned Premium - The portion of a policy premium that has been used to actually buy coverage, calculated based on length of time since inception of the policy.

Effective Date - The date on which an insurance policy becomes effective

Eligibility for Coverage - In order to be eligible for a TWIA policy, applicants and properties must meet certain criteria defined by the Texas Legislature

Endorsement - A written agreement attached to a policy expanding or limiting the benefits otherwise payable under the policy. Also called a "rider”

Escrow – Money placed by the insurance agent in the hands of a third party until specified conditions are met

Expiration Date - The date on which an insurance policy expires

First-party Claim - A claim filed by an insured against his or her own insurance policy

House Bill 3 (HB 3) - The 82nd Texas Legislature, 1st Called Special Session, enacted House Bill 3, legislation to address issues related to the operations of TWIA, such as, create new timelines and procedures for claims handling; develop alternative dispute resolution procedures for accepted and denied claims; enable TWIA to fund certain losses resulting from a catastrophe; require TWIA to issue annual reports on specific subjects; and require TWIA to study certain issues with the Texas Department of Insurance and the Legislature to address future legislative changes to TWIA. HB 3 became effective on September 28, 2011

Independent Adjuster - A person who charges a fee to the Association to adjust a claim

Inflation Protection – “Automatic Adjusted Building Cost,” automatically adjusts home insurance policy limits to account for increases in the costs to repair or rebuild a property

Insurability - Properties must be in an insurable condition to be eligible for TWIA coverage

Insured - The person or organization covered by an insurance policy

Insurer – TWIA

Lapse - The termination of an insurance policy because a renewal premium is not paid by the end of the grace period

Market Value - The current value of your home, including the price of land

Material Misrepresentation - A significant misstatement on an application form, such that if TWIA had access to the correct information at the time said application was submitted, the Association might have declined the application

Non-renewal - A decision by an insurance company not to renew a policy

Peril - A specific risk or cause of loss covered by a property insurance policy, such as TWIA windstorm and hail policies. A named-peril policy covers the policyholder only for the risks named in the policy

Personal Property - All tangible property (other than land) that is either temporary or movable in some way, such as furniture, jewelry, electronics, etc.

Policy - The contract issued by TWIA to the insured

Policy Period - The period a policy is in force, from the beginning or effective date to the expiration date

Policyholder - The person or party who has an insurable interest in the property and owns an individual insurance policy; this person may be the named insured, the named beneficiary, or another person. The policyholder usually is the one who pays the premium and is the only person who may make changes to a policy.

Premium - The amount paid by an insured to TWIA to obtain or maintain an insurance policy

Primary Home - A home that is occupied by the owner the majority of the time

Primary Named Insured – The primary person and address on a TWIA policy

Public Insurance Adjuster - An individual employed by a policyholder to negotiate a claim with TWIA in exchange for a percentage of the claim settlement. Public insurance adjusters must be licensed by the Texas Department of Insurance (TDI)

Rates - TWIA rates determine the amount of premium charged to each TWIA policyholder.

Rejected Application – Policy application rejected and no policy issued by TWIA due to factors such as, but not limited to, missing data, uninsurable property, property outside of coverage area

Renewal - Continuation of a policy after its expiration date

Replacement Cost - Insurance coverage that pays the dollar amount needed to replace the structure or damaged personal, or business personal, property without deducting for depreciation but limited by the policy's maximum dollar amount

Rescission - The termination of an insurance contract by TWIA when material misrepresentation has occurred

Residual Market - Insurers, such as assigned risk plans and TWIA an TFPA, that exist to provide coverage for those who cannot get it in the standard market

Secondary or Vacation Home - A home that is occupied by the owner some of the time, but is not the owner's primary home

Subrogation - Assignment of rights of recovery from insured

Tenant-occupied Rental Home - A home that is owned by the insured and rented to others

Tier 1 Coastal Counties - Aransas County, Brazoria County, Calhoun County, Cameron County, Chambers County, Jefferson County, Kenedy County, Kleberg County, Matagorda County, Nueces County, Refugio County, San Patricio County, Willacy County

Tier 2 Coastal Counties - Bee County, Brooks County, Fort Bend County, Goliad County, Hardin County, Harris County, Hidalgo County, Jackson County, Jim Wells County, Liberty County, Live Oak County, Orange County, Victoria County, and Wharton County

Underwriter - The TWIA employee who reviews an application for insurance and decides if the applicant is acceptable and at what premium rate

Underwriting - The process TWIA uses to decide whether to accept or reject an application for a policy

Unearned Premium - Premium amounts paid for a policy but not yet earned by the Association; calculated based on the length of time from inception of the policy to date of cancelation (or other date as needed).

Voluntary Market Depopulation Program - Participating insurance carriers may obtain access to TWIA policyholder data and can approach the agent of record to make offers of coverage. Acceptance of any offers is strictly voluntary

Waiver Surcharge – Surcharge added to a premium by TWIA in order for a structure that does not comply with the applicable building code to be eligible for coverage

WPI-8 - Certificate of Compliance from the Texas Department of Insurance (TDI) for ongoing improvements evidencing compliance with windstorm building code construction requirements.

WPI-8-C - Certificate of Compliance from TWIA for completed improvements evidencing compliance with windstorm building code construction requirements.