Texas Security General Insurance Agency

TEXAS DEPARTMENT OF INSURANCE October 16, PROPERTY & CASUALTY, MAIL CODE 111-1A [redacted] AUSTIN, TX [redacted] Insured: [redacted] Problem Report ID: *** Policy#: [redacted] Lloyd’s Market#: [redacted] In response to your request, I hope the following information answers all of the pertinent points mentioned for the Notice of Complaint receivedIn the Complaint received, Mr [redacted] (the Insured), has two issues with his renewal policy (1) the roof exclusion that was requested and (2) the premium returned after cancellation 1) The roof exclusion was requested on the Insured’s policy for the 2014-policy termAs part of the standard underwriting procedures an inspection is ordered on each policy after the third renewalIn the process of reviewing the inspection photos for this policy it was determined that the roof on the insured structure is in extremely poor conditionThis policy is written on a Texas Dwelling policy – Form (TDP-1) policy formThe TDP-is a Named Peril policyNamed Peril means that if the Peril is not listed in the Insuring agreements, damage from that Peril is not coveredMaintenance is not a Covered Peril in this policyAnother characteristic of the TDP-policy form is that losses are settled on an actual cash value basisActual cash value is the amount of the settlement after the depreciation has been removed from the replacement cost value of the whole amount of damageIn the event of a loss being filed and then having the maintenance damage removed, the depreciation removed and the deductible removed from the settlement, it was determined there was a large probability of a loss not having a settlement due to the poor condition of the roofTSGA obtains a signed exclusion as a way to verify that the Insured was aware that his coverage would be limited due to the poorly maintained condition of the roof Texas Security General (TSGA) requested the agent to obtain a signed roof exclusion from the InsuredThe inspection showed that this Risk is of a poorer quality and shows a greater lack of maintenance than is expectedThe increase in the premium that would have been charged due to the increase in hazard caused by the poorer than expected condition of the insured structure, especially the roof of the structure, offset any premium credit that would have occurred due to the reduction in coverage on this policy 2) The next issue mentioned in the Insured’s Complaint is regarding the unused/unearned premium that was returned to himThe Insured divided the whole premium by twelve months then added two months togetherHowever, the amount of return premium for a cancellation is computed on a pro-rata basis using the formula set forth in the Texas Property ManualThe $policy fee is a fully earned feeThe whole premium for this policy was $and this policy used/earned days of coverage or $of used/earned premiumThe used/earned State premium tax is based on the total of fully earned policy fee plus the used premium times 4.85% and then the State stamping fee is times 0.06% The following is how the used/earned premium formula works: Used/earned Premium =$ Fully earned policy fee =$ Subtotal =$ State Tax =$ State Stamping Fee =$ Total earned premium =$ The paid premium=$minus the earned premium $214.02=equals the unearned premium of $ The cancellation return is confusing because it is not an exact division of the policy year by the months that a policy was in forceIn this case the $return premium sent to Mr [redacted] was the whole amount of the unearned premium and taxes I have included policy information for your conveniencePlease let me know if I can be of further assistanceSincerely, [redacted] Claims Management/Compliance Dept