1. (a) Purpose. The purpose of this section is to prohibit the use of an unfair underwriting guideline based solely on a single prior claim for water damage either by the consumer or on the property sought to be insured in making a decision regarding the writing of residential property insurance and through this prohibition to promote the availability and affordability of residential property insurance.

2. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

   1. (1) Residential property insurance--Insurance against loss to real or tangible personal property at a fixed location provided in a homeowners policy, a tenant policy, a condominium owners policy, or a residential fire and allied lines policy.
   2. (2) Underwriting guideline--A rule, standard, marketing decision, guideline, or practice; whether written, oral, or electronic; used by an insurer or its agent to bind, accept, reject, cancel, or limit coverages made available to classes of consumers.
   3. (3) Consumer--The person making the application to insure a property and includes both existing insureds and applicants for insurance.

3. (c) Prohibition.

   1. (1) An insurer shall not use an underwriting guideline based solely upon a single prior claim for water damage either by the consumer or on the property sought to be insured in making a decision regarding the writing of residential property insurance.
   2. (2) The failure to comply with this subsection constitutes an unfair trade practice in the business of insurance in violation of the Texas Insurance Code Article 21.21, and shall be subject to the provisions thereof.
4. (d) Nothing contained herein shall preclude an insurer from the surcharge and renewal provisions of Insurance Code Article 21.49-2B, Sec. 7.

Source Note:The provisions of this §21.1007 adopted to be effective December 26, 2002, 27 TexReg 11986.