(a) The Association shall adopt application forms. The forms shall be designed to obtain all of the information necessary for underwriting and rating the risk. Such forms may also elicit additional information that the Association may use to revise its rates, underwriting rules, policy forms and endorsements. An application is considered complete when every question on the application form is answered fully and is signed by a proposed named insured and submitted by the agent. The Association may independently verify the information in an application or request additional information from the applicant or other sources.
(b) The Association shall file with the Commissioner for approval the underwriting rules for Association policies prior to use. Such underwriting rules shall determine whether a residential property is an insurable risk eligible for Association coverage, and if eligible, what coverages, policy forms and endorsements can be offered for that risk. The underwriting rules shall be subject to the underwriting standards set forth in §§5.9914, 5.9915 and 5.9917 of this subchapter (relating to Maximum Limits of Liability and Limitations, Inspections, and Application, Binder, Policy Issuance, Renewal and Cancellation) and any other requirements set forth in the underwriting rules. Such rules shall include under what circumstances the Association may grant an agent permission to bind coverage.
(c) The Association shall file with the Commissioner for approval the proposed rates and supplemental rate information, including a manual of rating rules, to be used in connection with the issuance of Association policies or endorsements. No policies or endorsements shall be issued unless the Commissioner has approved the rates to be applied to the policy or endorsement:
  (1) The Association rates must be set in an amount sufficient to carry all claims to maturity and to meet all expenses incurred in the writing and servicing of the business.
  (2) The rate filing shall additionally provide for:
    (A) premium installment payment plans including a servicing fee for those policyholders electing to use such a plan; and
    (B) deductible options such as different dollar amounts, different percentages of property coverage limits, that may vary by coverage or peril insured against.
(d) The Association shall file with the Commissioner for approval policy forms and endorsements prior to use. The policy forms and endorsements that the Association will offer to applicants will be governed by its underwriting rules. The Association may offer its policy forms on either an actual cash value or a replacement cost value basis, based on its underwriting rules. Association policies shall not cover businesses or commercial risks even if they are operated in or from a residence. Association policies shall not cover motor vehicles.

Source Note: The provisions of this §5.9916 adopted to be effective May 28, 2003, 28 TexReg 4153