28 Tex. Admin. Code § 3.3057 - Standards for Exceptions, Exclusions, and Reductions Provision
(a) An exception or exclusion is any
provision in a policy whereby coverage for a specified hazard in entirely
eliminated. It is a statement of a risk not assumed under the terms and
provisions of the contract. Extensive listing of diseases to be excluded will
not be acceptable unless the insurer can show that such are necessary and
proper to the coverage provided.
(b) A reduction is a provision which takes
away some portion, but not all of the coverage of the policy under certain
specific conditions. Such relates to a risk assumed by the insurer but payment
upon the occurrence of such loss is limited to some amount or period less than
would be otherwise payable had such reduction clause not been used.
(c) Exceptions, exclusions, and reductions
must be clearly expressed as a part of the benefit provision to which such
applies or, if applicable to more than one benefit provision, must be set forth
as a separate provision and appropriately captioned. Policies containing the
specified exclusionary subjects appearing in Exhibit A will be acceptable;
however, this may not preclude the consideration or approval of other
exceptions or exclusions if such are deemed reasonable and appropriate to the
risk undertaken and are approved by the commissioner. Exhibit A is adopted
herein by reference. Copies of Exhibit A may be obtained by contacting the
Texas Department of Insurance, Life and Health Division, Filings Intake,
MC-LH-LHL, P.O. Box 12030, Austin, Texas 78711-2030, or by accessing the
department's website at www.tdi.texas.gov/forms.
(d) The acceptable exclusions set forth in
Exhibit A may not impair or limit the use of waivers to exclude, limit, or
reduce coverage or benefits for named or specifically described pre-existing
disease, physical condition, or extra hazardous activity. If waivers are
required as a condition of issuance, renewal, or reinstatement, signed
acceptance by the insured is required unless on initial issuance the full text
of the waiver is contained either on the first page or specification page of
the policy or unless notice of the waiver appears on the first page or
specification page.
(e) If a policy
contains a military service exclusion or a provision suspending coverage during
military service, and if the premiums are either reduced or refunded for the
period of such military service, such must be clearly stated in the policy.
(1) As to coverage that is not
noncancellable, subject to limited renewability at option of the insured or
subject to a limited guarantee of renewability:
(A) if the policy contains a "status" type of
exclusion which excludes all coverages applicable to an insured person while in
military service on full-time active duty, the policy must provide, upon
receipt of written request, for refund of premiums as applicable to such person
on a pro rata basis;
(B) if the
policy contains a "causation" type exclusion (loss resulting from military
service) while an insured person is on full-time active duty in the military,
refund of premium is not required since the policy would be operative as to any
other loss not resulting from military service causes;
(C) if a policy contains a provision for
voluntary suspension of coverage during military service and an identifiable
premium is charged for such coverage upon written request for suspension, a pro
rata premium must be refunded.
(2) As to coverage that is noncancellable,
subject to limited renewability at option of the insured or a limited guarantee
of renewability:
(A) the policy may provide
for refund of the entire premium for the period of military service or for a
partial refund of the premium from the date the insurer receives notice and it
may adjust any such refund for any change in reserves during the period of
suspension;
(B) the policy may
contain a military service exclusion or a provision for suspension of coverage
upon entry into military service with the right of reinstatement upon
termination of such service without evidence of insurability, if applied for
within a specified period of not less than 60 days;
(C) the insurer may charge a partial premium
during the period of suspension which will anticipate accumulation of reserves
required by law or regulation and related cost factors.
Notes
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