“TFPA’s mission is to efficiently provide essential residential property insurance products and services for eligible Texas policyholders when no one else will.”
Purpose and Operation
The Texas Fair Plan Association (TFPA) was created by the Texas Legislature to address growing concerns of obtaining residential property insurance coverage in underserved areas. TFPA was implemented in 2002 following a mold crisis. Due to an increase in mold damage claims and water damage claims—fewer policies were being written and renewed through the private market. Lack of available residential property insurance policies through the private market sparked a surge in the number of TFPA policies being written.
Like an insurance company, TFPA issues insurances policies—yet it also functions as a pooling mechanism and allocates losses back to the insurance industry.
TFPA currently provides residential property insurance to consumers in several Texas counties, including Harris, Fort Bend, Galveston, and Dallas, among many others. Recent 2017 data released by the TFPA reported Harris County residential policies make up 67% of TFPA policies in force, the highest of any other county. TFPA does not insure commercial properties.
Coverage Eligibility and Requirements
To be eligible for a TFPA policy, applicants must have been denied coverage by at least two insurance companies licensed to write and actually writing residential property insurance in Texas. Additionally, consumers may not have received a valid offer of comparable residential property insurance coverage by another company licensed in Texas.
Limited coverage is provided by a TFPA policy for one and two-family dwellings, townhouse units and condominium units because TFPA does not compete with the private insurance market.
Policyholders should understand that, as a market of last resort, coverage available through TFPA is not as comprehensive as coverage available through the voluntary market. Therefore, it is imperative insureds read their full insurance policy to better understand the extent of the coverage provided.
Pursuant to Texas Insurance Code §2211.156, TFPA may not provide windstorm, hurricane and hail coverage for properties located in designated catastrophe areas and otherwise eligible for TWIA coverage. According to TFPA’s website, TFPA is “authorized to issue policies throughout Texas; however, the Association is not authorized to provide windstorm and hail insurance for properties eligible for coverage through Texas Windstorm Association.” Sometimes referred to as coastal wind properties, the designated catastrophe areas eligible for Texas Windstorm Insurance Association (TWIA) coverage includes all 14 first-tier coastal counties (Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio, and Willacy) and a portion of Harris County located east of State Highway 146. Where TFPA provides coverage for “TWIA eligible only” property, the policy must have attached to it a windstorm, hurricane and hail Exclusion Agreement—because the property owner’s only option to purchase windstorm, hurricane and hail insurance is through TWIA. Therefore, if you reside in a TWIA coverage area, yet qualify for TFPA you may carry both policies. For additional information on TWIA coverage and eligibility, please visit the TWIA website.
TFPA Policy Terms and Renewals
TFPA policies are issued for a one-year term, subject to underwriting standards. The insured is required, however, to reapply for residential property insurance through the voluntary market every two years. If the insured is declined for residential property insurance again by at least two insurance companies licensed to write—and actually writing—Texas residential policies and the insured does not receive a valid offer of comparable property insurance from a Texas licensed insurance company, the insured is eligible for renewal with the TFPA.
Claims against TFPA
Policyholders should review the full insurance policy provided by TFPA to ensure deadlines are met and requirements fulfilled. Should you have any questions or concerns about your TFPA policy or claim, please do not hesitate to contact Merlin Law Group for assistance.