SECTION 3.3092. Format, Content, and Readability for Outline of Coverage

(a) Format.

(1) Each outline of coverage must contain the appropriate text and be in the appropriate format of the outlines of coverage set forth in this subchapter and may not contain any material of an advertising nature, except for the insurer's logotype.

(2) The outline of coverage must be plainly printed in light-faced type of a style in general use, the size of which must be uniform except as provided in paragraph (4) of this subsection and not less than 12 point with a lowercase unspaced alphabet length not less than 130 point, with a minimum of one-point leading.

(3) The contrast and legibility of the color of ink and the color of paper of the outline of coverage must be substantially the equivalent of that of black ink on white paper.

(4) Text that is capitalized or underscored in the outline of coverage may be of a different style type the size of which may be the same as or larger than that of other text.

(5) When an outline of coverage is integrated with a sales brochure, multi-colored ink may be used on all portions of the brochure except the outline of coverage.

(b) Content.

(1) Drafting instructions for paragraph 1. The following language must appear in each outline of coverage: READ YOUR POLICY CAREFULLY. This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance contract and only the actual policy provisions will control. The policy itself sets forth, in detail, the rights and obligations of both you and your insurance company. It is, therefore, important that you READ YOUR POLICY CAREFULLY!

(2) Drafting instructions for paragraph 2. This paragraph must be in the applicable form set out in §3.3093 of this title (relating to Prescribed Outlines of Coverage) for the category of coverage provided.

(3) Drafting instructions for paragraph 3. This paragraph must set forth a brief specific description of the benefits (including dollar amounts and number of days duration where applicable) provided by the policy with which the outline of coverage is to be used. The description must be stated clearly and concisely, and include a description of any elimination periods, deductible amounts, inner limits or co-payment requirements, and any other items applicable to the benefits described. If a benefit is stated in the outline of coverage but not provided in the policy as applied for or issued, a notation must be made in the outline of coverage to the effect that no coverage is provided for that benefit.

(4) Drafting instructions for paragraph 4. This paragraph must briefly describe any policy provisions which exclude, eliminate, restrict, reduce, limit, delay, or in any other manner operate to qualify payment of the benefits described in paragraph (3) of this subsection. The circumstances under which any reduction becomes operative must be included. Limitations on coverage for pre-existing conditions that qualify payment of benefits must be summarized. Provisions which reduce benefits otherwise payable due to other coverage must be described.

(5) Drafting instructions for paragraph 5. This paragraph must include a description of the provisions regarding renewability including any limitation by age, time, or event, status requirements, any reservation by the insurer of a right to change premiums or right of cancellation, and any other matter appropriate to the terms and conditions of renewability. If the policy, or any part of the policy, consists of individual hospital, medical, or surgical coverage, paragraph 5 must include language regarding guaranteed renewability substantially similar to the following: "This (policy/coverage) is guaranteed renewable. That means that you have the right to keep the policy in force with the same benefits, except that we may discontinue or terminate the policy if: 1. You fail to pay premiums as required under the policy; 2. You have performed an act or practice that constitutes fraud, or have made an intentional misrepresentation of material fact, relating in any way to the policy, including claims for benefits under the policy; or 3. We stop issuing the (policy/coverage) in Texas, but only if we notify you in advance." (Include, if coverage offered by an issuer under the Insurance Code, Chapter 842: "4. You no longer reside, live, or work in our service area, as described in the policy.") (Include, if applicable: "This policy will not terminate when a covered person becomes eligible for Medicare. However, the policy excludes any benefits that are paid to a covered person by Medicare.") "Unless the policy is 'noncancellable,' as defined in the policy, we have the right to raise rates on your policy at each time of renewal, in a manner consistent with the policy and Texas law. If the policy is noncancellable, our right to raise rates is limited by the definition of 'noncancellable' contained in the policy, and by Texas law."

(6) Drafting instructions for paragraph 6. The total premium payable must be stated. In the event the mode stated is not an exact multiple of the annual premium, then the annual premium must also be stated. Initial policy fees must be stated separately. If premiums are "step-rated," they must either be disclosed for each step or the initial premium may be disclosed accompanied by a statement as follows: "Renewal premiums for this policy will increase periodically depending upon (your age) (the policy year)." Unless a policy is issued with guaranteed premium rates, this paragraph must contain the statement "premiums are subject to change." This paragraph must also include a statement of the policy grace period.

(c) Readability.

(1) Insurers must utilize an appropriate test of readability in gauging the readability of paragraphs 3 through 6 of the Outline of Coverage prescribed in this section and §§3.3090, 3.3091, and 3.3093 of this title (relating to Outline of Coverage Generally; Notice Requirements for Outline of Coverage of Limited Benefit, Supplemental and Non-conventional Coverages; and Prescribed Outlines of Coverage). Such test may be selected from any one of the following:

(A) "Flesch" Formula, Rudolf Flesch, The Art of Readable Writing (1949, as revised in 1974);

(B) Fry Graph, Edward Fry, Journal of Reading (April 1968);

(C) Chall Readability, Jean Chall and Edgar Dale, "A Formula for Predicting Readability"; Educational Research Bulletin (January 1948);

(D) FOG Index, Robert Gunning, "The Technique of Clear Writing" and "How to Take the Fog Out of Writing," Dartnell Press;

(E) Farr-Jenkins-Paterson, "Simplification of Flesch Reading Ease Formula," Journal of Applied Psychology (October 1951);

(F) any other test which may from time to time be established or approved by the commissioner.

(2) In utilizing a readability test, insurers must establish a specific minimum level of readability which may not be more difficult than the equivalent of a ninth-grade reading level. In determining the readability level, all prescribed language, any medical terms, or formal names may be deleted as a criteria of readability.

(3) Each insurer must notify the commissioner as to the readability test adopted in compliance with this section and any changes made or intended to be made in the use of such text.

(4) The insurer must file the readability score of the outline of coverage along with the outline of coverage.

(5) This subsection does not apply to outlines of coverage used in connection with policies providing business buy out agreements or key man coverage.

Source Note: The provisions of this §3.3092 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 7, 1983, 8 TexReg 4858; amended to be effective December 22, 1997, 22 TexReg 12503; amended to be effective May 11, 2022, 47 TexReg 2758