SECTION 5.4700. Rate Reduction

(a) Purpose. The purpose of this section is:

(1) to specify, pursuant to Article 21.49, §8E of the Insurance Code, the percentage of rate reduction which must be applied to windstorm and hail insurance policies issued by the Texas Windstorm Insurance Association for new residential construction, excluding additions or repairs to existing structures, that have been built to the standards of the Texas Windstorm Insurance Association Building Code for Windstorm Resistant Construction, which became effective on September 1, 1998, or the 2000 International Residential Code/2000 International Building Code, as revised by the Texas Revisions, which became effective on February 1, 2003;

(2) to specify the percentage of rate reduction which must be applied to windstorm and hail insurance policies issued by the Texas Windstorm Insurance Association for new residential construction, excluding additions or repairs to existing structures, that have been built to a higher standard of construction than that required by the Texas Windstorm Insurance Association Building Code for Windstorm Resistant Construction, which became effective on September 1, 1998, or the 2000 International Residential Code/2000 International Building Code, as revised by the Texas Revisions, which became effective on February 1, 2003; and

(3) to specify the percentage of rate reduction which must be applied to windstorm and hail insurance policies issued by the Texas Windstorm Insurance Association for residential structures constructed prior to September 1, 1998, or February 1, 2003, as applicable, which have been retro-fitted with exterior opening protection that meets the windborne debris impact-resisting standards of the Texas Windstorm Insurance Association Building Code for Windstorm Resistant Construction, which became effective on September 1, 1998, or the 2000 International Residential Code/2000 International Building Code, as revised by the Texas Revisions, which became effective on February 1, 2003, or equivalent criteria recognized by the Department pursuant to the procedures of the Texas Windstorm Insurance Association Building Code for Windstorm Resistant Construction, which became effective on September 1, 1998, or the 2000 International Residential Code/2000 International Building Code, as revised by the Texas Revisions, which became effective on February 1, 2003.

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

(1) Article 21.49, §8E--Section 8E of Article 21.49 of the Insurance Code as added by Acts 1997, 75th Legislature, chapter 1000, §3, effective September 1, 1997.

(2) Association--Texas Windstorm Insurance Association.

(3) TWIA Building Code--Texas Windstorm Insurance Association Building Code for Windstorm Resistant Construction, which became effective on September 1, 1998.

(4) Department--Texas Department of Insurance

(5) Exterior openings--Openings in the exterior walls or roofs of residential structures, including, but not limited to, windows, doors, garage doors, and skylights.

(6) Inland I areas--Areas inland of the Intracoastal Canal and within approximately 25 miles of the Texas coastline and east of the boundary line specified in §5.4008(b)(2)(A) of this title, and certain areas in Harris County as specified in §5.4008(b)(2)(B) of this title (relating to Applicable Building Code Standards in Designated Catastrophe Areas for Structures Constructed, Repaired, or to Which Additions Are Made on and after September 1, 1998).

(7) Inland II areas--Areas inland and west of the boundary line specified in §5.4008(b)(2)(A) of this title.

(8) IRC--2000 International Residential Code, as revised by the Texas Revisions, which became effective on February 1, 2003.

(9) IBC--2000 International Building Code, as revised by the Texas Revisions, which became effective on February 1, 2003.

(c) Percentage Rate Reduction for New Residential Construction Built to TWIA Building Code or IRC/IBC Standards.

(1) Areas seaward of the Intracoastal Canal. The Association shall implement a rate reduction of 26% for dwelling coverage and 20% for personal property coverage for new residential construction built to the TWIA Building Code standards and 28% for dwelling coverage and 23% for personal property coverage for new residential construction built to the IRC/IBC standards for residential structures located in areas seaward of the Intracoastal Canal.

(2) Inland I areas. The Association shall implement a rate reduction of 24% for dwelling coverage and 19% for personal property coverage for new residential construction built to the TWIA Building Code standards and 26% for dwelling coverage and 21% for personal property coverage for new residential construction built to the IRC/IBC standards for residential structures located in the Inland I areas.

(3) Inland II areas. The Association shall implement a rate reduction of 26% for dwelling coverage and 20% for personal property coverage for new residential construction built to the IRC/IBC standards for residential structures located in the Inland II areas.

(d) Percentage Rate Reduction for New Residential Construction Built to Higher Standards than Required by the TWIA Building Code or the IRC/IBC.

(1) Inland I areas. The Association shall implement a rate reduction of 29% for dwelling coverage and 23% for personal property coverage for new residential construction in the Inland I areas that meets the TWIA Building Code standards for a residential structure located in areas seaward of the Intracoastal Canal and 31% for dwelling coverage and 25% for personal property coverage for new residential construction in the Inland I areas that meets the IRC/IBC standards for a residential structure located in areas seaward of the Intracoastal Canal.

(2) Inland II areas.

(A) The Association shall implement a rate reduction of 27% for dwelling coverage and 21% for personal property coverage for new residential construction located in the Inland II area that meets the TWIA Building Code standards for a residential structure located in the Inland I areas and 28% for dwelling coverage and 23% for personal property coverage for new residential construction in the Inland II area that meets the IRC/IBC standards for a residential structure located in the Inland I areas.

(B) The Association shall implement a rate reduction of 32% for dwelling coverage and 25% for personal property coverage for new residential construction located in the Inland II areas that meets the TWIA Building Code standards for a residential structure located in the areas seaward of the Intracoastal Canal and 33% for dwelling coverage and 28% for personal property coverage for new residential construction in the Inland II areas that meets the IRC/IBC standards for a residential structure located in the areas seaward of the Intracoastal Canal.

(e) Percentage Rate Reduction for Certain Retro-fitted Residential Structures. The Association shall implement a rate reduction of 10% for dwelling coverage and 10% for personal property coverage for residential structures in any of the designated catastrophe areas which were constructed prior to September 1, 1998, or February 1, 2003, as applicable, which have been retro-fitted with exterior opening protection that meets the windborne debris impact-resisting standards of the TWIA Building Code or the IRC/IBC or equivalent criteria recognized by the Department pursuant to TWIA Building Code or IRC/IBC procedures. All exterior openings of the residential structure must be protected for the structure to be eligible for the rate reductions specified in this subsection.

(f) Certification Required to Qualify for Rate Reduction. A residential structure must be certified by the Department as meeting the standards specified in the TWIA Building Code or the IRC/IBC to qualify for the rate reductions specified in this section.

(g) Effective Date. The rate reductions specified in this section shall be applied to windstorm and hail insurance policies issued by the Association on and after February 28, 1999, for the TWIA Building Code and on and after July 31, 2003, for the IRC/IBC.

Source Note: The provisions of this §5.4700 adopted to be effective February 25, 1999, 24 TexReg 1158; amended to be effective July 31, 2003, 28 TexReg 5533