Texas P&C Study Guide

Texas P&C is where the state’s personality really shows. It’s the second-largest market in the country, and it does several things no other state does — most famously, it’s the only state that lets most employers skip workers’ comp entirely. Texas also wrote its own homeowners policy forms and runs its own coastal windstorm pool. Get the regulator basics, then we’ll hit the auto, homeowners, and workers’ comp rules that win points.

Licensing and rates — the quick version

Pre-licensing is 40 hours per line; CE is 24 hours every 2 years with 3 of ethics and 1 hour on Texas laws and rules. Texas is a file-and-use rate state — insurers file and use rates immediately, with TDI able to disapprove afterward — and, unlike California, Texas permits credit scoring as a personal-lines rating factor (with adverse-action notices).

Auto — the highest minimums, and PIP in a fault state

Texas minimum auto limits are 30/60/25 — the highest bodily-injury minimums of any state in this set. Texas is fault-based (the at-fault driver’s liability pays). But here’s the twist: even though it’s a fault state, Texas requires insurers to offer PIP (at least $2,500 per person) on every policy, and the insured has to sign a written rejection to decline it. UM/UIM must be offered the same way.

Fault is split on a 51% bar — you recover only if you’re less than 51% at fault (same rule as Colorado and Illinois).

Homeowners — Texas wrote its own rulebook

Texas didn’t adopt the standard ISO homeowners forms. It built its own — HO-A (Basic), HO-B (Broad), HO-C (Comprehensive) — to fit Texas perils. Two more Texas-specific pieces show up constantly:

• The appraisal clause: when the insured and insurer disagree on the amount of a covered loss (not whether it’s covered), either side can invoke it — each picks an appraiser, the two pick an umpire, and any two of the three decide. Binding.
• TWIA — the Texas Windstorm Insurance Association — is the insurer of last resort for wind and hail in the 14 coastal counties, where standard policies often exclude windstorm.

Workers’ comp — the one that defines Texas

This is the single most distinctive rule in Texas P&C: Texas is the only state that lets most private employers opt out of workers’ comp entirely. Employers who skip it are called non-subscribers — they carry no workers’ comp insurance, but in exchange they lose their key common-law defenses (assumption of risk, fellow-servant rule, contributory negligence) if an injured worker sues, and they can be taken to court for full damages. Subscribers carry comp and get the usual exclusive-remedy protection. Government employers can’t opt out.

Cancellation and nonrenewal

Texas personal-lines nonrenewal needs 30 days notice; commercial lines need 60. In a new policy’s first 60 days the insurer can cancel for any reason on 10 days’ notice; after that, mid-term cancellation narrows to nonpayment, fraud or material misrepresentation, or a substantial increase in