The Texas Department of Insurance (TDI) has adopted amendments to 28 TAC §5.7015. The amendments to §5.7015 establish that when a personal automobile or residential property policy is cancelled, the appropriate portion to be refunded is the pro rata amount of the policy premium. This prohibits insurers from using a “short rate” provision or otherwise retaining any unearned premium.
A short rate allows for an insurer to retain a portion of the unearned premium, meaning that the refund of the unearned premium would be less than the pro rata amount of the policy premium.
The amendments also clarify that insurers are still able to have a minimum retained premium or any other earned amount retained for otherwise unrecoverable expenses sustained when issuing a policy.
The changes made to 28 TAC §5.7015 will become effective September 1, 2026.
The adoption order can be found here. Other information can be found on TDI’s Proposed and Adopted Rules for 2025 webpage.
