Special One-Year Rule Applicable Only to Personal Automobile Policies

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

(1) require continuity of coverage for at least one year when the policy is written for a lesser term; and

(2) allow cancellation at the expiration of a one-year term when coverage is written for more than one year.

(b) Cancellation or nonrenewal. An insurer may cancel or nonrenew personal automobile policies for any legal reason, if the purpose is to terminate coverage concurrently with the expiration of any annual period, beginning with the original effective date of the policy. The prohibition in §5.7002 of this title (relating to Cancellations) does not apply to such cancellations. An insurer that cancels on the anniversary, and in accordance with this subsection, must give the policyholder at least 60 days prior written notice of cancellation.

(c) Except as provided in Insurance Code §551.1053, concerning Mandatory Nonrenewal of Private Passenger Automobile Insurance Policies, and Division 2 of this subchapter (relating to Mandatory Nonrenewal of Private Passenger Automobile Insurance Policies), personal automobile policies that are written for less than one year must be renewed, at the option of the insured, for additional periods so as to accumulate a minimum of 12 months' continuous coverage.

Source Note: The provisions of this §5.7005 adopted to be effective January 1, 1976; amended to be effective May 3, 1983, 8 TexReg 1295; amended to be effective January 1, 2025, 49 TexReg 2533.