THE ATTORNEY GXNERAL
op TEXAS
JUU~ 23, 1950
Hon. George B. Butler, Chairman
Board of InSuranoe Commissioners
Austin, Texas Opinion No. v-1074
Re: Whether 8 farm mutual
insurance aompany may
wrPritethe addItIona
cover es-'extended b$
Art. 436 08-20, Sec.la,
V.C.S., coexteneive with
the coverage that any
fire or w3.ndsto~lnsur-
Dear sir: ante oompany may write.
Your inquiry relates to 8 farm mutual liisuranoe com-
pany, organized snd'operetlng under Article ~4860a-20, V.C.S.
Speclf$cally, you IWJP~.XW whether such company may write the
addltion+l'coverage extended to county mntual insurance coni-
panics by virtue~of the provisions of Sec. 1s of Atit. 48608-20,
8s added by Acts ,5Oth Jag., 1947, 'tih.367, p. 739, titled House
Bill 155.
,hLh&& A study.of,the ~problem should include some of Its
.,.
County mutual insurance companies, 8s first defined,
authorized and regulated in 1937 by the 45th Legislature in an
act codiiied 8s Art. 40608-20, V.C.S., had but 8 modicum of
statutory regulation attached to their organlzstlon and oper8-
tion, when compared with that of other types of insurance eom-
l.mnNs. Their rate8 were not regulated 8s are other oomp8nles;
they were not subject to the rlgld lreserve requlreanents; their
financial status for orgtilsatlon end'for continued operation
was less exacting. The possible coverage they were authorized
to write ~8s very limited, however. Such eoverege was found
in Sec. 1 61 Art. 48608-20, Snd was as follows:
'County Mutual Insuranae Companies are cornpan-
les organtied for the purpose of lnsuranee on the
mntual or cooperative plan against loss or dam8R
by fire. linhtninn. uas exx)loslon, theft, winds&m
and hall, and for all or either of such purposes.
Hon. George 'B. Butler, page 2~(V-1074)
qnless they are restrioted by the&r charters,
they may write insurance against said hazards:
"(8) On both rural and urban dwellings and
Sttendant out-hOUSeS 8nd yard buildlngsiand 811
their contents ior home and personal use -- in-
cluding ftmt&y vehloles, mSiC81 instruments 8nd
libraries;
*(b) On barns and other farm, dairy, truok
garden, hehnery and ranuh bulldings and lmprove-
ments of every desariptlcin;
'(0) On 811 vehicles, harness, Implements,
tools and machlnery,of every kind Snd description
used on and about'~farms, truck gardens, d8irieS,
hennerles or ranohes.
~- “id),Oziall fr&s and products, other than
&rmring'or6ps, azu,,a&l fovls, domestic aalmals.
Wui 'llvestook~of every description, prodnoed,
raised, grown, kept.or used on truok gardens, hen-
nerles; ~farms; ranohes and dairies; Snd
"(e) On chureh:hduses, oountry sohool houses,
. country lodge glooms and country~recreatlon halls,
other than road houses and publio~darice halls and
shelr c6utents." (Emphesls supnlied throughout this
opinion.)
: Thereafter~~~iP~~~l~~,the 50th~ bgislsture, by the pSs-
sag& of Its E&se Bill 155, 8s noted heretofore, extended the
coverage $n th&following respects and with the following Wal-
ifiC8tiOnS:
nSeotlon 1. Senate Bill Ho. I.21 psssed by the
Forty-fifth bglslstnre of the State of Texas St
Its Regillar gessiod in 1937, and known 8s Artlole
486OS~20, Veruonts Civil StStUt9S of the State of
Texas,~~ls hereby smended so 8s to add thereto St
th6 end thereof the following:
-Ya~Sec . la. County Nutnal Insuranoe Cola dies
operating under the provlslons of Artlole 4 E Oa-20
shall after.th& passage of this Act be authorised
to write lnsuranoe against loss or damage from any
hazard provided therein or thatrz otynr fg; 2
wlndstorm~insur8nce comrmny 0Dc) inn T P
Eon. George B. Butler, page 3 (V-1074)
write on operty described in Section 1 of
Artiole 4
' 'Sec. 28. Any oom y operating undbr the
pro+zislous of Ax%dcle 4 E?OS-20 or subjeat:to the
provisions of said Article, -exceptLng those com-
panies which out of the total amount of insurance
in force maintain more than sixty per cent (6@)
In force on rural property. . . which shall here-
after be known as ‘Farm Mutual Insurance Companies,'
Shall become subject to the urovislons of this Act
and shall comply with the following requirements,
to wit:
termx when used ln this
""company" shall refer to and Include all types
of orgaulxstlons, corporations, asxociatlons, aom-
panle,s or.:groups subject to the provlslons of this
Act. ;~
". . . .
""Ruril Property" as the term 1s used In this
kw shall mean any property which h8s at least
five (5) acres of'oultlvated or grating lend used
exclusively with such insured property."
Speciflo8lly, then, your question Is whether 8 fsrti
mutual insmoe company, as defined imSec. 2s of Rouse Bill
155 set out 8bov6, IS entitled to write the additional cover-
age extended tc:oounty mutual lusuranoe companies by Sec. la
of House Bill 155.
Until the passage of Rouse Bill 155, connty mutual
lnsur8nce companles'could write only the perils of fire,
lightning, g88 explosion, theft, windstorm and hall on the
enumerated risks.
Thereafter, they were authorlxed to write Insurance
against all of the perils that 8 fire or windstorm lnsurauoe
company may write, 8 recitation of whioh perils ls unnecessary
herein.
An examination of the precise language of Rouse Bill
155 will show the exclusion of farm mutual lneuranoe Companies
both from Its benefits and from Its exactions. Thus it pro-
vides that:
Hon. George B. Butler, page 4 (V-1074)
"Any corn ny.operatlng under the provisions
of Article r 8608-20. . . , excepting those com-
panlea which out of the total amount of lnsur-
ance In force maintain more th8n sixty per cent
(60s) In force on rural property. . . which
shall hereafter be known ~88 *Farm Mu& Insur-
ance Companies.' shall become subject to the
provisions of this Act. . . ."
Obviously, farm mutual Insurance companies are re-
moved from the-'operation of the entire Act by the foregtilng
provision. That psrt of the Act whloh extends additional
coverage to county mutual insurance companies, though deslg-
nated therein 8s Sec. la, Is no less removed from the effect
of the quoted exemptloU of farm mutual insurance OOmp8UitiS
from the operation of the Act by virtue bf Its bdlng In 8
separate-section. The Act Is entire. Farmmutualina~ranae
compenles are not subject to any part of it. !i'heydo not
obtain the advantage of wrltlng the additional cover8ge,but
by the same token, they aide not siibjeot to the exactions made
thereafter. And these exactions are considerable. For exam-
ple, the additional exactions include the requirements of
approval of policy forms, flllUg of rate schedules, llceuslng (
of agents, officers bonds and pens1 provisions, solvency defi-
nition and supervlslon,sn&max~ contingent liability, to
point out some of the more sUbStSUtl81 changes.
SUMMARY
Farm mutual lnsursnce comp8nles brgenlxed,
~ defined and operating under Art. ~&OS-20, V.C.S.,
are not authorlsed to cover the additional perils.
extended by the provisions of House Bill 155, Acts
50th.-Leg., 1947, ch. 367, p-739 (Sec. la, Art.
486Os-2O;V.C.S.) but are, Instead, confined to
the iiuthorlted perils set out In Sea. 1 of Art.
4060a-20.
Yours very truly
APPROVBD: PRICE DZXEL
Attorney General
Red McDaniel
State Affairs Dlvislou
Joe R. Greenhill
First Assistant
DJC/rt