Texas Administrative Code
Title 16 - ECONOMIC REGULATION
Part 4 - TEXAS DEPARTMENT OF LICENSING AND REGULATION
Chapter 77 - SERVICE CONTRACT PROVIDERS AND ADMINISTRATORS
Section 77.40 - Financial Security - General Requirements

(a) A provider must maintain financial security to ensure the faithful performance of a provider's obligations to its service contract holders and for the benefit of those service contract holders who suffer actual financial loss due to the provider's failure to perform those obligations.

(b) A provider must submit in a manner prescribed by the department proof of one of the following three forms of financial security that meets the requirements of Texas Occupations Code § 1304.151 and/or §1304.152:

(c) Whichever form of financial security the provider uses must be maintained by the provider during the entire time the provider continues to do business in this state or is registered to do business in this state and until the provider has performed or otherwise satisfied all liabilities and obligations to its service contract holders in this state.

(d) If any form of financial security is canceled or lapses during the term of the provider's registration, the provider may not sell or issue a new service contract after the effective date of the cancellation or lapse, unless and until the provider files with the executive director a new form of financial security that meets the financial security requirements provided by Texas Occupations Code, Chapter 1304 and this chapter.

(e) Cancellation or lapse of the financial security does not affect the provider's liability for a service contract sold or issued by the provider before or after the effective date of the cancellation or lapse.