              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
