What happens if the diligent effort requirement is not met in Texas?

In Texas, if the diligent effort requirement is not met, the policy indeed becomes void and agents may face penalties. The diligent effort requirement refers to the obligation of agents to demonstrate that they have made reasonable attempts to place insurance with admitted carriers before turning to surplus lines insurers. This is crucial for maintaining regulatory standards and protecting the Texas insurance market's integrity.

Failure to meet this requirement not only invalidates the surplus lines policy but can also lead to disciplinary actions against the agents involved. Such penalties can include fines, suspension, or revocation of the agent's license, as regulators enforce compliance with Texas insurance laws. This emphasizes the importance of adhering to diligent effort protocols in order to maintain valid insurance policies and prevent legal consequences for agents who do not comply.