Ch. 627 INSURANCE CODE; RATES AND CONTRACTS Ch. 627

Transcription

1 through except that under the insurer may at its option provide for an equitable reduction of the amount of the annuity payments in settlement of an overdue or deferred payment in lieu of providing for deduction of such payments from an amount payable upon settlement under the contract. (b) In such reversionary annuity contracts there shall be a provision that the contract may be reinstated at any time within three years from the date of default in making stipulated payments to the insurer, upon production of evidence of insurability satisfactory to the insurer, and upon condition that all overdue payments and any indebtedness to the insurer on account of the contract be paid, or, within the limits permitted by the then cash value of the contract, reinstated, with interest as to both payments and indebtedness at a rate to be specified in the contract but not exceeding six per cent per annum compounded annually. (2) This section shall not apply to group annuities or to annuities included in life insurance policies, and any of such provisions not applicable to single premium annuities shall not to that extent be incorporated therein. Blator:r.- 488, ch Incontestability after reinstatement.-a reinstated policy of life insurance, fixed dollar annuity contract or variable annuity contract may be contested on account of fraud or misrepresentation of facts material to the reinstatement only for the same period following reinstatement and with the same conditions and exceptions as the policy provides with respect to contestability after original issuance. Blotor:r.- 488, ch ; 17, ch Policy settlements.-any life insurer shall have the power to hold under agreement the proceeds of any policy issued by it, upon such terms and restrictions as to revocation by the policyholder and control by beneficiaries and with such exemptions from the claims of creditors of beneficiaries other than the policyholder as set forth in the policy or as agreed to in writing by the insurer and the policyholder. Upon maturity of a policy, in the event the policyholder has made no such agreement, the insurer shall have the power to hold the proceeds of the policy under an agreement with the beneficiaries. The insurer shall not be required to segregate the funds so held but may hold them as part of its general assets. BlstorJ'.- 500, c!! Policy must contain entire contract.-no life insurer or any agent thereof shall make any contract of insurance or agreement as to such contract other than as plainly expressed in the policy issued thereon. Blotor:r.- 501, ch Nonforfeiture benefits; certain interim policies.-each life insurance policy issued between the effective date of this code and the operative date of (standard 1451 nonforfeiture law) shall provide: (1) That, in the event of default in any premium, the insurer will grant, upon proper request not later than sixty days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy. (2) That, upon surrender of the policy within sixty days after the due date of any premium payment in default after premiums have been paid for at least three full years, the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value at least equal to the minimum cash surrender value hereinafter specified. The minimum cash surrender value shall be equal to (a) The reserve on the date of default of the premium less a sum of not more than two and one-half per cent of the face amount, or (b) An amount as defined in but on the basis of the commissioners' 1941 standard ordinary mortality table in lieu of the commissioners' 1958 standard ordinary mortality table therein specified. The policy shall reserve to the insurer the right to defer the granting of any cash surrender value for six months after demand therefor with surrender of the policy. (3) That a specified paid-up nonforfeiture benefit the present value of which shall be at least equal to the cash surrender value shall become effective as specified in the policy unless the person entitled to make such election elects another available option not later than sixty days after the due date of the premium in default, provided, however, that where the mortality table used is the commissioners' 1941 standard ordinary mortality table, the rates of mortality to be assumed in calculating any extended term insurance with accompanying pure endowment, if any, may be not more than one hundred and thirty per cent of the rates of mortality according to such table. (4) A statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first twenty policy years or during the term of the policy, whichever is shorter. (5) This section does not apply to term policies of uniform amount of fifteen years duration or less, to increasing term policies of fifteen years duration or less, nor to decreasing term policies. Blstor:r.- 502, ch Note.-Bimllar provisions found In former Standard nonforfeiture law; life insurance.- ( I) This section shall be known as the standard nonforfeiture law. (2) NONFORFEITURE PROVISIONS.-In the case of policies issued on or after the opera-

2 tive date of this section as defined in subsection surrender values and the paid-up nonforfeiture (11), no policy of life insurance, except as set benefits are altered by the existence of any forth in subsection (10), shall be delivered or paid-up additions credited to the policy or any issued for delivery in this state unless it shall indebtedness to the insurer on the policy; if a contain in substance the following provisions, detailed statement of the method of computaor corresponding provisions which in the opin- tion of the values and benefits shown in the ion of the department are at least as favor- policy is not stated therein, a statement that able to the defaulting or surrendering policy- such method of computation has been filed with holder. the insurance supervisory official of the state (a) That in the event of default in any pre- in which the policy is delivered; and a statemium payment, after premiums have been paid ment of the method to be used in calculating for at least one full year in the case of ordi- the cash surrender value and paid-up nonfornary insurance or three full years in the case feiture benefit available u.nder the policy on of industrial insurance, the insurer will grant, any policy anniversary beyond the last anniupon proper request not later than sixty days versary for which such values and benefits are after the due date of the premium in default, consecutively shown in the policy. a paid-up nonforfeiture benefit on a plan stipu- (3) Any of the provisions or portions therelated in the policy, effective as of such due date, of set forth in paragraphs (a) through (f) of of such value as may be hereinafter specified. subsection (2) which are not applicable by reason of the plan of insurance may, to the extent (b) That upon surrender of the policy with- inapplicable, be omitted from the policy. The inin sixty days after the due date of any premium surer shall reserve the right to defer the paypayment in default after premiums have been ment of any cash surrender value for a period paid for at least three full years in the case of six months after demand therefor with surof ordinary insurance, and five full years in render of the policy. the case of industrial insurance, the insurer will pay, in lieu of any paid-up nonforfeiture (4) CASH SURRENDER VALUE.- Any benefit, a cash surrender value of such amount cash surrender value available under the polas may be hereinafter specified. icy in the event of default in the premium payment due on any policy anniversary, whether (c) That a specified paid-up nonforfeiture or not required by subsection (2), shall be an benefit shall become effective as specified in amount not less than the excess, if any, of the the policy unless the person entitled to make present value on such anniversary of the future such election elects another available option guaranteed benefits which would have been pronot later than sixty days after the due date of vided for by the policy, including any existing the premium in default. paid-up additions, if there had been no default, (d) That if the policy shall have become over the sum of: paid up by completion of all premium payments, (a) The then present value of the adjusted or if it is continued under any paid-up non- premiums as defined in subsection (6), correforfeiture benefit which became effective on sponding to premiums which would have fallen or after the third policy anniversary in the due on and after such anniversary, and case of ordinary insurance, or the fifth policy (b) The amount of any indebtedness to the anniversary in the case of industrial insurance, insurer on account of or secured by the policy. the insurer will pay upon surrender of the pol- Any cash surrender value available within icy within thirty days after any policy anni- thirty days after any policy anniversary under versary, a cash surrender value of such amount any policy paid up by completion of all preas may be hereinafter specified. mium payments, or any policy continued under (e) A statement of the mortality table and any paid-up nonforfeiture benefits, whether or interest rate used in calculating the cash sur- not required by such subsection (2), shall be render values and the paid-up nonforfeiture an amount not less than the present value, on benefits available under the policy, together such anniversary, of the future guaranteed with a table showing the cash surrender value, benefits provided for by the policy, including if any, and paid-up nonforfeiture benefit, if any existing paid-up additions, decreased by any, available under the policy on each policy any indebtedness to the insurer on account of anniversary, either during the first twenty pol- or secured by the policy. icy years or during the term of the policy, (5) PAID-UP NONFORFEITURE BENEwhichever is shorter, such values and benefits FITS.-Any paid-up nonforfeiture benefit availto be calculated upon the assumption that there able under the policy in the event of default are no dividends or paid-up additions credited in the premium payment due on any policy to the policy and that there is no indebtedness anniversary shall be such that its present value to the insurer on the policy. as of such anniversary shall be at least equal (f) A statement that the cash surrender to the cash surrender value then provided for values and the paid-up nonforfeiture benefits by the policy, or, if none is provided for, that available under the policy are not less than the cash surrender value which would have been minimum values and benefits required by or required by this section in the absence of the pursuant to the insurance law of this state; an condition that premiums shall have been paid explanation of the manner in which the cash for at least a specified period. 1452

3 1453 (6) THE ADJUSTED PREMIUM.-The adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding extra premiums on a substandard policy, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of: (a) The then present value of the future guaranteed benefits provided for by the policy; (b) Two per cent of the amount of the insurance if the insurance be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with the duration of the policy; (c) Forty per cent of the adjusted premium for the first policy year; (d) Twenty-five per cent of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less. Provided, however, that in applying the percentages specified in paragraphs (c) and (d) above, no adjusted premium shall be deemed to exceed four per cent of the amount of insurance or uniform amount equivalent thereto. The date of issue of a policy for the purpose of this subsection shall be the date as of which the rated age of the insured is determined. (7) In the case of a policy providing an amount of insurance varying with the duration of the policy, the equivalent uniform amount thereof for the purpose of subsection (6) shall be deemed to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy, provided, however, that in the case of a policy for a varying amount of insurance issued on the life of a child under age ten, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age ten were the amount provided by such policy at age ten. (8) All adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of the commissioners' 1958 standard ordinary mortality table, provided that for any category of such policies issued on female risks, adjusted premiums and present values may be calculated according to an age not more than three years younger than the.actual age of the insured. Such calculations for all policies of industrial insurance shall be_ made on the basis of the following tables: (a) For policies issued on and after the operative date of this section but before January 1, 1968, the 1941 standard industrial mortality table unless the commissioners' 1961 standard industrial mortality table is applicable according to subsection (11) of this section; (b) For policies issued on and after January 1, 1968, the commissioners' 1961 standard industrial mortality table. All calculations shall be made on the basis of the rate ofinterest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits; provided that such rate of interest shall not exceed 3lf2 percent per annum, except that a rate of interest not exceeding 4 percent per annum may be used for policies issued on or after July 1, 1973, and prior to January 1, 1986; and provided that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioners' 1958 extended term insurance table, for ordinary policies. In the case of industrial policies: (c) For policies issued on and after the operative date of this section but before January 1, 1968, not more than one hundred thirty per cent of the rates of mortality according to the 1941 standard industrial mortality table, unless the commissioners' 1961 industrial extended term insurance table is applicable according to subsection (11) of this section, in which case not more than those of the latter table; ~d) For policies issued on and after January 1, 1968, not more than those of the commissioners' 1961 industrial extended term insurance table. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the insurer and approved by the department. (9) CALCULATION OF VALUES.-Any cash surrender value and any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due at anv time other than on the policy anniversary sh~ll be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in subsections (4)-(8) of this section may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paidup term additions, shall be not less than the dividends used to provide such additions. If term insurance benefits are provided by a rider or by a supplemental policy provision to which, if issued as a separate policy, this section would apply, additional cash surrender values and additional paid-up nonforfeiture benefits, if any, at least equal to those required if issued

4 as a separate policy, may be provided by the insurer and shall be deemed to be in compliance with this section. Notwithstanding the provisions of subsection (4), additional benefits payable: (a) In the event of death or dismemberment by accident or accidental means, (b) In the event of total and permanent disability, (c) As reversionary annuity or deferred reversionary annuity benefits, (d) As term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this section would not apply, and (e) As term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child's age is twenty-six, is uniform in amount after the child's age is one, and has not become paid-up by reason of the death of a parent of the child, and (f) As other policy benefits additional to life insurance and endowment benefits, and premiums for all such additional benefits, shall he disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this section, and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits. (10) EXCEPTIONS.-This section shall not apply to any re-insurance, group insurance, pure endowment, annuity or reversionary annuity contract, nor to any term policy of uniform amount, or renewal thereof, of, fifteen years or less expiring before age sixty-six, for which uniform premiums are payable during the entire term of the policy, nor to any term policy of decreasing amount on which each adjusted premium calculated as specified in subsections ( 6)-(8) is less than the adjusted premium so calculated on a policy of uniform amount issued at the same age and for the same initial amount of insurance for a term defined as follows: For ages at issue fifty and under the term shall be fifteen years; thereafter, the term shall decrease one year for each year of age beyond fifty. (11) OPERATIVE DATE.-After the effective date of this code, any insurer may file with the department a written notice or notices of its election to comply with the provisions of this section on and after a specified date or dates before January 1, 1966, as to either or both of its policies of ordinary and industrial insurance, in which case such specified date or dates shall be the operative date of this section with respect to such policies. this section for such policies but before January 1, 1968, any insurer may file with the department written notice of its election to have the commissioners' 1961 standard industrial mortality table and the commissioners' 1961 industrial extended term insurance table applicable with respect to subsection (8) of this section for policies issued on and after the date specified in sue}). election. History ch ; 3, ch ; 2, 3, ch ; 13, 35, ch ; 3, ch Note.-Simllar provisions found In former , Registered policies; deposit of as sets.- (1) Any life insurer which has outstanding any policies heretofore issued under laws heretofore in force providing for the deposit with the commissioner of assets equal to the legal reserve on such policies in force, less any loans or liens on such policies not in excess of such legal reserve, and providing for a certificate upon the face of such policies in. substantially the following words: "This policy is registered, and approved securities equal in value to the legal reserve thereon are held in trust by the insurance commissioner," shall continue to make such deposits as required by such laws and such policies. (2) No insurer shall hereafter issue any new such policy. (3) All deposits under this section are subject to the applicable provisions of part III of chapter 625 of this code (administration of deposits). Blstory.- 504, ch Note.-Simllar provisions found In former , Same; deficiency of deposit.-. (1) If at any time the value of assets held on deposit as to a particular insurer under is less than the legal reserves currently required to be held as to all the insurer's life insurance policies and annuity contract!!, which are subject to , then in force, the insurer shall not issue any additional life insurance policies or annuity contracts while such deficiency exists. This provision does not apply as to industrial life insurance. (2) If the insurer has failed to cure such a. deficiency after the department has given the insurer notice thereof by registered mail, within such reasonable time, not exceeding ninety days, as may be allowed therefor by the department and so specified in such notice, the insurer shall be deemed to be insolvent and the department shall revoke its certificate of authority and institute delinquency proceedings against the insurer under chapter 631 of this code. Hlstory.- 505, ch ; 13, 35, ch The operative date of this section for policies Prohibited policy plans.- of both ordinary and industrial insurance (1) No insurer shall issue policies, certifishall be the earlier of January 1, 1966, and cates or contracts to policyholders or members any prior operative date or dates resulting providing for the grouping of its policyholders from such previously filed written notices. or members into groups and divisions, classified With respect to policies of industrial insur- according to age, and providing for payment ance issued on and after the operative date of of contingent endowment benefits, by whatever 1454

5 Ch. 627 INSURANCE CODE: RATES AND CONTRACTS Ch. 627 name called, from special funds created for such purpose to the oldest member in seniority of the group or division, or under any other similar plan. (2) The department shall revoke the certificate of authority of any insurer which violates this section. Any officer or agent of an insurer who violates this section shall be guilty of a misdemeanor, and upon conviction thereof shall be punished as provided in of this code. History.- 506, ch ; H13, 35, ch Note.-Simllar provisions found In former , , , Cash payments of single premium life policies.-premiums for single premium life insurance policies shall be paid in cash consisting of coins, currency, checks, or money orders. This section shall not be applicable to the use of dividends to purchase paid-up additional insurance or to such other usual and customary methods of paying for life insurance as may be permitted by the department of insurance pursuant to rule or regulation. History.- 1, ch ; 1, ch Scope of part IV Industrial life insurance defined Required provisions Grace period Entire contract; statements m application Incontestability Misstatement of age or sex Dividends Reinstatement Scope of part IV.-The provisions of part IV of this chapter shall apply only to industrial life insurance policies. Sections (excluded or restricted coverage), (incontestability after reinstatement), (standard nonforfeiture law), and (prohibited policy plans) of part III of chapter 627 shall also apply as to industrial life insurance policies. Bldory.- 507, ch Note.-Simllar provisions found In former Industrial life insurance defined. For the purposes of this code "industrial life insurance" is that form of life insurance written under policies under which premiums are payable monthly or more often, bearing the words "industrial policy" or "weekly premium policy" or words of similar import imprinted upon the policy as part of the descriptive matter, and issued by an insurer which, as to such industrial life insurance, is operating under a system of collecting a debit by its agent. Blatory.- 508, ch Note.-Simllar provisions found In former Required provisions.- (!) No policy of industrial or weekly premium life insurance shall be delivered or issued for delivery in this state unless it contains in substance each of the provisions as required in inclusive, and or provisions which in the department's opinion are more favorable to the policyholder. (2) Any of such provisions or portions thereof. not applicable to single premium or term policies shall to that extent not be incorporated therein. PART IV INDUSTRIAL LIFE INSURANCE POLICIES Settlement Authority to alter contract Beneficiary Facility of payment Nonforfeiture benefits; certain terim policies Title Direct payment of premiums Conversion. Hlstory.- 509, ch ; flj, 35, ch Note.-Simllar provisions found In former Grace period.-there shall be a provision that the insured is entitled to a grace period of four weeks within which the payment of any premiums after the first may be made, except that in policies the premiums for which are payable monthly, the period of grace shall be one month, but not less than thirty days; that during the period of grace the policy shall continue in full force, but if during the grace period the policy becomes a claim, then any premiums then due and unpaid may be deducted from any settlement under the policy. Bldory.- 510, ch Note.-Simllar provisions found In former Entire contract; statements in application.-there shall be a provision that the policy shall constitute the entire contract between the parties, or, if a copy of the application is endorsed upon or attached to the policy when issued, a provision that the policy and the application therefor shall constitute the entire contract. If the application is so made a part of the contract, the policy shall also provide that all statements made by the applicant in such application shall, in the absence of fraud, be deemed to be representations and not warranties. History.- 511, ch Note.-Simllar provisions found In former Incontestability.-There shall be a provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue except for nonpayment of premiums, and except, at the option of the insurer, 1455 In-

6 as to provisions providing benefits for disability or specifically for death by accident or accidental means. Butory.- 512, ch Note.-Simllar provisions found tn former f Misstatement of age or sex.- There shall be a provision that if it is found that the age or sex of the individual insured, or the age or sex of any other individual considered in determining the premium, has been misstated, any amount payable or benefit accruing under the policy shall be such as the premium would have purchased according to the correct sex or age. Such calculations shall be in accordance with the insurer's rate at date of issue and at the insurer's option this may be so specified in the policy. Bistory.- 513, ch Note.-Simllar provisions found In former Dividends.-If a participating policy, there shall be a provision that the insurer shall annually ascertain and apportion any divisible surplus accruing on the policy. This provision shall not prohibit the payment of additional dividends on default of payment of premiums or termination of the policy. Blstory.- 514, ch Note.-Simllar provisions found In former Reinstatement.-There shall be a provision that the policy may be reinstated at any time within two years after the date of default in the payment of any premium, unless the policy has been surrendered for its cash value or unless the paid-up term insurance, if any, has expired, upon evidence of insurability satisfactory to the insurer and the payment of all overdue premiums and payment (or, within the limits permitted by the then cash value of the policy, reinstatement) of any other indebtedness to the insurer upon the policy with interest as to both premiums and indebtedness at a rate not exceeding six per cent per annum compounded annually. Blstory.- 515, ch Note.-Simllar provisions found In former Settlement.-There shall be a provision that when the policy becomes a claim by the death of the insured, settlement shall be made upon surrender of the policy and receipt of due proof of death or after a specified period not exceeding sixty days after such surrender and receipt of such proof. At the insurer's option surrender of the premium receipt book may also be required. Blstory.- 516, ch Note.-Simllar provisions found In former Authority to alter contract.-there shall be a provision that no agent shall have the power or authority to waive, change or alter any of the terms or conditions of any policy; except that at the option of the insurer the terms or conditions may be changed by an endorsement or rider signed by a duly authorized officer of the insurer. Blstory.- 517, ch Note.-Simllar provisions found In former Beneficiary.-Each such policy shall have a space for the name of the beneficiary designated with a reservation of the right to designate or change the beneficiary after the issuance of the policy. The policy may also provide that no designation or change of beneficiary shall be binding on the insurer until endorsed on the policy by the insurer, and that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured. Blatory.- 518, ch Note.-Simllar provisions found in former Facility of payrnent.-the policy may also provide that if the beneficiary designated in the policy does not make a claim under the policy or does not surrender the policy with due proof of death within the period stated in the policy, which shall not be less than thirty days after the death of the insured, or if the beneficiary is the estate of the insured or is a minor, or dies before the insured or is not legally competent to give valid release, then the insurer may make payment thereunder to the executor or administrator of the insured, or to any of the insured's relatives by blood or legal adoption or connection by marriage, or to any person appearing to the insurer to be equitably entitled thereto or to any person who has incurred expense for the maintenance, medical attention or burial of the insured. The policy may also include a similar provision applicable to any other payment due under the policy. Blatory.- 519, ch Note.-Simllar provisions found In former Nonforfeiture benefits; certain interim policies.-each industrial life insurance policy issued between the effective date of this code and the operative date of (standard nonforfeiture law) shall provide: (1) That, in the event of default in any premiums, the insurer will grant upon proper request not later than thirteen weeks or three months after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy. (2) That upon surrender of the policy within thirteen weeks or three months after the due date of any premium payment in default after premiums have been paid for at least five full years, the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value at least equal to the minimum cash surrender value hereinafter specified. The minimum cash surrender value shall be equal to (a) The reserve on the date of default of the premium less a sum of not more than two and one-half per cent of the face amount, or (b) An amount as defined in The policy shall reserve to the insurer the right to defer the granting of any cash surrender value for six months after demand therefor with surrender of the policy. (3) That a specified paid-up nonforfeiture

7 benefit, the present value of which shall be at least equal to the cash surrender value, shall become effective as specified in the policy unless the person entitled to make such election elects another available option not later than thirteen weeks or three months after the due date of the premium in default, provided, however, that where the mortality table used is the 1941 standard industrial mortality table, the rates of mortality to be assumed in calculating any extended term insurance with accompanying pure endowment, if any, may be not more than one hundred and thirty per cent of the rates of mortality according to such table. ( 4) A statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefits, if any, available under the policy on each policy anniversary either during the first twenty policy years or during the term of the policy, whichever is shorter. (5) This section does not apply to term policies of uniform amount of fifteen years duration or less, to increasing term policies of fifteen years duration or less, nor to decreasing term policies. Blotor;r.- 520, cb Note.-Simllar provisions found In former Title.-There shall be a title on the face of each such policy briefly describing its form. Bla r.- 521, cb. 58-2~ Direct payment of premiums.-in Group contracts must meet group requirements Employee groups Debtor groups Labor union groups Trustee groups Credit union groups Provisions required in group contracts Grace period Incontestability Application; statements deemed representations Insurability. the case of weekly premium policies, there may be a provision that upon proper notice to the insurer, while premiums on the policy are not in default beyond the grace period, of the intention to pay future premiums directly to the insurer at its home office or any office designated by the insurer for the purpose, the insurer will at the end of each period of a year from the due date of the first premium so paid, for which period such premiums are so paid continuously without default beyond the grace period, refund a stated percentage of the premiums in an amount which fairly represents the savings in collection expense. Bls r.- 522, ch Conversion.-There may be a provision in the case of industrial policies granting to the insured, upon proper written request and upon presentation of evidence of insurability satisfactory to the insurer, the privilege of converting any industrial insurance policy to any form of life insurance with less frequent premium payments regularly issued by the insurer, in accordance with terms and conditions agreed upon with the insurer. The privilege of making such conversion need be granted only if the insurer's industrial policies on the life insured, in force as premium paying insurance and on which conversion is requested, grant benefits in event of death, exclusive of additional accidental death benefits and exclusive of any dividend additions, in an amount not less than the minimum amount of such insurance with less frequent premium payments issued by the insurer at the age of the insured on the plan of industrial or ordinary insurance desired. Blstor;r.- 523, cb PART V GROUP LIFE INSURANCE Misstatement of age Payment of benefits Certificate Conversion on termination of eligibility Conversion on termination of policy Death pending conversion Use of dividends, refunds, fees, etc Premium rates Assignment of incidents of ownership in group life insurance policies, including conversion privileges Group life insurance; association Group contracts must meet group insurance policies: requirements.- (a) Insuring only individuals related by (1) No life insurance policy shall be de- blood, marriage or legal adoption; or livered or issued for delivery in this state in- (b) Insuring only individuals having a comsuring the lives of more than one individual mon interest through ownership of a business unless to one of the groups as provided for in enterprise, or a substantial legal interest or , and unless in compliance equity therein, and who are actively engaged in with the other applicable provisions of part V the management thereof; or of this chapter. (c) Insuring only individuals otherwise hav- (2) Subsection (1) shall not apply to life ing an insurable interest in each other's lives. 1457

8 Ch. 627 INSURANCE CODE: RATES AND CONTRACTS Ch. 627 (3) Nothing in this chapter shall affect the provisions of to Hlstor , ch Note.-Simllar provisions found 1n former Employee groups.-the lives of a group of individuals may be insured under a policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policybolder, to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements: (1) The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class or classes thereof determined by conditions pertaining to their employment. The policy may provide that the term "employees" shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietors or partnerships i~ the business of the employer and of such affiliated corporations, proprietors or pa~tnerships is under common control. The pohcy may provide that the term "employees" shall include the individual proprietor or partners if the employer is an individual proprietor or a partnership. The policy may provide that the term "employees" shall include retired employees. No director of a corporate employer shall be eligible for insurance under the policy unless such person is otherwise eligible as a bona fide employee of the corporation by performing services other than the usual duties of a director. No individual proprietor or partner shall be eligible for insurance under the policy unless he is actively engaged in and devotes a substantial part of his time to the conduct of the business of the proprietor or partnership. A policy issued to insure the employees of a public body may provide that the term "employees" shall include elected or appointed officials. (2) The premium for the policy shall be paid by the policyholder, either wholl~ from the policyholder's funds or funds contnbuted by the employer, or partly from such funds and partly from funds contributed by the insured employees. No policy may be issued on which the entire gross premium charged for the insurance by the insurer is to be derived from funds contributed by the insured employees. A policy on which part of the premium is to be derived from funds contributed by the insured employees may be placed in force only if at least sixty per cent of the then eligible employees, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer, elect to make the required contributions. A policy on which no part of the premium is to be derived from funds contributed by the insured employees must insure all eligible employees, or all except any as to whom ev:idence of individual insurability is not satisfactory to the insurer. ( 3 ) The policy must cover at least ten employees at date of issue. (4) The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the employees or by the employer or trustees. Hlstory.- 525, ch ; U. ch Note.-Slmllar provisions found In former Debtor groups.-the lives of a group of individuals may be insured under a policy issued to a creditor, who shall be deemed the policyholder, to insure debtors of the creditor, subject to the following requirements: (1) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor whose indebtedness is repayable in installments, or all of any class or classes thereof determined by conditions pertaining to the indebtedness or to the purchase giving rise to the indebtedness. The policy may provide that the term "debtors" shall include the debtors of one or more subsidiary corporations, and the debtors of one or more affiliated corporations, proprietors or partnerships if the business of the policyhoider and of such affiliated corporations, proprietors or partnerships is under common control through stock ownership, contract, or otherwise. (2) The premium for the policy shall be paid by the policyholder, either from the creditor's funds, or from charges collected from the insured debtors, or from both. A policy on which part or all of the premium is to be derived from the collection from the insured debtors of identifiable charges not required of uninsured debtors shall not include, in the class or classes of debtors eligible for insurance, debtors under obligations outs1anding at its date Of issue without evidence of individual insurability unless at least seventy-five per cent of the then eligible debtors elect to pay the required charges. A policy on which no part of the premium is to be derived from the collection of such identifiable charges must insure all eligible debtors, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer. The policy may be issued only if the group of eligible debtors is then receiving new entrants at the rate of at least one hundred persons yearly, or may reasonably be expected to receive at least one hundred new entrants during the first policy year, and only if the policy reserves to the insurer the right to require evidence of individual insurability if less than seventy-five per cent of the new entrants become insured. The policy may exclude from the classes eligible for insurance classes of debtors determined by age. (3) The amount of insurance on the life of any debtor shall at no time exceed the amount owed by him which is repayable in installments to the creditor, or five thousand dollars, whichever is less, except that loans not exceeding one year duration shall not be subject to the five thousand dollars limit; provided further, that on such loans not exceeding one year duration the limit of coverage shall

9 not exceed ten thousand dollars with any one insurer. ( 4) The insurance shall be payable to the policyholder. Such payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of such payment. (5) On a policy for which the premium is paid wholly from the creditor's funds without the collection of identifiable charges from the insured debtors for the insurance, directly or indirectly, and which policy is effected through a licensed life agent principally engaged in the sale of life insurance, other than one defined in ~ (1) (e), who shall receive all commission or any other form of compensation thereunder, the provisions of part VIII of this chapter shall not apply to such policy, and the amount of insurance under such policy on the life of any debtor shall at no time exceed the amount owed by him to the creditor or ten thousand dollars, whichever is less, and the term of insurance on any loan insured thereunder shall not be longer than five years from the date it becomes effective. History.- 526, ch ; 1, ch Note.-SimJ1ar provisions found In former Labor union groups.-the lives of a group of individuals may be insured under a policy issued to a labor union, or to the trustees of a fund established in this state by a labor union, which shall be deemed the policyholder, to insure members of such union for the benefit of persons other than the union or any of its officials, representatives or agents, subject to the following requirements: (1) The members eligible for insurance under the policy shall be all of the members of the union, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the union, or both. In the case of a policy issued to the trustees of a fund established in this state by a labor union, the policy may provide that the trustees or their employees, or both, may be insured under the policy if their duties are principally connected with such trusteeship. (2) The premium for the policy shall be paid by the policyholder either wholly from the policyholder's funds or funds contributed by the employer or employers of the insured persons, or by the labor union, or by both, or partly from such funds and partly from funds contributed by the insured members specifically for their insurance. No policy may be issued on which the entire gross premium charged for the insurance by the insurer is to be derived from funds contributed by the insured members specifically for their insurance. A policy on which part of the premium is to be derived from funds contributed by the insured members specifically for their insurance may be placed in force only if at least sixty per cent of the then eligible members, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer, elect to make the required contributions. A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer. (3) The policy must cover at least ten members at date of issue. (4) The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the members or by the union. History.- 527, ch ; 1, ch ; *2, ch Note.-Simllar provisions found in former Trustee groups.-the lives of a group of individuals may be insured under a policy issued to the trustees of a fund established by two or more employers in the same industry, or by two or more labor unions, or to the trustees of a fund established by one or more employers in the same industry and one or more labor unions, or by one or more employers and one or more labor unions whose members are in the same or related occupations or trades, which trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions for the benefit of persons other than the employers or the unions, subject to the following requirements: (1) No policy may be issued (a) To insure employees of any employer whose eligibility to participate in the fund as an employer arises out of considerations directly related to the employer being a commercial correspondent or business client or patron of another employer (regardless of whether such other employer is or is not participating in the fund), or (b) To insure employees of any employer which is not located in this state, unless the majority of the employers whose employees are to be insured are located in this state, or unless -the employer has assumed obligations through a collective bargaining agreement and is participating in the fund either pursuant to those obligations with regard to one or more classes of his employees which are encompassed in the collective bargaining agreement or as a method of providing insurance benefits for other classes of his employees, or unless the policy is issued to the trustees of a fund established by two or more labor unions. (2) (a) The persons eligible for insurance shall be all of the employees of the employers or all of the members of the unions, or all of any class or classes thereof determined by conditions pertaining to their employment or to membership in the unions, or both. The policy may provide that the term "employees" shall include retired employees and the individual proprietor or partners if an employer is an individual proprietor or a partnership. No director of a corporate employer shall be eligible for insurance under the policy unless 1459

10 Ch. 627 INSURANCE CODE: RATES AND CONTRACTS Ch. 627 such person is otherwise eligible as a bona fide employee of the corporation by performing services other than the usual duties of a director. (b) Except as otherwise provided. he_r~in with respect to retired employees, n?!ndlvldual proprietor or partner shall be ehg1ble for insurance under the policy as an employee unless he is actively engaged in and devotes a substantial part of his ti~e to the conduct _of the business of the propnetor or partnership. The policy may provide that the term "e~ployees" shall include the tru~tees or t_he1_r employees, or both, if their duties. are prmclpally connected with such trusteeship. (3) The premium for the policy shall be paid by the policyholder either wholly. from the policyholder's fund or funds contnbuted by the employer or employers of the insured persons, or by the union or unions, or by both, or partly from such funds and partly from funds contributed by the insured persons. No policy may be issued on which the entire gross premium charged for the insurance by the insurer is to be derived from funds contributed by the insured employees or members specifically for their insurance. A policy on which part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance may be placed in forc.e only if at least seventy-five per cent of the then eligible persons, excluding any as to whom evidence of insurability is not satisfactory to the insurer, elect to make the required contributions. A policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance must insure all eligible persons or all except any as to whom evidence of individual insurability is not satisfactory to the insurer. (4) The policy must cover at date of issue at least one hundred persons and not less than an average of five persons, other than indivi~ual proprietors or partners per employer umt unless the policy is issued to the trustees of a fund established by employers which have assumed obligations through a collective bargaining agreement and are particip~tin~ in ~he fund either pursuant to those obhgatwns with regard to one or more classes of their employees which are encompassed in the collective bargaining agreement or as a method of providing insurance benefits for other class~s of their employees, or unless the employer un.1t is a subsidiary corporation of an employer m the group or is an affiliated corporation, pr? prietorship or partnership of an employer m the group whose business and that of such employer is under common control, or unles& the policy is issued to the trustees of a fund established by two or more labor unions; and in addition to the foregoing requirements if the fund is established by the members of a group of employers the policy may be issued only if either (a) The participating employers constitute 1460 at date of issue at least sixty per cent of those employer members whose employees are not already covered for group life insurance, or (b) The total number of persons covered at date of issue exceeds six hundred; and the policy shall not require that, if a participating employer discontinues membership in such group of employers, the insurance of his employees shall cease solely by reason of such discontinuance. (5) The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the insured persons or by the policyholder, or employers or unions. History.- 528, ch ; 2, ch ; U, ch ; U. ch Note.-81milar provisions found In former Credit union groups.-the lives of a group of individuals may be insured under a policy issued to a credit union, which shall be deemea to be the policyholder for the purpose of this section, the premium on which is to be paid by the credit union or by the credit union and its members jointly, and insuring all of its eligible members for the amounts of insurance, not in excess of the share balance, or two thousand dollars, whichever is less, as to each member, based upon some plan which will preclude individual selection, for the benefit of the share account of the member or some person or persons other than the credit union or its officials, provided, that all eligible members of a credit union may be insured; provided, also, that when the premium is to be paid by the credit union and its members jointly and the benefits are offered to all eligible members, not less than seventy-five per cent of such members may be so insured. History.-1529, ch ; U. ch Note.-81mbar provisions found In former Provisions required in group contracts.-no policy of group life insurance shail be delivered in this state unless it contains in substance the provisions set forth in or provisions which in the opinion of the department are more favorable to the persons insured, or at least as favorable to the persons insured and more favorable to the policyholder; except, however, that: (1) Sections inclusive shall not apply to policies issued to a creditor to insure debtors of such creditor; (2) The standard provisions required for individual life insurance policies shall not apply to group life insurance policies; and (3) If the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision or provisions which in the opinion of the department is or are equitable to the insured persons and to the policyholder, but nothing herein shall be construed to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies. History.- ~ 531, ch ; H l3, 35, ch Note.-slmllar provisions found In former

11 Ch. 62i INSURANCE CODE; RATES AND CONTRACTS Ch Grace period.-the group life insurance policy shall contain a provision that the policyholder is entitled to a grace period of thirty-one days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder shall have given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during such grace period. Hlstory.- 532, ch Note.-Simllar provisions found In former Incontestability.-The group life insurance policy shall contain a provision that the validity of the policy shall not be contested, except for nonpayment of premium, after it has been in force for two years from its date of issue; and that no statement made by any person insured under the policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two years during such person's lifetime nor unless it is contained in a written instrument signed by him. History. -~533, ch Note.-Similar pt ovlslons found In former Application; statements deemed representations.-the group life insurance policy shall contain a provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties, and that no statement made by any person ins ured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or to his beneficiary. History.-~534, ch Note.-Similar provisions found In former Insurability.-The group life insurance policy shall contain a provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of his coverage. Ristory.-~535, ch Note.-Similar provisions found In former Misstatement of age.-the group life insurance policy shall contain a provision specifying an equitable adjustment of premiums or of benefits or of both to be made in the event the age of a person insured has been misstated, such provision to contain a clear statement of the method of adjustment to be used. Rlstory ch Note.-Simllar provisions found In former Payment of benefits.-the group life insurance policy shall contain a provision that any sum becoming due by reason of the death of the person insured shall be payable to the beneficiary designated by the person insured, subject to the provisions of the policy in the event there is no designated beneficiary as to all or any part of such sum, living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of such sum not exceeding five hundred dollars to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured. History.- 537, ch ~. Note.-Similar provisions found In former Certificate.-The group life insurance policy shall contain a provision that the insurer will issue to the policyholder for delivery to each person insured an individual certificate setting forth a statement as to the insurance protection to which he is entitled, to whom the insurance benefits are payable, and the rights and conditions set forth in , , and History.- 538, ch Note.-Similar provisions found In former Conversion on termination of eligibility.-the group life insurance policy shall contain a provision that if the insurance, or any portion of it, on a person covered under the policy ceases because of termination of employment or of membership in the class or classes eligible for coverage under the policv. such person shall be entitled to have issued to him by the in surer, without evidence of insurability, a n individual policy of life insurance without disability or other supplementary benefits, provided application for the individual policy shall be made, and the first premium paid to the insurer, within thirty-one days after such termination, and provided further that: ( 1) The individual policy shall, at the option of such person, be on any one of the forms, except term insurance, then customarily issued by the insurer at the age and for the amount applied for; ( 2) The individual policy shall be in an amount not in excess of the amount of life insurance which ceases because of such termination, less, in the case of a person whose membership in the class or classes eligible for coverage terminates but who continues in employment in another class, the amount of any life ins urance for which such person is or becomes eligible under any other group policy within thirty-one days after such termination, provided that any amount of insurance which shall have matured on or before the date of such termination as an endowment payable to the person insured, whether in one sum or in installments or in the form of an annuity, shall not, for the purposes of this provision, be in-

12 eluded in the amount which is considered to cease because of such termination; and (3) The premium on the individual policy shall be at the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which such person then belongs, and to his age attained on the effective date of the individual policy. HlstorJ.- 539, ch Note.-Simllar provisions found In former Conversion on termination of policy.-the group life insurance policy shall contain a provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of such termination whose insurance terminates and who has been so insured for at least five years prior to such termination date shall be entitled to have issued to him by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided by , except that the group policy may provide that the amount of such individual policy shall not exceed the smaller of: (1) The amount of the person's life insurance protection ceasing because of the ~ermination or amendment of the group pohcy, less the amount of any life insurance for which he is or becomes eligible under any group policy issued or reinstated by the same or anothe_r insurer within thirty-one days after such termination, and (2) Two thousand dollars. HlstorJ.- 540, ch Note.-Simllar provisions found In former Death pending conversion.-the group life insurance policy shall contain a P.rovision that if a person insured under the pohcy dies during the period within which he would have been entitled to have an individual policy issued to him in accordance with or and before such an individual policy shall have become effective, the amount of life insurance which he would have been entitled to have issued to him under such individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefor has been made. HlstorJ.- 541, ch NC'te.-Simllar provisions found In former Use of dividends, refunds, fees, etc.-if a dividend, premium refund, rate reduction commission or service fee is received by any' employer, labor union or association, under any and all group insurance policies heretofore or hereafter delivered in this state, with respect to which they are the policyholdof such dividends, premium refunds, rate reductions, commissions and service fees over the aggregate expenditure of such employer, labor union or association towards the cost of such insurance, including its administration, for the current and preceding two years to the extent that they were not defrayed by dividends, premium refunds, rate reductions, commissions and service fees, shall be applied by the policyholder for the sole benefit of insured employees or members on a basis which precludes individual selection and unfair discrimination. If the aforesaid dividend, premium refund, rate reduction, commission or service fee is received by a trusteed fund, it shall be applied by the trustees for the sole purposes of the trust. Hlstory.- 542, ch Note.-Simllar provisions found In former Premium rates.-a life insurer may issue insurance policies under the provisions of this chapter at premium rates less than the usual rates or premiums for individual insurance policies. Hlstory.- 543, ch Note.-Simllar provisions found In former Assignment of incidents of ownership in group life insurance policies, including conversion privileges.- (!) Nothing in this insurance code or in any other law shall be construed to prohibit any person insured under a group life insurance policy from making an assignment of all or any part of his incidents of ownership under such policy, including, but not limited to, the privilege of having issued to him an individual policy of life insurance pursuant and subject to the provisions of and and the right to name a beneficiary. Subject to the terms of the policy, agreement, or arrangement between the insured, the group policyholder, and the insurer, relating to assignment of incidents of ownership thereunder, such an assignment by an insured, heretofore or hereafter made, is valid for the purpose of vesting in the assignee, in accordance with any provisions included therein as to the time at which it is to be effective, all of such. incidents of ownership so assigned, but without prejudice to the insurer on account of any payment it may make or individual policy it may issue in accordance with and prior to receipt of notice of the assignment. (2) The purpose of sub~ection (1) is to declare and codify existing rights under policies of the types described therein. Hlotory , ch er, or an affiliate or subsidiary of a policyhold Group life insurance; association. er, covering the employees of one or more em- The lives of a group of individuals may be inployers or the members of one or more labor sured under a policy issued to an association unions or associations, or any combination whose members are engaged in a particular thereof to which such employees or members profession, occupation, business, or charitable, contribute to the cost of the premiums for such educational or public service activity which insurance, the excess, if any, of the aggregate holds regular meetings not less than annually to 1462

13 further the purposes of the association members, or to the trustees of a fund established in this state for such association, which shall be deemed the policyholder, to insure the members of such association for the benefit of persons other than the association or any of its official representatives or agents, subject to the following requirements: (1) The members eligible for insurance under the policy shall be all of the members of the association, or all of any class or classes thereof determined by conditions pertaining to their profession, occupation, business, or charitable, educational or public service activity, or to membership in the association, or both. In the case of a policy issued to the trustees of a fund established in this state by an association, the policy may provide that the trustees or their employees, or both, may be insured under the policy if their duties are principally connected with such trusteeship. (2) The premium for the policy shall be paid by the policyholder either wholly from the policyholder's funds or funds contributed by the insured persons or by the association, or by both, or partly from such funds and partly from funds contributed by the insured members specifically for their insurance. A policy on which part of the premium is to be derived from funds contributed by the insured members specifically for their insurance may be placed in force only if at least two hundred of the then eligible members elect to make the required contributions. A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members. (3) The association shall have been in existence for at least two years prior to the issuance of the policy, its annual dues actually collected from its members shall have been not less than $25, and it shall not have Scope of part VI Scope, format of policy Death benefits Nonresident insured Required provisions; captions, omissions, substitutions Handicapped children; continuation of coverage under individual policy Entire contract; changes Time limit on certain defenses Grace period Reinstatement Notice of claim Claim forms Proofs of loss Time of payment of claims. fl Payment of claims Physical examination, autopsy. PART VI DISABILITY INSURANCE POLICIES 1463 been organized for the sole and exclusive purpose of qualifying for insurance under this section. (4) No policy of group life insurance may be issued to an association, or to the trustees of a fund established in whole or in part by an association, which provides term insurance on any person that, together with any other term insurance under any group life insurance policy or policies issued to any association of which such person is a member or to the trustees of any fund or funds established in whole or in part by such an association, exceeds twenty thousand dollars, unless 200 percent of the annual compensation of such person exceeds ' twenty thousand dollars, in which event such term insurance shall not exceed one hundred thousand dollars or 200 percent of such annual compensation, whichever is the lesser. (5) If a dividend, premium refund, rate reduction, commission, or service fee is received by any association or.by the trustees of a fund established in whole or in part by an association, under any and all group insurance policies heretofore or hereafter delivered in this state, with respect to which they are the policyholder, covering the members of the association, to which such members contribute to the cost of the premiums for such insurance, the excess, if any, of the aggregate of such dividends, premium refunds, rate reductions, commissions, and service fees over the aggregate expenditure of such association or trustees towards the cost of such insurance, including its administration, for the current and preceding two years, to the extent that they were not defrayed by dividends, premium refunds, rate reductions, commissions, and service fees, shall be applied by the policyholder for the sole benefit of insured members, on a basis which precludes individual selection and unfair discrimination. History.-!, ch ; 164, ch Legal actions Change of beneficiary Optional policy provisions Change of occupation Misstatement of age or sex Other insurance in this insurer Insurance with other insurers Same; other benefits Relation of earnings to insurance Unpaid premiums Cancellation Conformity with statutes Illegal occupation Intoxicants and narcotics Order of certain provisions Third party ownership Requirements of other jurisdictions Other policy provisions.

14 Age limit Excess insurance Industrial disability insurance Construction of noncomplying contracts Direct payment for hospital, medical services Application signed by agent Filing of classifications and rates Coverage for newborn children Scope of part VI.-Nothing in part VI of this chapter shall apply to or affect: (1) Any policy of liability or workmen's compensation insurance with or without supplementary expense coverage therein. (2) Any group or blanket policy. (3) Life insurance, endowment or annuity contracts, or contracts supplemental thereto which contain only such provisions relating to disability insurance as: (a) Provide additional benefits in case of death or dismemberment or loss of sight by accident or accidental means, or as (b) Operate to safeguard such contracts against lapse, or to give a special surrender value or special benefit or an annuity in the event that the insured or annuitant becomes totally and permanently disabled, as defined by the contract or supplemental contract. ( 4) Reinsurance. Blstory.- 5U, ch Note.-81mllar provisions found In former , Scope, format of policy.-no policy of disability insurance shall be delivered or issued for delivery to any person in this state unless it otherwise complies with this code, and complies with the following: (1) The entire money and other considerations therefor shall be expressed therein; (2) The time when the insurance takes effect and terminates shall be expressed therein; (3) It shall purport to insure only one person, except that a policy may insure, originally or by subsequent amendment, upon the application of an adult member of a family who shall be deemed the policyholder, any two or more eligible members of that family, including husband, wife, dependent children or any children under a specified age which shall not exceed twenty-one years and any other person dependent upon the policyholder; (4) The style, arrangement and overall ap. pearance of the policy shall give no undue prominence to any portion of the text, and every printed portion of the text of the policy and of any endorsements or attached papers shall be plainly printed in lightfaced type of a style in general use, the size of which shall be uniform and not less than ten-point with a lower case unspaced alphabet length not less than one hundred and twenty-point (the "text" shall include all printed matter except the name and address of the insurer, name or title of the policy, the brief description, if any, and captions and subcaptions) ; (5) The exceptions and reductions of indemnity shall be set forth in the policy and, other than those contained in , inclusive, shall be printed, at the insurer's 1464 option, either included with the benefit provisions to which they apply, or under an appropriate caption such as "Exceptions," or "Exceptions and Reductions," except that if an exception or reduction specifically applies only to a particular benefit of the policy, a statement of such exception or reduction shall be included with the benefit provision to which it applies; (6) Each such form, including riders and endorsements, shall be identified by a form number in the lower left-hand corner of the first page thereof; and (7) The policy shall contain no provision purporting to make any portion of the charter, rules, constitution or by-laws of the insurer a part of the policy unless such portion is set forth in full in the policy, except in the case of the incorporation of, or reference to, a statement of rates or classification of risks, or shortrate table filed with the department. (8) The department may require any disability insurance policy or certificate containing a provision commonly known as a deductible provision to have printed or stamped on such policy or certificate "this policy or certificate contains a deductible provision," or appropriate words of similar import approved by the department. This le-gend shall appear on the first page of such policy or certificate in at least eighteen point type and may be - either as an overprint or by means of a rubber stamp impression in a contrasting color. Hlstory.- 545, ch ; 1, ch ; 13, 35, ch Note.-81mllar provisions found In former , Death benefits.-any such policy may contain a provision for paying a benefit for death from any cause in an amount not exceeding two hundred and fifty dollars, which benefit shall not relieve such policy from the requirements of this chapter. This provision shall not limit benefits for death by accident. Blstory.- 546, ch Note.-8imllar provisions found In former Nonresident insured.-if any policy is issued by an insurer domiciled in this state for delivery to a person residing in another state, and if the official having responsibility for the administration of the insurance laws of such other state shall have advised the department that any such policy is not subject to approval or disapproval by such official, the department may by ruling require that such policy meet the standards set forth in this part VI. History.-! 547, ch, ;!!13, 35, ch, , Note.-81mllar provisions found In former Required provisions; captions, omissions, substitutions.- (!) Except as provided in subsection (2),

15 each such policy delivered or issued for delivery to any person in this state shall contain the provisions specified in , inclusive, in the words in which the same appear; except, that the insurer may, at its option, substitute for one or more of such provisions corresponding provisions of different wording approved by the department which are in each instance not less favorable in any respect to the insured or the beneficiary. Each such provision shall be preceded individually by the applicable caption shown, or at the option of the insurer, by such appropriate individual or group captions or subcaptions as the department may approve. (2) If any such provision is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy, the insurer, with the approval of the department, shall omit from such policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of a provision in srtch manner as to make the provision as contained in the policy consistent with the coverage provided by the policy. History.-~548. ch ; , ch Note.-Simllar provisions round In former Himdicapped children; continuation of coverage under individual policy.-an individual hospital or medical expeme in!ourance policy or hospital or medical service plan contract, delivered or issued for delivery in this state subsequent to October 29, 1970, which provides that coverage of a dependent child shall terminate upon attainment of the limiting age for dependent children specified in the policy or contract shall also provide in substance that attainment of such limiting age shall not operate to terminate the coverage of such child while the child is and continues to be both: (1) Incapable of self-sustaining employment by reason of mental retardation or physical handicap; and. (2) Chiefly dependent upon the pohcyholder or subscriber for support and maintenance, provided proof of such incapacity and depe~dency is furnished to the insurer or serv1ce plan corporation by the policyholder or subscriber within thirty-one days of the child's attainment of the limiting age and subsequently as may be required by the insurer or corporation, but not more frequently than annually after the two year period following the child's attainment of the limiting age. Hlstory.- 1. ch Entire contract; changes.-there shall be a provision as follows: "Entire Contract; Changes: This policy, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. No change in this policy shall be valid until approved by an executive officer of the insurer and unless such approval be endorsed hereon or attached hereto. No agent has authority to change this policy or to waive any of its provisions." Hlstory ch Note.--Slmllar provisions found In former Time limit on certain defenses. There shall be a provision as follows: "Time Limit on Certain Defenses: (1) After three years from the date of issue of this policy no misstatements, except fraudulent misstatements, made by the applicant in the application for such policy shall be used to void the policy or to deny a claim for loss incurred or disability (as defined in the policy) commencing after the expiration of such threeyear period." (The foregoing policy provision shall not be so construed as to affect any legal. requirement for avoidance of a policy or denial of a claim during such initial three-year period, nor to limit the application of in the event of misstatement with respect to age or occupation or other insurance.) A policy which the insured has the right to continue in force subject to its terms by the timely payment of premium (a) Until at least age fifty or, (b) In the case of a policy issued after age forty-four, for at least five years from its date of issue, may contain in lieu of the foregoing the following provision (from which the clause in parentheses may be omitted at the insurer's option) under the caption "Incontestable":. "After this policy has been in force for a period of three years during the lifetime of the insured (excluding any period during which the insured is disabled), it shall become incontestable as to the statements contained in the application. "(2) No claim for loss incurred or disability (as defined in the policy) commencing after three years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy." (For the purpose of permitting insurers to use a uniform policy in several states, the insurer is permitted to print in the policy form in required provisions (1) and (2), above, the term "three years." Nevertheless, the provisions of the contract and text of the statute to the contrary notwithstanding, the time limits for such defenses under any contract delivered or issued for delivery to any person in this state shall not exceed two years.) Hlstory.-~550. ch Note.-Slmilar provisions found in former Grace period.-there shall be a provision as follows: "Grace Period: A grace period of... (insert a number not less than '7' for the weekly premium policies, '10' for monthly premium policies and '31' for all other policies) days will be granted for the payment of each premium

16 falling due after the first premium, during which grace period the policy shall continue in force." (A policy which contains a cancellation provision may add, at the end of the above provision: "subject to the right of the insurer to cancel in accordance with the cancellation provision hereof.") A policy in which the insurer reserves the right to refuse any renewal shall have, at the beginning of the above provision: "Unless not less than five days prior to the premium due date the _insurer _has delivered to the insured or has mailed to his last address as shown by the records of the insurer written notice of its intention not to renew this policy beyond the period for which the premium has been accepted." Hlstory.-~551, ch Note.-Similar provisions found in former I Reinstatement.-There shall be a provision as follows: "Reinstatement: If any renewal premium be not paid within the time granted the insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly authorized by the insurer to accept such premium, without requiring in connection therewith an application for reinstatement, shall reinstate the policy; provided, however, that if the insurer or such agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy will be reinstated upon approval of such application by the insurer or, lacking such approval, upon the forty-fifth day following the date of such conditional receipt unless the insurer has previously notified the insured in writing of its disapproval of such application. The reinstated policy shall cover only loss resulting from such accidental injury as may be sustained after the date of reinstatement and loss due to such sickness as may begin more than ten days after such date. In all other respects the insured and insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium, subject to any provisions endorsed hereon or attached hereto in connection with the reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than sixty days prior to the date of reinstatement." (The last sentence of the above provision may be omitted from any policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums until at least age fifty or, in the case of a policy issued after age forty-four, for at least five years from its date of issue.) History.- 552, ch Note.-Similar provisions found in former I Notice of claim (1) There sha.ll be a provision as follows: Notice of Claim: Written notice of claim must be given to the insurer within twenty days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or on behalf of insured or the beneficiary to the insurer at... (insert the location of such office as the insurer may designate for the purpose), or to any authorized agent of the insurer, with information sufficient to identify the insured, shall be deemed notice to the insurer." ( 2 l In a policy providing a loss-of-time benefit which may be payable for at least two years, an insurer may at its option insert the following between the first and second sentences of the above provision: "Subject to the qualifications set forth below, if the insured suffers loss of time on account of disability for which indemnity may be payable for at least two years, he shall, at least once in every six months after having given notice of the claim, give to the insurer notice of continuance of the disability, except in the event of legal incapacity. The period of six months following any filing of proof by the insured or any payment by the insurer on account of such claim or any denial of liability in whole or in part by the insurer shall be excluded in applying this provision. Delay in the giving of such notice shall not impair the insured's right to any indemnity which would otherwise have accrued during the period of six months preceding the date on which such notice is actually given." Hlstory.- 553, ch , Note.-Simllar provisions found ln former Claim forms.-there shall be a provision as follows: "Claim Forms: The insurer, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not furnished within fifteen days after the giving of such notice the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made." Hlstory.- 554, ch Note.-Simllar provisions found In former Proofs of loss.-there shall be a provision as follows: "Proofs of Loss: Written proof of loss must be furnished to the insurer at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within ninety days after the termination of the period for which the insurer is liable and in case of claim for any other loss within ninety days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce

17 any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required." Hlslorr.-l555, ch Note.-Simliar prot lslons found In former Time of payment of claims.-there shall be a provision as follows: "Time of Payment of Claims: Indemnities payable under this policy for any loss other than loss for which this policy provides any periodic payment will be paid immediately upon receipt of due written proof of such loss. Subject to due written proof of loss, all accrued indemnities for loss for which this policy provides periodic payment will be paid... (insert period for payment which must not be less frequently than monthly) and any balance remaining unpaid upon the termination of liability will be paid immediately upon receipt of due written proof." Hlstorr.- 556, ch Note.-Simllar provisions found In former Payment of claims.- (1) There shall be a provision as follows: "Payment of Claims: Indemnity for loss of life will be payable in accordance with the beneficiary designation and the provisions respecting such payment which may be prescribed herein and effective at the time of payment. If no such designation or provision is then effective, such indemnity shall be payable to the estate of the insured. Any other accrued indemnities unpaid at the insured's death may, at the option of the insurer, be paid either to such beneficiary or to such estate. All other indemnities will be payable to the insured." (2) The following provisions, or either of them, may be included with the foregoing provision at the option of the insurer: "If any indemnity of this policy shall be payable to the estate of the insured, or to an insured or beneficiary who is a minor or otherwise not competent to give a valid release, the insurer may pay such indemnity, up to an amount not exceeding $ (insert an amount which shall not exceed $1,000), to any relative by blood or connection by marriage of the insured or beneficiary who is deemed by the insurer to be equitably entitled thereto. Any payment made by the insurer in good faith pursuant to this provision shall fully discharge the insurer to the extent of such payment." "Subject to any written direction of the insured in the application or otherwise all or a portion of any indemnities provided by this policy on account of hospital, nursing, medical or surgical services may, at the insurer's option and unless the insured requests otherwise in writing not later than the time of filing proof of such loss, be paid directly to the hospital or person rendering such services; but it is not required that the service be rendered by a particular hospital or person." 1467 Hislory.- 557, ch Note.-Simllar provisions found In former Physical examination, autopsy. There shall be a provision as follows: "Physical Examinations and Autopsy: The insurer at its own expense shall have the right and opportunity to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim hereunder and to make an autopsy in case of death where it is not forbidden by law." Hlstory.- 558, ch Note.-Simllar provisions found In former Legal actions.-there shall be a provision as follows: "Legal Actions: No action at law or in equity shall be brought to recover on this policy prior to the expiration of sixty days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of three years after the written proof of loss is required to be furnished." Dlstorr.-~539, ch Note.-Simllar provlswcs found In former Change of beneficiary.-there shall be a provision as follows: "Change of Beneficiary: Unless the insured makes an irrevocable designation of beneficiary, the right to change a beneficiary is reserved to the insured and the consent of the beneficiary or beneficiaries shall not be requisite to surrender or assignment of this policy or to any change of beneficiary or beneficiaries, or to any other changes in this policy." (The first clause of this provision, relating to the irrevocable designation of beneficiary, may be omitted at the insurer's option.) History.- 560, ch Note.-81mllar provisions found In former Optional policy provisions.-except as provided in (2), no such policy delivered or issued for delivery to any person in this state shall contain provision respecting the matters set forth in , inclusive, unless such provisions are in the words in which the same appear in the applicable section, except that the insurer may, at its option, use in lieu of any such provision a corresponding provision of different wording approved by the department which is not less favorable in any respect to the insured or the beneficiary. Any such provision contained in the policy shall be preceded individually by the appropriate caption or, at the option of the insurer, by such appropriate individual or group captions or subcaptions as the department may approve. History.-~5 61, ch ; 13, 35, ch Note.-81mllar provisions found In former Change of occupation.-there may be a provision as follows: "Change of Occupation: If the insured be injured or contract sickness after having

18 Ch. 627 INSURANCE CODE: RATES AND CONTRACTS Ch. 627 changed his occupation to one classified by the insurer as more hazardous than that stated in this policy or while doing for compensatio? anything pertaining to an occupation so ~lassified the insurer will pay only such portion of the' indemnities provided in this policy as the premium paid would have purchased at the rates and within the limits fixed by the insurer for such more hazardous occupation. If the insured changes his occupation to one classified by the insurer as less hazardous than t~at stated in this policy, the insurer, upon receipt of proof of such change of occupation, will reduce the premium rate accordingly, and ~ill return the excess pro rata unearned premium from the date of change of occupation or from the policy anniversary date imjl!ediately: preceding receipt of such proof, whichever IS the more recent. In applying this provision, the classification of occupational risk and the premium rates shall be such as have been last filed by the insurer prior to the occurrence of the loss for which the insurer is liable or prior to date of proof of change in occupation with the state official having supervision of insurance in the state where the insured resided at the time this policy was issued; but if such filing was not required, then the cla~sification of occupational risk and the premium rates shall be those last made effective by the insurer in such state prior to the occurrence of the loss or prior to the date of proof of change in occupation." Hlstor:r.- 562, ch Note.-81mllar provisions found In former Misstatement of age or sex.-there may be a provision as follows: "Misstatement of Age or Sex: If the age or sex of the insured has been misstated, all amounts payable under this policy shall be such as the premium paid would have purchased according to the correct age or sex." Hlator:r.- 563, ch Note.-81mllar provisions found In former Other insurance in this insurer. There may be a provision as follows: "Other Insurance in This Insurer: If an accident or sickness or accident and sickness policy or policies previously issued by the insurer to the insured be in force concurrently herewith making the aggregate indemnity for (in~ert type of coverage or coverages) in excess of $. (insert maximum limit of indemnity or indemnities) the excess insurance shall be void and all premiums paid for such excess shall be returned to the insured or to his estate." Or, in lieu thereof: "Insurance effective at any one time on the insured under a like policy or policies in this insurer is limited to the one such policy elected by the insured, his beneficiary or his estate, as the case may be, and the insurer will return all premiums paid for all other such policies." History.- 564, ch Note.-81mllar provisions found In former Insurance with other insurers. (Provision of service or expense incurred basis). (1) There may be a provision as follows: "Insurance with Other Insurers: If there be other valid coverage, not with this insurer, providing benefits for the same loss on. a provision of service basis or on an expense m curred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability under any expense incurred coverage of this policy shall be for such proportion of the loss as the amount which would otherwise have been payable hereunder plus th~ total of the like amounts under all such other valid coverages for the same loss of which this insurer had notice bears to the total like amounts under all valid coverages for such loss, and for the return of such portion of the premiums paid as shall exceed the pro rata portion for the amount so determined. For the purpose of applying this provision when other coverage is on a provision of service basis, the 'like amount' of such other coverage shall be taken as the amount which the services rendered would have cost in the absence of such coverage." (2) If the foregoing policy provision is included in a policy which also contains the policy provision set out in there shall be added to the caption of the foregoing provision the phrase "-Expense Incurred Benefits." The insurer may, at its option, include in this provision a definition of "other valid coverage," approved as to form by the department, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and by hospital or medical service organizations, and to any other coverage the inclusion of which may be approved by the department. In the absence of such definition such term shall not include group insurance, automobile medical payments insurance, or coverage provided by hospital or medical service organizations or by union welfare plans or employer or employee benefit organizations. For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute (including any workmen's compensation or employer's liability statute) whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third party liability coverage shall be included as "other valid coverage." History.-~ 565. ch ; 13, 35, ch Note.-81mllar provisions found In former Same; other benefits.- (!) There may be a provision as follows:

19 "Insurance With Other Insurers: If there be other valid coverage, not with this insurer, providing benefits for the same loss on other than an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability for such benefits under this policy shall be for such proportion of the indemnities otherwise provided hereunder for such loss as the like indemnities of which the insurer had notice (including the indemnities under this policy) bear to the total amount of all like indemnities for such loss, and for the return of such portion of the premium paid as shall exceed the pro rata portion for the indemnities thus determined." (2) If the foregoing policy provision is included in a policy which also contains the policy provision set out in , there shall be added to the caption of the foregoing provision the phrase "-Other Benefits." The insurer may, at its option, include in this provision a definition of "other valid coverage," approved as to form by the department, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and to any other coverage the inclusion of which may be approved by the department. In the absence of such definition such term shall not include group insurance, or benefits provided by union welfare plans or by employer or employee benefit organizations. For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute (including any workmen's compensation or employer's liability statute) whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third party liability coverage shall be included as "other valid coverage." Hlstory.-l566, ch ; 1 13, 35, ch Note.-slmllar provisions found In former Relation of earnings to insurance. ( I) There may be a provision as follows: "Relation of Earnings to Insurance: If the total monthly amount of loss of time benefits promised for the same loss under all valid loss of time coverage upon the insured, whether payable on a weekly or monthly basis, shall exceed the monthly earnings of the insured at the time disability commenced or his average monthly earnings for the period of two years immediately preceding a disability for which claim is made, whichever is the greater, the insurer will be liable only for such proportionate amount of such benefits under this policy as the amount of such monthly earnings or such average monthly earnings of the insured bears to the total amount of monthly 1469 benefits for the same loss under all such coverage upon the insured at the time such disability commences and for the return of such part of the premiums paid during such two years as shall exceed the pro rata amount of the premiums for the benefits actually paid hereunder; but this shall not operate to reduce the total monthly amount of benefits payable under all such coverage upon the insured below the sum of $200 or the sum of the monthly benefits specified in such coverages, whichever is the lesser, nor shall it operate to reduce benefits other than those payable for loss of time." (2) The foregoing policy provision may be inserted only in a policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums until at least age fifty or, in the case of a policy issued after age forty-four, for at least five years from its date of issue. The insurer may, at its option, include in this provision a definition of "valid loss of time coverage," approved as to form by the department, which definition shall be limited in subject matter to coverage provided by governmental agencies or by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, or to any other coverage the inclusion of which may be approved by the department or any combination of such coverages. In the absence of such definition such term shall not include any coverage provided for such insured pursuant to any compulsory benefit statute (including any workmen's compensation or employer's liability statute), or benefits provided by union welfare plans or by employer or employee benefit organizations. History.-*567, ch ; H13, 35, ch Note.-slmllar provisions found In former Unpaid premiums.- There may be a provision as follows: "Unpaid Premium: Upon the payment of a claim under this policy, any premium then due and unpaid or covered by any note or written order may be deducted therefrom." Hlstory.- 568, ch Note.-slmllar provisions found In former Cancellation.-There may be a provision as follows: "Cancellation: The insurer may cancel this policy at any time by written notice delivered to the insured, or mailed to his last address as shown by the records of the insurer, stating when, not less than five days thereafter, such cancellation shall be effective; and after the policy has been continued beyond its original term the insured may cancel this policy at any time by written notice delivered or mailed to the insurer, effective upon receipt or on such later date as may be specified in such notice. In the event of cancellation, the insurer will return promptly the unearned portion of any premium paid. If the insured cancels, the earned premium shall be computed by the use of the short-rate table last filed with the state

20 official having supervision of insurance in the state where the insured resided when the policy was issued. If the insurer cancels, the earned premium shall be computed pro rata. Cancellation shall be without prejudice to any claim originating prior to the effective date of cancellation." History.- 569, ch Note.-Sim!lar provisions found In former Conformity with statutes.-there may be a provision as follows: "Conformity with State Statutes: Any provision of this policy which, on its effective date, is in conflict with the statutes of the state in which the insured resides on such date is hereby amended to conform to the minimum requirements of such statutes." History.- 570, ch Note.-slmllar provisions found In former Illegal occupation.-there may be a provision as follows: "Illegal Occupation: The insurer shall not be liable for any loss to which a contributing cause was the insured's commission of or attempt to commit a felony or to which a contributing cause was the insured's being engaged in an illegal occupation." History.- 571, ch Note.-slmllar provisions found In former Intoxicants and narcotics.-there may be a provision as follows: "Intoxicant~'! and Narcotics : The insurer shall not be liable for any loss sustained or contracted in consequence of the insured's being intoxicated or under the influence of any narcotic unless administered on the advice of a physician." History.- 572, ch Note.-slmllar provisions found In former Order of certain provisions.-the provisions which are the subject of , inclusive, or any corresponding provisions which are used in lieu thereof in accordance with such sections, shall be printed in the consecutive order of the provisions in such sections or, at the option of the insurer, any such provision may appear as a unit in any part of the policy, with other provisions to which it may be logically related, provided that the resulting policy shall not be in whole or in part unintelligible, uncertain, ambiguous, abstruse, or likely to mislead a person to whom the policy is offered, delivered or issued. History. -~573, ch Note.-Simllar provlslor.s found In former Third party ownership.-the word "Insured," as used in this chapter~ shall not be construed as preventing a person other than the insured with a proper insurable interest from making application for and owning a policy covering the insured or from being entitled under such a policy to any indemnities, benefits, and rights provided therein. History.- 574, ch Note.-Slmllar provi lons found In tormer Requirements of other jurisdic tions.- ( 1) Any policy of a foreign or alien insurer, when delivered or issued for delivery to any person in this state, may contain any provision which is not less favorable to the insured or the beneficiary than the provisions of this chapter and which is prescribed or required by the law of the state or country under which the insurer is organized. (2) Any policy of a domestic insurer may, when issued for delivery in any other state or country, contain any provision permitted or required by the laws of such other state or country. History.- 575, ch Note.-Simt:Rr provisions found In former Other policy provisions.-no policy provision which is not subject to part VI of this chapter shall make a policy, or any portion thereof, less favorable in any respect to the insured or the beneficiary than the provisions thereof which are subject to this chapter. History.- 576, ch Note.-Simllar provisions found In former Age limit.-if any such policy contains a provision establishing, as an age limit or otherwise, a date after which the coverage provided by the policy will not be effective, and if such date falls within a period for which premium is accepted by the insurer or if the insurer accepts a premium after such date, the coverage provided by the policy will continue in force subject to any right of cancellation until the end of the period for which premium has been accepted. In the event the age of the insured has been misstated and if, according to the correct age of the insured, the coverage provided by the policy would not have become effective, or would have ceased prior to the acceptance of such premium or premiums, then the liability of the insurer shall be limited to the refund, upon request, of all premiums paid for the period not covered by the policy. History.-fi577, ch Note.-Simllar provisions found In former Excess insurance.- ( I) No provision of this chapter shall be deemed to prohibit an insurer from issuing a policy as, or including in a policy a provision providing for, excess insurance; that is, to the effect that the insurer's liability for benefits payable on account of expense incurred for any hospitalization, medical, surgical and other service resulting from covered sickness or injury of the insured, shall be limited to that part of such expense, if any, which is in excess of all benefits payable on account thereof by the same insurer under any other policy or policies covering the same insured and by all other insurers and service organizations by whom benefits are payable as to the same such expense. (2) Any such policy, or any policy containing any such provision, shall have im- 1470

21 printed or stamped conspicuously upon the face thereof the designation "excess insurance" or appropriate words of similar import approved by the department. Hi s tory.-~578, ch ; ~H J, 35, ch Industrial disability insurance. lndustrial disability insurance is that form of individual disability insurance for which the premium is payable weekly. No such policy of industrial disability insurance may be delivered or issued for delivery in this state unless it has printed thereon the words "industrial policy" or "weekly premium policy" or words of similar import. Each such policy shall be subject to the provisions of this chapter except that: (1) Any such policy may contain a provision requiring proof of continuance of disability. If such provision is used it shall be in the following words: "Affirmative proof of continuance of disability must be furnished at the expiration of each period for which a claim is filed." (2) The insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to have' an insurable interest in the life of the insured. HistOrJ.- 579, ch, Note.-Similar provisions found In former Construction of noncomplying contracts.-if any insurer writes or issues in this state any disability insurance contract, as contemplated by this chapter, and the form of such contract is not authorized by or in conformity with the provisions of this chapter, such contract shall nevertheless be a valid and binding contract of the insurer, and shall be construed as though the terms and provisions thereof were in conformity with those required by this chapter, any provision in such contract to the contrary notwithstanding. HistorJ.- 580, ch Note.-Simllar provisions found In former Direct payment for hospital, medical services.- Any disability insurance policy insuring against loss or expense due to hospital confinement or to medical and related services may provide for payment of benefits direct to any recognized hospital, doctor, or other person who provided such services, in accordance with the provisions of the policy. To comply with this section the words "or to the hospital, doctor, or person rendering services covered by this policy," or similar words appropriate to the terms of the policy, shall be added to applicable provisions of the policy. Hlstory.- 581, ch Note.-Similar provisions found In former Application signed by agent.-if the application for a disability insurance policy is to be made a part of the contract of insurance, the insurer's agent who completed the application shall sign the same in the capacity of soliciting agent. Hlstory.- 582, ch Filing of classifications and rates. -An insurer shall not deliver or issue for delivery in this state any disability insurance policy until it has filed with the department a copy of any classification of risks and premium rates applicable thereto. History.-!583, ch ; H l3, 35, ch Note.-81mllar provisions found In former Coverage for newborn children.. (1) Any disability policy delivered, or Issued for delivery, in this state which provides hospital, medical, or surgical coverage for newborn children shall provide coverage for such newborn children, to the extent provided in the policy, for congenital anomalies from the moment of birth. (2) This section applies to such disability policies delivered, or issued for delivery, subsequent to August 1, History.-!, ch PART VII GROUP, BLANKET AND FRANCHISE DISABILITY INSURANCE Group contracts must meet group re Conditions and provisions of blanket quirements. disability policies Group disability in general. insurance defined, School accident policy service. insurance claims; Employee groups Handicapped children; continuation Labor union and association groups. of coverage under group policy Debtor groups Other provisions applicable Additional groups Franchise disability insurance Provisions of group disability poli Assignment of incidents of ownercies. ship in group, blanket, or fran Use of dividends, refunds, fees, etc.; chise disability policies. premium rates Blanket disability insurance; eligible groups Group contracts must meet group requirements (1) No disability insurance policy shall be delivered or issued for delivery in this state

22 Ch. 627 INSURANCE CODE; RATES AND CONTRACTS Ch. 62i insuring more than one individual unless to one of the groups as provided for in , and unless in compliance with the other applicable provisions of part VII of this chapter. (2) Subsection (1) shall not apply to disability insurance policies: (a) Insuring only individuals related by blood, marriage or legal adoption; or (b) Insuring only individuals having a common interest through ownership of a business enterprise, or a substantial legal interest or equity therein, and who are actively engaged in the management thereof; or (c) Insuring only individuals otherwise having an insurable interest in each other's lives; or (d) Issued as blanket insurance pursuant to (3) Nothing in this chapter shall affect the provisions of to , inclusive. Blstorr.- 584, ch Note.-Simllar provisions found In former Group disability insurance defined, in general.-group disability insurance is that form of disability insurance covering groups of persons under a master group disability insurance policy issued pursuant to any one of Blstorr.- 585, ch Note.-Simllar provisions found In former Employee groups.- (1) A group of individuals may be insured under a policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, insuring at least ten employees of the employer for the benefit of persons other than the employer. The term employees as used herein may include: (a) Retired employees, _ (b) The individual proprietor or partners if the employer is a proprietor or partnership, and (c) Elected or appointed officials if the policy is issued to insure employees of a public body. The policy may provide for insuring the employees of one or more subsidiary or affiliated corporations, proprietors and partnerships if the business of the employer and such subsidiary or affiliated corporations, proprietors and partnerships are under common control. No director of a corporate employer shall be eligible for insurance under the policy unless such person is otherwise eligible as a bona fide employee of the corporation by performing services other than the usual duties of a director or unless such person receives an annual compensation from the corporation in excess of $2,500. (2) No such policy of insurance as defined in subsection (1) may be issued to any employer, as enumerated therein, unless all employees of such employer, or all of any class or classes thereof, determined by conditions pertaining to their employment, but not determined 1472 so as to exclude those in the more hazardous employment solely because of their hazardous employment, are declared etigible and acceptable to the insurer at the time of issuance of the policy, and unless sixty per cent of the eligible employees are so insured. (3) Any such policy may insure spouse and/ or dependent children with or without the employee being insured. History.- 586, ch ; 1, ch ; 1, ch Note.-See former ; Labor union and association groups.- (1) A group of individuals may be insured under a policy issued to an association, including a labor union, which association shall have a constitution and by-laws and not less than twenty-five individual members and which has been organized and has been maintained in good faith for a period of one year for purposes other than that of obtaining insurance, or to the trustees of a fund established by such an association, which association or trustees shall be deemed the policyholder, insuring at least fifteen individual members of the association for the benefit of persons other than the officers of the association, the association or trustees. (2) No such policy of insurance as defined in subsection (1) may be issued to any such association, unless all individual members of such association or all of any class or classes thereof, are declared eligible and acceptable to the insurer at the time of issuance of the policy, and unless sixty per cent of the eligible members are so insured. (3) Any such policy may insure the spouse and/or dependent children with or without the member being insured. Hlstory.-! 587, ch ;!, ch Note.-Simllar provisions found In former Debtor groups.-a group of individuals may be insured under a policy issued to a creditor, who shall be deemed the policyholder, under which the debtors of such creditor are indemnified in connection with a specific loan or credit transaction against loss of time resulting from bodily injury or sickness. The debtors eligible for such insurance under the policy shall be all of the debtors of the creditor, or all of any class or classes thereof, determined by conditions pertaining to the indebtedness or to the credit transaction giving rise to the indebtedness. The policy may provide that the term "debtors" shall include the debtors of one or more subsidiary or affiliated corporations, proprietors or partnerships, if the business of the creditor and of such subsidiary or affiliated corporations, proprietors or partnerships is under common control. The policy may be issued only if the group of eligible debtors is then receiving new entrants at the rate of at least one hundred persons yearly, or may reasonably be expected to receive at least one

23 hundred new entrants during the first policy year, and only if the policy reserves to the insurer the right to require evidence of individual insurability if less than seventy-five per cent of the new entrants become insured. Hlstory.- 588, ch Note.-Bimllar provisions found In former Additional groups.-a group of individuals, other than the groups defined in , may be insured under a policy issued to any person or organization to which a policy of group life insurance may be issued or delivered in this state to insure any class or classes of individuals for disability insurance that could be insured under such group life policy. Any such policy may insure the spouse and dependent children with or without the "employee" being insured. History.- I, ch Provisions of group disability policies.-each group disability policy shall contain. in substance the following provisions: (1) A provision that, in the absence of fraud, all statements made by applicants or the policyholder or by an insured person shall be deemed representations and not warranties, and that no statement made for purpose of effecting insurance shall avoid such insurance or reduce benefits unless contained in a written instrument signed by the policyholder or the insured person, a copy of which has been furnished to such policyholder or to such person or his beneficiary. (2) A provision that the insurer will furnish to the policyholder for delivery to each employee or member of the insured group, a certificate setting forth the essential features of the insurance coverage of such employee or member and to whom benefits are payable. If dependents are included in the coverage, only one certificate need be issued for each family unit. (3) A provision that to the group originally insured may be added from time to time eligible new employees or members or dependents, as the case may be, in accordance with the terms of the policy. ( 4) The provisions of part VI of chapter 627 shall not apply to group disability insurance policies, but no such policy shall contain any provision relative to notice or proof of loss, or to the time for paying benefits, or to the time within which suit may be brought on the policy, which is less favorable to the individuals insured than would be permitted by the comparable provisions required for individual disability insurance policies. Blstory.- 589, ch Note.-Simllar provisions found In former Use of dividends, refunds, fees, etc.; premium rates.- (1) Section of this code shall apply also as to group disability insurance policies. (2) An insurer may issue insurance policies under the provisions of this chapter at premium 1473 rates less than the usual rates or premiums for individual insurance policies. History.- 590, ch Blanket disability insurance; eligible groups.-blanket disability insurance is that form of disability insurance covering special groups of individuals as enumerated in one of the following subsections (1) to (6) inclusive: (1) Under a policy or contract issued to any common carrier, which shall be deemed the policyholder, covering a group defined as all persons who may become passengers on such common carrier. (2) Under a policy or contract issued to an employer, who shall be deemed the policyholder, covering any group of employees defined by reference to exceptional hazards incident to such employment, or under a policy or contract issued to an employer where all employees are covered under any such policy or contract. (3) Under a policy issued to a school, district school system, college, university or other institution of learning, or to the official or officials of such institution insuring the students and teachers. Any such policy issued to a college or a university may insure the spouse and dependent children or the spouse or dependent children of the insured student. ( 4) Under a policy or contract issued in the name of any volunteer fire department, first aid, or other such volunteer group, which shall be deemed the policyholder, covering all of the members of such department or group. (5) Under a policy or contract issued to an organization, or branch thereof, such as boy scouts of America, future farmers of America, religious, or educational bodies, or similar organizations, or to an individual, firm or corporation, holding or operating meetings such as summer camps or other meetings for religious, instructive or recreational purposes, covering all those attending such camps or meetings, including counselors, instructors and persons in other administrative positions. (6) Under a policy or contract issued in the name of a newspaper, which shall be deemed the policyholder, covering independent contractor newspaper boys. History.- 591, ch ; 2, ch ; 1, ch Note.-Sim!lar provisions found In former Conditions and provisions of blanket.disability policies.- ( I) An individual application shall not be required from a person covered under a blanket disability insurance policy or contract nor shall it be necessary for the insurer to furnish such person a certificate, except as provided in subsection (6) of this section. (2) Any benefit under a blanket disability policy shall be payable as provided in (payment of claims). (3) No such policy shall contain any provision relative to notice or proof of loss, or to the time for paying benefits, or to the time

24 Ch. 627 INSURANCE CODE: RATES AND CONTRACTS Ch. 627 within which suit may be brought on the policy, which is less favorable to the individuals insured than would be permitted by the comparable provisions required for individual disability insurance policies. ( 4) The provisions of part VI of chapter 627 shall not apply to blanket disability insurance policies, but no such policy shall contain any provision relative to notice or proof of loss, or to the time for paying benefits, or to the time within which suit may be brought on the policy, which is less favorable to the individuals insured than would be permitted by the comparable provisions required for individual disability insurance policies. (5) Nothing contained in or in this section shall be deemed to affect the legal liability of policyholders for the death or injury to any person insured under a blanket disability policy. ( 6 ) The insurer shall issue or cause to be issued to each insured person covered under a policy issued pursuant to (3), a written certificate setting forth the essential features of the insurance coverage. Such certificate shall be subject to filing and approval in accordance with and The department shall have the full power and authority to adopt, promulgate and enforce rules and regulations pertaining to the issuance and the use of the insurance referred to in (3). History.- 592, ch ; 3, ch ; B tl, 35, ch , Note.-Simllar provisions found In former School accident insurance claims; policy service.-an insurer issuing a school accident policy referred to in (3) shall maintain an office or offices in this state for the processing and payment of claims, and to render service to insureds, or appoint a duly licensed adjuster or resident agent for that purpose; except that processing and payment of claims and service I\'lay be performed at the insurer's home office. Hislory.- 4, ch Handicapped children; continuation of coverage under group policy.-a group hospital or medical expense insurance policy or hospital or medical service plan contract, delivered or issued for delivery in this state subsequent to October 29, 1970, which provides that coverage of a dependent child of an employee or other member of the covered group shall tei minate upon attainment of the limiting age for dependent children specified in the policy or contract shall also provide in substance that attainment of such limiting age shall not operate to terminate the coverage of such child while the child is and continues to be both: (1) Incapable of self-sustaining employment by reason of mental retardation or physical handicap and (2) Chiefly dependent upon the employee or member for support and maintenance, provided proof of such incapacity and de pendency is furnished to the insurer or service plan corporation by the employee or member within thirty-one days of the child's attainment of the limiting age and subsequently as may be required by the insurer or corporation, but not more frequently than annually after the two year period following the child's attainment of the limiting age. History.-!, ch Other provisions applicable.-the following sections from part VI of chapter 627 (disability insurance policies) shall also apply as to group disability insurance and blanket disability insurance and franchise disability insurance: (1) Section (excess insurance). (2) Section (direct payment for hospital, medical services). (3) Section (filing of classifications and rates). (4) Section (8) (deductible provisions of policies or certificates). History.- 593, ch ; 12. ch Franchise disability insurance. (1) "Franchise disability insurance" (also known as "franchise group insurance") is that form of disability insurance issued to: (a) Five or more employees of any corporation, copartnership, or individual employer or any governmental corporation, agency or department thereof; or (b) Ten or more individuals who are members of any trade or professional association or of a labor union or any other association having had an active existence for at least two years where such association or union has a constitution or by-laws and is formed in good faith for purposes other than that of obtaining insurance; where such persons with or without their dependents, are issued the same form of an individual policy varying only as to amounts and kinds of coverage applied for by such persons, under an arrangement whereby the premiums on such policies may be paid to the insurer periodically by the employer, with or without payroll deductions, or by the association, or by some designated person acting on behalf of such employer or association. Notwithstanding the provisions of any state antidiscriminatory law, such provisions shall not prohibit different rates charged, or benefits payable, or different underwriting procedure for individuals insured under a franchise plan provided rates charged, benefits payable, or underwriting procedure used do not discriminate between franchise plans. (2) Sections of this code shall also apply as to franchise disability insurance. Bistory.-*594. ch Note.-Similar provisions found In former Assignment of incidents of ownership in group, blanket, or franchise disability policies.- (!) No provision of the insurance code or

25 Ch. 627 INSURANCE CODE; RATES AND CONTHACTS Ch. 627 any other Jaw shall be construed to prohibit an insured under any group, blanket, or franchise disability insurance policy. or any other person who may be the owner of any incidents o'f ownership under such policy, from making an assignment of all or any part of his incidents of ownership under the policy, including specifically, but not by way of limitation, any right to designate a beneficiary thereunder and the right, if any, to have an individual policy issued in accordance with the terms thereof. Subject to the terms of the policy or any contract relating thereto, an assignment by an insured or by any other owner of rights under the policy, made either before or after May 7, 1970 is valid for the purpose of vesting in the assignee, in accordance with any provisions included therein as to the time at which it is to be effective, all incidents of ownership so assigned, but without prejudice to the company on account of any payment it may make or individual policy it may issue prior to receipt of notice of the assignment. (2) The purpose of subsection ( 1) is to declare and codify existing rights under policies of the types described therein. HlstorJ.- 2, 3, ch PART VIII CREDIT LIFE AND DISABILITY IXSL'RAl'\CE Scope of part VIII Definitions Rules and regulations Amount of insurance; Same; credit disability. credit life Term and evidence of insurance Filing, approval of forms Licensed agent required Premium not deemed loan or finance charg-e Penalty for violations Scope of part VIII.-Part VIII of chapter 627 applies only to credit life and credit disability insurances as defined in HistorJ.- 595, ch * Definitions.- (1) Credit life insurance is that form of term life insurance which precludes debtor selection as to beneficiary or assignee under which the life of a borrower of money or a purchaser of goods is insured in connection with a specific loan or credit transaction. The policy, certificate, or statement shall be issued on a plan especially designed for the sole purpose of meeting the requirements of the definition of this section and shall bear the description "creditor-debtor insurance only" or words of similar import on the face of each such policy, certificate or statement. There are three recognized forms: (a) Group credit life insurance is that form of insurance which is subject to. the provisions of (debtor groups). (b) Franchise credit life insurance ir that form of insurance by which a master policy is issued to and in favor of a creditor and under which debtors are insured at the option of the creditor. (c) Individual credit life insurance is individual insurance upon the life of an individual debtor in favor of a creditor. (2) Credit disability insurance is that form of insurance under which a borrower of money or a purchaser of goods is insured in connection with a specific loan or credit transaction against loss of time resulting from accident or sickness. History.- 596, ch ; 19, ch ; 1, ch Note.-Subsection (3) repealed, effective October 1, Note.-Similar provisions found in former , Rules and regulations.- (1 J For the effective protection of the public inte1 e~t the department shall have full power and authority to adopt, promulgate and enforce separate rules and regulations pertaining to issuance and use of each type of credit insurance defined in (2) Rules and regulations made pursuant to this section shall be principally designed, and shall be promulgated with the purpose of protecting the borrower from excessive charges by or collected through the lender for insurance in relation to the amount of the loan, to avoid duplication or overlapping of insurance coverage and to avoid loss of the borrower's funds by short-rate cancellation or termination of such insurance. However, nothing in such rules and regulations shall be construed to authorize the department to prohibit operation of normal dividend distributions under participating insurance contracts. (3) The department shall, before adopting any rules or regulations under this chapter, hold a public hearing, giving the interested parties not less than fifteen days notice of such hearing together with a copy of the proposed rules and regulations. (4) The order of the depa1 tment adopting rules and regulations shall set forth the date such rules and regulations are to become effective, which date shall be not less than fifteen days after such rules and regulations have been adopted and filed with the department and with the department of state. Copy of the order, together with a copy of rules and regulations as adopted, shall be furnished interested parties on the same date that the rules and regulations a1 e filed. History.- ~597. ch : ~UO ch Note.-SimUar provisions found In former

26 Amount of insurance; credit life. (1) The amount of credit life insurance written under one or more policies shall not exceed by more than five dollars the original face amount of the specific contracts of indebtedness in connection with which it is written; except, that where the indebtedness is repayable in substantially equal installments the amount of insurance shall never exceed the approximate unpaid balance of the loan. (2) The total amount of credit life insurance on the life of any debtor with respect to any loan or loans covered in one or J;Il.Ore insurance policies shall at no time exceed ten thousand dollars with any one creditor, except that loans not exceeding one year duration shall not be subject to such limits, and provided that on such loans not exceeding one year's duration, the limits of coverage shall not exceed ten thousand dollars with any one insurer. (3) Notwithstanding the provisions of this section credit life insurance in connection with agricultural loans not exceeding one year may be written up to the amount of the loan commitment on the nondecreasing or level term plan. History.- 598, ch ; 1, ch Note.-Sim il a r provis ions found In former ~ Same; credit disability.- (1) The total indemnities provided under the terms of credit disability coverage shall not exceed by more than five dollars the amount of the initial indebtedness; except, that where the indebtedness is repayable in substantially equal installments the amount of insurance shall never exceed the approximate unpaid balance of the loan. (2) The total amount of credit disability insurance on the life of any debtor with respect to any loan or loans covered in one or more insurance policies, as defined in (2) shall at no time exceed ten thousand dollars. History.- 599, ch ; 2, ch Note.-Simllar provisions found In former Term and evidence of insurance. (1) The term of credit life insurance or credit disability insurance coverages shall not extend more than fifteen days beyond the term of the indebtedness except where extended without additional cost to the insured borrower or purchaser, and in. no event shall the term of the insurance policy exceed ten years from the date of issue thereof. (2) All credit insurance sold shall be evidenced by a policy, certificate or statement of insurance, which shall be delivered to the insured borrower or purchaser. Said policy, certificate, or statement of insurance shall set forth a description of the coverage, including any exceptions, limitations, or restrictions and the amount of the premium in the case of individual or franchise insurance, or the amount of any identifiable charge in the case of group 1476 insurance provided that in the case of group insurance in lieu of setting forth the amount of identifiable charge in the certificate or statement of insurance, such identifiable charge may be set forth in an instrument in writing, which shall be delivered to the insured borrower or purchaser. History.- 600, ch ; 3, ch Note.-Simllar provisions found In former Filing, approval of forms.-all forms of policies, certificates of insurance, statements of insurance, applications for insurance, binders, endorsements and riders of credit life or disability insurance delivered or issued for delivery in this state shall be filed with and approved by the department before use as provided in and of this code. In addition to grounds as specified in the department, upon compliance with the procedures set forth in , shall disapprove any such form and may withdraw any previous approval thereof if the benefits provided therein are not reasonable in relation to the premiums charged, or if it contains provisions which are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of such policy. Hlstory.- ~ 601, ch ;! 13, 35, ch Licensed agent required.-all policies to which this chapter applies shall be issued through a licensed agent of the insurer. History.-~ 602, ch Note.-BimUar provisions found In former Premium not deemed loan or finance charge.-the premium or cost of credit life or disability insurance, when written by or through any lender or other creditor, its affiliate or associate or subsidiary or a director, officer or employee of any of them shall not be deemed as interest or charges or consideration or an amount in excess of permitted charges in connection with the loan or credit transaction and any gain or advantage to any lender or other creditor, its affiliate, associate or subsidiary or a director, officer or employee of any of them, arising out of the premium or commission or dividend from the sale or provision of such insurance shall not be deemed a violation of any other law general or special, civil or criminal of this state, or of any rule, regulation or order issued by any regulatory authority. Blstor:r.- 603, ch Note.-Bimllar provisions found In former Penalty for violations.-any insurer, agent, or other representative of such insurer, who violates the provisions of this chapter or any valid rule or regulation adopted and promulgated pursuant thereto, after having been ordered to cease and desist from such violation following the procedure as outlined in , shall be cited to appear before the department upon five days' notice to show cause why an order revoking the license or cer-

27 tificate of authority should not be entered. At such hearing, if the department determines that such violation was committed willfully and knowingly, it may, in its discretion, forthwith revoke the license or certificate of authority of such agent or insurer. Such order of revocation may be reviewed as provided for cease and desist orders in In addition, any person who violates a cease and desist order or an order of revocation after it has become final and while such order is in effect shall be guilty of a misdemeanor of the second degree, punishable as provided in or History.- 604, ch ; 13, 35, ch ; 650, ch Note.-Simllar provisions found In former PART IX PROPERTY INSURANCE CONTRACTS Co-insurance contracts Valued policy law Same; penalty for violation Replacement insurance Return of unearned premium on overinsured personal property Co-insurance contracts.-no property insurer shall issue any policy or contract of fire insurance covering either real or personal property in this state which contains any clause or provision requiring the insured to take out or maintain a larger amount of fire insurance than that expressed in such policy; nor in any way provide that the insured shall be liable as a co-insurer with the insurer issuing the policy for any part of the loss or damage which may be caused by fire to the property described in such policy; and any such clause or provision shall be null and void, and of no effect unless there is printed or stamped on the face of such policy or on a form attached thereto the words: "CO-INSURANCE CON TRACT. The rate charged in this policy is based upon use of a co-insurance clause attached hereto, with the consent of the insured." The rate for the insurance with and without the co-insurance clause shall be furnished the insured upon request. HI a torr.- 605, ch Note.-Simllar provisions found In former Valued policy law.- (1) In event of total loss by fire or lightning of any building or structure located in this state and insured by any insurer as to such perils, in the absence of any change increasing the risk without the insurer's consent the insurer's liability, if any, under the policy for such total loss shall be in the amount of money for which such property was so insured as specified in the policy and for which premium has been charged and paid. (2) In the case of partial loss by fire or lightning of any such property the insurer ~ s liability, if any, under the policy shall be for the actual amount of such loss but not to exceed the amount of insurance specified in the policy as to such property and such perils. (3) Except, however, that the amount of any loss referred to in subsections (1) or (2) shall be subject to any co-insurance clause contained in the policy pursuant to ( 4) This section shall not apply as to personal property or any interest therein Blat orr.- 606, ch Note.-Simllar provisions found In former Same; penalty for violation.-if any insurer writes into or attaches to any policy of fire insurance on any building or structure in this state any provision or condition conflicting with the provisions of , and complaint thereof is made to the department by the policyholder, the department shall forthwith revoke the insurer's certificate of authority. The department shall withhold any new certificate of authority from the insurer until a new policy has been issued to the complaining policyholder without such conflicting provision or condition. Hlstory.- 607, ch ; 13, 35, ch Note.-Simllar provisions found In former Replacement insurance.-in case of total or partial loss of a building or structure insured against fire and lightning the liability of the insurer for such loss shall be as provided in ; except, that any property insurer may, by appropriate riders or endorsements or otherwise, provide insurance indemnifying the insured for the difference between the insurable value of the insured property at the time any loss or damage occurs, and the amount actually expended to repair, rebuild or replace within this state with new materials of like size, kind and quality, such property as has been damaged or destroyed by fire or lightning. His torr.-fi 608, ch Note.-Simllar provisions found In former Return of unearned premium on overinsured personal property.-in the event of a total loss or destruction of any personal property on which the amount of the appraised or agreed loss is less than the total amount insured thereon, the insurer shall return to the insured the unearned premium for the excess of insurance over the appraised or agreed loss, to be paid at the same time and in the same manner as the loss shall be paid; and the unearned premium shall be a just and legal claim against the insurer. Hlatorr.- 609, ch Note.-Simllar provisions found In former

28 Contracts are subject to general provisions Refusal to issue policy Automobile liability insurance; uninsured vehicle coverage; insolvent insurer protection Cancellations; nonrenewals Cancellation of policies following holding of invalidity of ch , Laws of Florida Short title Purpose Definitions Required security. PART X CASUALTY INSURANCE CONTRACTS Proof of security; security requirements; penalties Operation of a motor vehicle illegal without security; penalties Required personal injury protection benefits; exclusions; priority Tort exemption; limitation on right to damages Property damage, basic or full coverage; tort liability Deductible endorsement Tort claims against persons not subject to Implementation of Contracts are subject to general the lessee of such vehicle shall have the sole provisions.-all contracts of casualty insurance privilege to reject uninsured motorist's coverage. covering subjects resident, located, or to be per- Unless the named insured, or lessee having formed in this state shall be subject to the ap- the privilege of rejecting uninsured motorist's plicable provisions of part II of chapter 627, coverage, requests such coverage in writing, the (the insurance contract), and to the other ap- coverage need not be provided in or suppleplicable provisions of this code. mental to a renewal policy where the named in- Biator:r.- 610, ch sured had rejected the coverage in connection Refusal to issue policy.-no with a policy previously issued to him by the insurer may. deny an ap.{llication for auto- same insurer. The coverage provided under mobile liability insurance solely on the grounds this section shall be excess over but shall not that renewal of similar coverage has been duplicate the benefits available to an insured denied by another insurer, or on the grounds of under any workmen's compensation law, an applicant's failure to disclose that such denial disability benefits law, or any similar law; has occurred. under any automobile liability or automobile History.- 2, ch. 71-?(B). medical expense coverages; or from the owner Automobile liability insurance; un- or operator of the uninsured motor vehicle or insured vehicle coverage; insolvent insurer any other person or organization jointly or protection.- severally liable together with such owner or *(1) No automobile liability insurance operator for the accident. Such coverage shall covering liability arising out of the ownership, not inure directly or indirectly to the benefit maintenance, or use of any motor vehicle shall of any workmen's compensation or disability be delivered or issued for delivery in this state benefits carrier or any person or organization with respect to any motor vehicle registered or qualifying as a self-insurer under any workprincipally garaged in this state unless coverage men's compensation or disability benefits law or is provided therein or supplemental thereto in any similar law. not less than the limits( of the liability insurance *(2) For the purpose of this.coverage, the purchased by the named insured for bodily in- term "uninsured motor vehicle" shall, subject to jury, **[or such lower limits complying with the the terms and conditions of such coverage, be company's ratin~ plan as may be selected by the deemed to include an insured motor vehicle named insured,]/under provisions filed with and when the liability insurer thereof: approved by the department, for the protection of (a) Is unable to make payment with respect persons insured thereunder who are legally to the legal liability of its insured within the entitled to recover damages from owners or limits specified therein because of insolvency; or operators of uninsured motor vehicles because (b) Has provided limits of bodily injury liaof bodily injury, sickness or disease, including bility for its insured which are less than the death, resulting therefrom; provided, however, limits applicable to the injured person provided that the coverage required under this section under his uninsured motorist's coverage. shall not be applicable when, or to the extent (3) An insurer's insolvency protection shall that, any insured named in the policy shall be applicable only to accidents occurring durreject the coverage; and provided further, that ing a policy period in which its insured's unwhen a vehicle is leased for a period of one year insured motorist coverage is in effect where or longer and the lessor of such vehicle by the the liability insurer of the tort-feasor becomes terms of the lease contract provides liability insolvent within one year after such an accoverage on the leased vehicle in a policy cident. Nothing herein contained shall be conwh~rein the lessee is a ~am~d insured or on a strued to prevent any insurer from affording certificate of a master pohcy 1ssued to the lessor, insolvency protection under terms and condi- 1478

29 Ch. 627 INSURANCE CODE: RATES AND CONTRACTS Ch. 627 tions more favorable to its insureds than is provided hereunder. ( 4) Any person having a claim against an insolvent insurer as defined in (5) under the provisions of this section shall present such claim for payment to the Florida insurance guaranty association only. In the event of a payment to any person in settlement of a claim arising under the provisions of this section, the association shall not be subrogated or entitled to any recovery against the claimant's insurer. The association shall, however, have the rights of recovery as set forth in chapter 631 in the proceeds recoverable from the assets of the insolvent insurer. Hlstory.-! 1. ch ; 1,. ch ; 13, 35, ch ; 19, ch ; 1, ch ; 182, ch ; 20, ch ; 3, 4, ch ; 165, ch Note.-Subsections (1) and (2) as amended take effect October 1, 1973, and are applicable to policies delivered, issued for delivery, or renewed in this state with an inception date on or after October 1, Note.-ln the interest of clarity, the editors substituted the bracketed words for the following: "however, the named insured may select such lower limits as complies with the company's rating plan." Cancellations; nonrenewals. (1) As used in this section: (a) "Policy" means the bodily injury and property damage liability, medical payments and uninsured motorist coverage portions of a policy of automobile liability insurance delivered or issued for delivery in this state: 1. Insuring a natural person as named insured or one or more related individuals resident of the same household, and 2. Insuring only a motor vehicle of the private passenger or station wagon type which is not used as a public or livery conveyance for passengers or rented to others; or insuring any other four-wheel motor vehicle having a load -capacity of fifteen hundred pounds or less which is not used in the occupation, profession, or business of the insured other than farming, and 3. Other than any policy: a. Issued under an automobile insurance assigned risk plan, or b. Insuring more than four automobiles, or c. Covering garage, automobile sales agency, repair shop, service station, or public parking place operation hazards. (b) "Renewal" or "to renew" means the issual)ce and delivery by an insurer of a policy superseding at the end of the policy period a policy previously issued and delivered by the same insurer, or the issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term. Any policy with a policy period or term of less than six months or any policy with no fixed expiration date shall for the purpose of this section be considered as if written for successive policy periods or terms of six months. (c) "Nonpayment of premium" means failure of the named insured to discharge when due any of his obligations in connection with the payment of premiums on a policy or any 1479 installment of such premium, whether the premium is payable directly to the insurer or its agent or indirectly under any premium finance plan or extension of credit. (2) No notice of cancellation of a policy shall be effective unless it is based on one or more of the following grounds: (a) Nonpayment of premium; (b) Material misrepresentation or fraud; or (c) The driver's license or motor vehicle registration of the named insured or of any other operator who either resides in the same household or customarily operates an automobile insured under the policy has been under suspension or revocation during the policy period or the one hundred and eighty days immediately preceding its effective date or, if the policy is a renewal, during its policy period. This subsection shall not apply to any policy which has been in effect less than sixty days at the time notice of cancellation is mailed or delivered by the insurer unless it is a renewal policy. Nothing in this subsection shall apply to nonrenewal. (3)(a) No notice of cancellation of a policy to which this section applies shall be effective unless mailed or delivered by the insurer to the named insured and to the named insured's insurance agent at least forty-five days prior to the effective date of cancellation, except that when cancellation is for nonpayment of premium, at least ten days' notice of cancellation accompanied by the reason therefor shall be given. No notice of cancellation of a policy to which this section applies shall be effective unless the reason or reasons for cancellation accompany the notice of cancellation. (b) Nothing in this subsection (3) shall apply to nonrenewal. (4)(a) No insurer shall fail to renew a policy unless it shah mail by registered mail or certified mail, or deliver to the named insured, at the address shown in the policy, and tq the named insured's insurance agent at his business address, at least forty-five days' advance notice of its intention not to renew, and the reasons for refusal to renew must accompany such notice. The requirement for mailing notice by registered mail or certified mail shall not apply to an agent that has agreed to represent exclusively one insurer or a group of insurers under common management. This subsection shall not apply: 1. If the insurer has manifested its willingness to renew; or 2. In case of nonpayment of premium. Notwithstanding the failure of an insurer to comply with this subsection, the policy shall terminate on the effective date of any other automobile liability insurance policy procured by the insured with respect to any automobile designated in both policies. Unless a written explanation for refusal to renew accompanies

30 the notice of intention not to renew the policy shall remain in full force and effect. ' (b) Renewal of a policy shall not constitute a waiver or estoppel with respect to grounds for cancellation which existed before the effective date of such renewal. (c) No insurer shall fail to renew a policy for reasons based entirely on the sex, occupation, marital status, race, color, creed, national origin, residence, military service, or age of the insured or on the principal place of garaging the insured vehicle in this state, or for any other reason which is arbitrary or capricious. (5) Proof of mailing of notice of cancellation, of intention not to renew, or of reasons for cancellation to the named insured at the address shown in the policy shall be sufficient proof of notice. ' (6) When a policy is cancelled, other than for nonpayment of premium, or in the event of failure to renew a policy to which subsection ( 4) applies, the insurer shall notify the named insured of his possible eligibility for insurance through the automobile assigned risk plan. Such notice shall accompany or be included in the notice of cancellation or the notice of intent not to renew, and shall state that such notice of availability of the automobile assigned risk plan is given pursuant to this section. (7) Where the reason or reasons for cancellation do not accompany or are not included in the notice of cancellatb n, the insurer shall, upon written request of the named insured mailed or delivered to the insurer not less than fifteen days prior to the effective date of cancellation, specify in writing the reason or reasons for such cancellation. Such reasons shall be mailed or delivered to the named insured within five days after receipt of such request, except in the case of cancellation for nonpayment of premium, and shall contain or be accompanied by a notice of the named insured's right to apply to the department for a hearing thereon if the application is made not less than four days prior to the effective date of cancellation and is accompanied by a filing fee of seven dollars and fifty cents. If the reasons for cancellation are stated in or accompany the noti-ce of cancellation, such notice shall, except in the case of cancellation of nonpayment of premium, also contain or be accompanied by a notice of the named insured's right to apply to the department for a hearing if the application is made not less than ten days prior to the effective date of cancellation and is accompanied by a filing fee of seven dollars and fifty cents. This subsection shall apply only to a cancellation to which subsection (2) applies. (8) (a) A named insured who wishes to contest the reason or reasons for a cancellation to which subsection (2) is applicable, shall, not less than four days prior to the ef.fective date of cancellation where the reasons 1480 for cancellation are furnished upon written request and not less than ten days prior to the effective date of cancellation where the reasons for cancellation are furnished with the notice of cancellation, mail or deliver to the department a written request for a hearing, which shall state clearly the basis for the appeal and be accompanied by a filing fee of seven dollars and fifty cents. This subsection shall not apply to cancellation for nonpayment of premium. (b) A cancellation which is subject to the provisions of this subsection shall be deemed effective unless the department determines otherwise in accordance with the provisions of this section. (9) (a) Within two working days after receipt of a timely request for a hearing, the department shall call a hearing upon ten days' notice to the parties. The department may, where it finds that a request for a hearing is not timely made because the insurer did not, within the time period provided in subsection (8), furnish the reason for cancellation upon the timely request therefor by the named insured, accept the request for a hearing and, after notice to the insurer, extend the effective date of cancellation for a period not to exceed four days from the date the reason for cancellation was mailed or delivered. (b) Each insurer subject to this section shall maintain on file with the department the name and address of the person authorized to receive notices pursuant to this section on behalf of the insurer. (c) The department shall, at the conclu ~ion of the hearing or not later than two workmg days thereafter, issue its written findings to the parties and, if it finds for the named insured, it shall assess the insurer seven dollars.and fifty cents to defray the cost of the hearmg and shall refund the seven dollars and fifty cents filing fee to the named insured and it shall either order the insurer to rescin'd its notice of cancellation or, if the date cancellatio~ is t.o be effective has elapsed, order the pohcy remstated from the date of cancellation and such coverage shall be continuous to and shall operate prospectively from the date on which the C?rder was is~ued. How~ver, no policy shall be remstated while the named insured is in.arrears in payment of premium on such pohcy. If the department finds for the insurer its written order s~all so state, and it shaii a.ssess the named msured seven dollars and f1fty cents and apply the named insured's seven dollars and fifty cents filing fee against the assessment to defray the cost of the hearinl!'. (d) Reinstatement of a policy under this subsection shall not operate in any way to extend the expiration, termination, or anniversary date provided in the policy. Upon such reinstatement, costs and attorney's fees may be assessed by the department and paid to the

31 named insured by an insurer who has wrongfully canceled or wrongfully refused to renew a policy, as determined by the hearing provided for in paragraph (c). (10) The department s?all d~pos~t all ~Uing fees provided for in th1s sectwn m the m surance commissioner's regulatory trust fund. (11) There shall be no liability on the part of, and no cause of action of any nature shall arise against, any insurer or its authorized representative, agents, or employees or any firm, person or corporation furnishing to the insurer or insured information as to reasons for cancellation or refusal to renew, for any statement made by any of them in any written notice of cancellation or refusal to renew, for the providing of information pertaining thereto, or for statements made or evidence submitted at the hearings conducted in connection therewith. (12) The notice of cancellation as provi~ed by this section shall contain the ~ollowmg words which are to be prominently d1splayed: "You are permitted by law to appeal this cancellation. Appeal should be filed before the effective date of cancellation set forth in this notice. Forms for such appeal and the regulations pertaining thereto may be obtained from the offices of the Department of Insurance. Appeals must be accompanied by a deposit. You or this company may be charged with the costs of the appeal, depending nn the outcome." History.-!, ch ; 13, 35, ch ; 1, ch ; 1, ch. 71-7(B); 1, ch. 71-8(8); 1, ch Note.-See former Cancellation of policies following holding of invalidity of ch , Laws. of Florida.-In the event that a law preventmg increases on a utomobile insurance policy premium rates effective July 1, 1970, should be found to be invalid, no insurance policy in effect on July 1, 1970, or renewed in reliance of such law, shall be declared canceled or invalid. Provided, however, that the policy holder shall be required to remit, within thirty days after receiving written notice from the insurer of an increase in rates, the difference between the rate on July 1, 1970, and the rate set by the insurer. Such notice shall not be effective unless sent to the insured after a law preventing the increase of rates is declared invalid. History.-!, ch Short title.- Sections 627.~::! :: 741 may be cited and known as the Flonda automobile reparations reform act." History.-!, ch Purpose.--The purpose of is to require medical, surgical, funeral and disability insurance benefits to be provided without regard ~o faul~ u~d~r motor vehicle policies that provide bodily m)ury and property damage liabili~y insur~nce, o~ oth~r security, for motor vehicles registered m this 1481 state and, with respect to motor vehicle accidents a limitation on the right to claim damages for p'ain, suffering, mental anguish and inconvenience. History.- 2, ch Definitions.-As used in : (1) "Motor vehicle" means a sedan, station wagon, or jeep type vehicle not used as ~ public livery conveyance for passengers and mcludes any other four-wheel motor vehicle used as a utility automobile and a pickup or panel truck which is not used primarily in the occupation, profession, or business of the insured. (2) "Owner" means a person who holds the legal title to a motor vehicle, or, in the event a motor vehicle is the subject of a security agreement or lease with option to purchase with the debtor or lessee having the right to possession, then the debtor or lessee shall be deemed the owner for the purposes of (3) "Named insured" means a person, usually the owner of a vehicle, identified in a policy by name as the insured under the policy. (4) "Relative residing in the same household" means a relative of any degree by blood or by marriage who usually makes his home in the same family unit, whether or not temporarily living elsewhere.. History.~ 3, ch Required security.- (!) Every owner or registrant of a motor vehicle required to be registered and licensed in this state shall maintain security as required by subsection (3) of this section in effect continuously throughout the registration or licensing period. (2) Every nonresident owner or registrant of a motor vehicle which, whether operated or not, has been physically present witj:in this state for more than ninety days durmg the preceding three hundred sixty-five da;ys shall thereafter maintain security as defmed by subsection (3) of this section in effect continuously throughout the period such motor -vehicle remains within this state. (3) Such security shall be provided by one of the following methods: (a) Security by insurance may be provided with respect to such motor vehicle by an insurance policy delivered or issued for delivery in this state by an authorized or eligible insurer as otherwise defined in this code, which qualifies as evidence of automobile or motor vehicle liability insurance under chapter 324, the "Financial Responsibility Law," except as modified to provide the benefits and exemptions contained in Any such policy of liability insurance covering motor vehicles registered or licensed in this state and any policy of insurance represented or sold as providing the security required hereunder

32 for registered and licensed motor vehicles under shall be deemed to provide insurance for the payment of such benefits; or (b) Security may be provided with respect to any motor vehicle by any other method approved by the department of insurance as affording security equivalent to that afforded by a policy of insurance, if such security is continuously maintained throughout the motor vehicle's registration or licensing period. The person filing such security shall have all of the obligations and rights of an insurer under ( 4) An owner of a motor vehicle with respect to which security is required by this section who fails to have such security in effect at the time of an accident shall have no immunity from tort liability, but shall be personally liable for the payment of benefits under With respect to such benefits, such an owner shall have all of the rights and obligations of an insurer under History.- 4, ch Proof of security; security requirements; penalties.- (1) The provisions of chapter 324 which pertain to the method of giving and maintaining proof of financial responsibility and which govern and define a motor vehicle liability policy shall apply to filing and maintaining proof of security or financial responsibility required by It is intended that the provisions of chapter 324 relating to proof of financial responsibility required of each operator and each owner of any motor vehicle shall continue in full force and effect. (2) Any person who: (a) Gives information required in a report or otherwise as provided for in , knowing or having reason to believe that such information is false; (b) Forges or, without authority, signs any evidence of proof of security; or (c) Files or offers for filing any such evidence of proof, knowing or having reason to believe that it is forged or signed without authority, shall be guilty of a misdemeanor of the first de gree, punishable as provided in or (3) Sections do not apply to any motor vehicle owned by the state a political subdivision of the state, or the fed~ral government. History.- 5, 5A, ch Operation of a motor vehicle illegal without security; penalties.- ( I) Any owner or registrant of a motor vehicle with respect to which security is required under subsection (1) or subsection (2) of who operates such motor vehicle or permits it to be operated in this state without having in frill force and effect security complying 1482 with the terms of subsection (1) or subsection (2) of shall have his operator's license and registration revoked. (2) Any motor vehicle liability insurance policy which provides security required pursuant to subsection (3) of shall also be deemed to comply with the applicable limits of liability required under the financial responsibility or compulsory laws of any other state. History.- 6, ch Required personal injury protection benefits; exclusions; priority.- (1) REQUIRED BENEFITS.-Every insurance policy complying with the security requirements of shall provide personal injury protection providing for payment of all reasonable expenses incurred for necessary medical, surgical, x-ray, dental, and rehabilitative services, including prosthetic devices; necessary ambulance, hospital, nursing services; and funeral and disability benefits to the named insured, relatives residing in the same household, persons operating the insured motor vehicle, passengers in such motor vehicle, and other persons struck by such motor vehicle and suffering bodily injury while not an occupant of a motor vehicle or motorcycle, all as specifically provided in subsections (2) and (4)(d), to a limit of five thousand dollars for loss sustained by any such person as a result of bodily injury, sickness, disease, or death arising out of the ownership, maintenance, or use of a motor vehicle as follows: (a) Medical - benefits.-all reasonable expenses for necessary medical, surgical, x-ray, dental and rehabilitative services, including prosthetic devices, and necessary ambulance, hospital, and nursing services. Such benefits shall also include necessary remedial treatment and services recognized and permitted under the laws of the state for an injured person who relies upon spiritual means through prayer alone for healing, in accordance with his religious beliefs. (b) Disability benefits.-one hundred percent of any loss of gross income and loss of earning capacity per individual, unless such ~enefits are dee~ed not includable in gross mcome for federal mcome tax purposes, in which event such benefits shall be limited to 85 percent, from inability to work proximately caused by the injury sustained by the injured person,. p~us all expenses reasonably incurred 1n obtammg from others ordinary and necessary services in lieu of those that but for the injury, the injured person wo~ld have performed without income for the benefit of his household. All disability benefits payable under this provision shall be paid not less than every two weeks. (c) Funeral, burial or cremation benefits. Funeral, burial, or cremation expenses in an amount not to exceed one thousand dollars per individual.

33 (2) AUTHORIZED EXCLUSIONS.-Any right of reimbursement under this section, if insurer may exclude benefits: suffering loss from inability to collect such (a) For injury sustained by the named reimbursement out of a payment received by a insured and relatives residing in the same claimant upon a tort claim, is entitled to household while occupying another motor indemnity from one who, with notice of the vehicle owned by the named insured and not insurer's interest, made such a payment to the insured under the policy, or for injury sustained claimant without making the claimant and the by any person operating the insured motor insurer joint payees as their interests may vehicle without the express or implied consent appear, or without obtaining the insurer's of the insured. consent to a different method of payment. (b) To any injured person, if such person's (d) In the event an injured party or his conduct contributed to his injury under any of legal representative is entitled to bring suit the following circumstances: against a third party tort-feasor under the 1. Causing injury to himself intentionally; provisions of and fails to bring such 2. Being convicted of driving while under suit against such third party tort-feasor within the influence of alcohol or narcotic drugs to the one year after the last payment of any benefits extent that his driving faculties are impaired; under subsection (1), the insurer of such 3. While committing a felony. injured party, upon giving thirty days' written (3) INSURER'S RIGHTS OF REIM notice to such injured party, shall have the right BURSEMENT AND INDEMNITY.- to bring suit against such third party, in its (a) No subtraction from personal protection own name or in the name of the injured person insurance benefits will be made because of the or his legal representative, to recover the amount value of a claim in tort based on the same of the benefits paid pursuant to the provisions bodily injury, but after recovery is realized upon of this section to or for the benefit of such injured person. However, the prosecution or such a tort claim, a subtraction will be made to the extent of the recovery, exclusive of settlement of such suit without the consent of reasonable attorneys' fees and other reasonable the injured person or his legal representative expenses incurred in effecting the recovery, shall be without prejudice to such person. but only to the extent that the injured person (4) BENEFITS; WHEN DUE.-Benefits has recovered said benefits from the tort-feasor due from an insurer under or his insurer or insurers. If personal protection shall be primary, except that benefits received insurance benefits have already been received, under any workmen's compensation law shall be the claimant shall repay to the insurer or credited against the benefits provided by insurers, out of the recovery, a sum equal to the subsection (1) and be due and payable as loss benefits received, but not more than the recovery, exclusive of reasonable attorneys' fees loss and the amount of expenses and loss incurred accrues, upon receipt of reasonable proof of such and other reasonable expenses incurred in which are covered by the policy issued under effecting the recovery, but only to the extent that the injured person has recovered said (a) An insurer may require written notice benefits from the tort-feasor or his insurers or to be given as soon as practicable after an insurer. The insurer or insurers shall have a accident involving a motor vehicle with respect lien on the recovery to this extent. No recovery to which the policy affords the security required by an injured person or his estate for loss by suffered by him will be subtracted in calculating benefits due a dependent after the death, and (b) Personal injury protection insurance no recovery by a dependent for loss suffered by benefits shall be overdue if not paid within d h II b b d thirty days after the insurer is furnished the dependent after the eat wi e su tracte written notice of the fact of a covered loss and in calculating benefits due the injured person of the amount of same. If such written notice is except as provided in paragraph ( 1 )(c). not furnished to the insurer as to the entire (b) The insurer shall be entitled to reim- claim, any partial amount supported by written bursement of any payments made under the notice is overdue if not paid within thirty provisions of this subsection, based upon such days after such written notice is furnished to equitable distribution of the amount recovered the insurer. Any part or all of the remainder of as the court may determine, less the pro rata the claim that is subsequently supported by share of all court costs expended by the plain- written notice is overdue if not paid within tiff in the prosecution of the suit to recover such thirty days after such written. notice is amount against a third-party tort-feasor, includ- furnished to the insurer. However, any payment ing a reasonable attorney's fee for the plaintiffs shall not be deemed overdue when the insurer attorney. The proration of the reimbursement has reasonable proof to establish that the shall be made by the judge of a trial court insurer is not responsible for the payment, handling the suit to recover damages in the notwithstanding that written notice has been third-party action against the tort-feasor upon furnished to the insurer. For the purpose of calcuapplication therefor and notice to the carrier. lating the extent to which any benefits are over- ( c) A personal protection insurer with a due, payment shall be treated as being made on 1483

34 the date a draft or other valid instrument which is equivalent to payment was placed in the United States mail in a properly addressed, postpaid envelope or, if not so posted, on the date of delivery. (c) All overdue payments shall bear simple interest at the rate of 10 percent per annum. (d) The insurer of the owner of a motor vehicle shall pay personal injury protection benefits for: 1. Accidental bodily injury sustained in this state by the owner while occupying a motor vehicle, or while not an occupant of a motor vehicle or motorcycle if the injury is caused by physical contact with a motor vehicle. 2. Accidental bodily m)ury sustained outside this state but within the United States of America, its territories or possessions, or Canada by the owner while occupying the owner's motor vehicle. 3. Accidental bodily injury sustained by a relative of the owner residing in the same ho.usehold, under the circumstances described in subparagraph 1. or subparagraph 2., provided the relative at the time of the accident is domiciled in the owner's household and is not himself the owner of a motor vehicle with respect to which security is required under Accidental bodily injury sustained in this state by any other person while occupying the owner's motor vehicle or, if a resident of this state, while not an occupant of a motor vehicle or motorcycle, if the injury is caused by physical contact with. such motor vehicle, provided the injured person is not himself: a. The owner of a motor vehicle. with respect to which security is required under , or b. Entitled to personal mjury benefits from the insurer of the owner of such a motor vehicle. (e) If two or more insurers are liable to pay personal injury protection benefits for the same injury to any one person the maximum payable shall be as specified in subsection (1), and any insurer paying the benefits shall be.. entitled to recover from each of the other insurers an equitable pro rata share of the benefits paid and expenses incurred in processing the claim. (5) CHARGES FOR TREATMENT OF IN JURED PERSONS.-Any physician, hospital, clinic, or other person or institution lawfully rendering treatment to an injured person for a bodily injury covered by personal injury protection insurance may charge only a reasonable amount for the products, services, and accommodations rendered. In no event, however, may such a charge be in excess of the amount the person or institution customarily charges for like products, services, and accommodations in cases involving no insurance (6) DISCOVERY OF FACTS ABOUT AN INJURED PERSON; DISPUTES.- (a) Every employer shall, if a request is made by an insurer providing personal injury protection benefits under against whom a claim has been made, furnish forthwith, in a form approved by the department of insurance, a sworn statement of the earnings, since the time of the bodily injury and for a reasonable period before the injury, of the person upon whose injury the claim is based. (b) Every physician, hospital, clinic, or other medical institution providing, before or after bodily injury upon which a claim for personal injury protection insurance benefits is based, any products, services, or accommodations in relation to that or any other injury, or in relation to a condition claimed to be connected with that or any other injury, shall, if requested to do so by the insurer against whom the claim has been made, furnish forthwith a written report of the history, condition, treatment, and dates and costs of such treatment of the injured person, and produce forthwith and permit the inspection and copying of his or its records regarding such history, condition, treatment, and dates and costs of treatment. The person requesting such records shall pay all reasonable costs connected therewith. (c) In the event of any dispute regarding an insurer's right to discovery of facts about an injured person's earnings or about his history, condition, treatment, and dates and costs of such treatment, the insurer may petition a court of competent jurisdiction to enter an order permitting such discovery. The order may be made only on motion for good cause shown and upon notice to all persons having an interest, and it shall specify the time, place, manner, conditions, and scope of the discovery. Such court may, in order to protect against annoyance, embarrassment, or oppression, as justice requires, enter an order refusing discovery or specifying conditions of discovery and may order payments of costs and expenses of the proceeding, including reasonable fees for the appearance of attorneys at the proceedings, as justice requires. (d) The injured person shall be furnished upon demand a copy of all information obtained by the insurer under the provisions of this section, and shall pay a reasonable charge, if required by the insurer. (7) MENTAL AND PHYSICAL EX- AMINATION OF INJURED PERSON; REPORTS.- (a) Whenever the mental or physical condition of an injured person covered by personal injury protection is material to any claim that has been or may be made for past or future personal injury protection insurance benefits, such person shall, upon request of an insurer, submit to mental or physical examina-

35 tion by a physician or physicians. The costs of any examinations requested by an insurer shall be borne entirely by the insurer. Such examination shall be conducted within the city of residence of the insured. If there is no qualified physician to conduct the examination within the city of residence of the insured, then such examination shall be conducted in an area of the closest proximity to the insured's residence. Personal protection insurers are authorized to include reasonable proviswns in personal injury protection insurance policies for mental and physical examination of those claiming personal injury protection insurance benefits. (b) If requested by the person examined, a party causing an examination to be made shall deliver to him a copy of every written report concerning the examination rendered by an examining physician, at least one of which reports must set out his findings and conclusions in detail. After such request and delivery, the party causing the examination to be made is entitled upon request to receive from the person examined every written report available to him or his representative concerning any examination, previously or thereafter made, of the same mental or physical condition. By requesting and obtaining a report of the examination so ordered or by taking the deposition of the examiner, the person examined waives any privilege he may have, in relation to the claim for benefits, regarding the testimony of every other person who has examined or may thereafter examine him in respect of the same mental or physical condition. (8) With respect to any dispute under the provisions of between the insured and the insurer, the provisions of shall apply. History.- 7, ch Tort exemption; limitation on right to damages.- ( I) Every owner, registrant, operator, or occupant of a motor vehicle with respect to which security has been provided as required by ~ , and every person or organization legally responsible for his acts or omissions is hereby exempted from tort liability fo; damages because of bodily injury, sickness or dis~ase arising out of the ownership, operation, mamtenance, or -use of such motor vehicle in this state to the extent that the benefits described in (1) are payable for such injury, or would be payable but for any exclusion or deductible authorized by , under any insurance policy or other method of security complying with the requirements of , or by an owner personally liable under for the payment of such benefits unless a person is entitled to maintain a~ ~ction fo~ pain, suffering, mental anguish, and mconveruence for such injury under the provisions of subsection (2) (2) In any action of tort brought against the owner, registrant, operator, or occupant of a motor vehicle with respect to which security has been provided as required by , or against any person or organization legally responsible for his acts or omissions, a plaintiff may recover damages in tort for pain, suffering, mental anguish, and inconvenience because of bodily injury, sickness, or disease arising out of the ownership, maintenance, operation, or use of such motor vehicle only in the event that the benefits which are payable for such injury under (1)(a) or which would be payable but for any exclusion or deductible authorized by exceed one thousand dollars or the injury or disease consists in whole or in part of permanent disfigurement, a fracture to a. weight-bearing bone, a compound, comminuted, displaced or compressed fracture, loss of a body member, permanent injury within reasonable medical probability, permanent loss of a bodily function, or death. Any person who is entitled to receive free medical and surgical benefits shall be deemed in compliance with the requirements of this subsection upon a showing that the medical treatment received has an equivalent value of at least one thousand dollars. Any person receiving ordinary and necessary services normally performed by a nurse from a relative or a member of his household shall be entitled to include the reasonable value of such services in meeting the requirements of this subsection. History.- 8, ch * Property damage, basic or full coverage; tort liability.- (!) The owner of a motor vehicle as defined in is not required to maintain security with respect to property damag~ to his motor vehicle, but may elect to purchase either full or basic coverage for accidental property damage to his motor vehicle. (2) Every insurer providing security under shall offer the owner either full or basic coverage for accidental property damage to the insured motor vehicle, as follows: (a) FUll coverage shall provide insurance without regard to fault for accidents occurring within the United States or its territories 01 possessions or Canada. (b) Basic coverage shall be limited to insurance against damage caused by the fault of another resulting from contact between the insured vehicle and a vehicle with respect to which security is required under (3) The insurer may include within the terms and conditions applicable to full or basic coverage such other provisions as it customarily applies to collision coverage for private passenger automobiles in other states, including deductibles without limitation. (4) Every owner, registrant, operator, 01 occupant of a motor vehicle with respect to

36 which security has been provided as required by , and every other person or organization legally responsible for the acts or omissions of such an owner, registrant, operator, or occupant, is hereby exempted from tort liability for damages because of accidental property damage to motor vehicles arising out of the ownership, operation, maintenance, or use of such motor vehicle in this state. However, a person shall not be exempt from such liability if he was operating the motor vehicle without the express or implied consent of its owner or an insured under the owner's policy or if his willful and wanton misconduct was the proximate cause of the accident. This exemption applies only with respect to property damage to motor vehicles subject to but shall not be applicable as to a motor vehicle damaging a parked vehicle. (5) Notwithstanding subsection (4), an owner who has elected not to purchase insurance with respect to property damage to his motor vehicle may maintain an action of tort therefor against the owner, registrant, operator or occupant of a motor vehicle causing such damage if such damage exceeds five hundred and fifty dollars, and the insurer of an owner who has elected to purchase full or basic collision coverage for his motor vehicle shall have the right, if the damage to such motor vehicle exceeds the above amount, to recover the amount of the benefits it has paid and, on behalf of its insured, any deductible amount from the insurer of the owner, registrant, operator, or occupant of a motor vehicle causing such damage. The issues of liability in such a case and the amount of recovery shall be decided on the basis of tort law, and shall be determined by agreement between the insurers involved or, if they fail to agree, by arbitration. History.- 9, ch Note.-See Kluger v. White, 281 So.2d 1 (F1a. 1973), holding this section invalid. any amount so deducted from any owner, registrant, operator, or occupant of a motor vehicle or any person or organization legally responsible for any such person's acts or omissions who is made exempt from tort liability by History.- 10, ch Tort claims against persons not subject to Notwithstanding any other provision of , the rights of residents of this state to claim damages in tort shall not be diminished when such residents are involved in motor vehicle accidents with persons not required to provide security under History.- 11, ch Implementation of (1) The department of insurance shall adopt rules and regulations necessary to implement the provisions of (2) Notwithstanding any other provision of law, all insurers issuing insurance coverage under shall comply with the following provisions: (a) Within sixty days after July 1, 1971, each insurer shall file its proposed manual, rules, rates, and rating plans with the department for approval. Rates for required financial responsibility coverage after January 1, 1972 shall be reduced by each insurer by not less than 15 percent, calculated as a percentage of the combined required financial responsibility rate of such insurer in effect on June 7, 1971, or of the combined required financial responsibility rate of such insurer approved by the commissioner and in effect at the time of the filing of the new rates required herein. There shall be no exception to the requirements of this provision unless the department shall find that the. use of the rates required herein by any insurer will result in rates which are Deductible endorsement.-each in- inadequate under to the extent that surer providing security as required by such rates jeopardize the solvency, as defined to any owner shall, at the election in , of the insurer required to use such of the owner, issue a policy endorsement, rates. Notwithstanding. the provisions of approved as to content by the department of chapter 71-3(B), Laws of Florida, no rate for the insurance and subject to such other reasonable insurance required by shall regulations regarding said endorsement as the be increased prior to January 1, 1973, unless department may make after al?propriate hearing, the insurer proposing such rate increase shall which endorsement shall provide that there shall show that the rates required herein are inadebe deducted from personal protection benefits quate as defined in that would otherwise be or become due to the (b) Within sixty days from the date of policyholder alone or to the policyholder filing by such insurer, the department may and relatives residing in his household an approve or disapprove the filing. If no action is amount of either two hundred and fifty dollars, taken by the department within sixty days, the five hundred dollars, or one thousand dollars, filing shall be deemed approved. again as the policyholder elects, said amount to (c) If the department approves the filing be deducted from the amounts otherwise due or the filing otherwise becomes effective, the each person subject to the deduction. ~ny person manual, rules, rates, and rating plans shall take electing such an endorsement or subject to such effect January 1, If the department an endorsement as a result of the policyholder's disapproves the filing, the insurer shall revert election shall have no right to claim or to recover to a rate level for required coverage which 1486

37 shall be lower, by not less than 15 percent, than the combined premiums for required financial responsibility coverage at the time such proposed new rates were filed. (d) Upon complying with this subsection, any insurer appealing an order of disapproval may use the rates set forth in the disapproved filing during the pendency of the appeal, so long as such rates do not exceed its rates for required financial responsibility coverage at the time of its rate filing required herein. As a condition to the use of such disapproved rates, the insurer must enter into a legally binding agreement with the department to secure the repayment to the insurer's policyholders of the difference between the insurer's proposed rate and that rate which would be lower, by not less than 15 percent, than the combined premiums for required financial responsibility coverage at the time such proposed new rates were filed. In addition to the repayment of the difference in premium, the company shall agree to pay to the insured the legal rate of interest on any money refunded Surety on required bonds; release Bonds in judicial proceedings Bond premium allowable as expense or costs Sureties upon official bonds Certain official and fiduciary bonds; special approval of surety and forms required Surety on required bonds; re lease.- (1) Subject to other applicable provisions of part XI of chapter 627, any surety insurer having a currently effective certificate of authority to transact such insurance in this state may be accepted as surety on the bond of any person required by the laws of this state to give bond, and may be the only surety necessary to render the bond valid, but other surety may, in the discretion of the official authorized to approve the bond, be required. (2) Such a surety insurer may be released from its liability on any such bond on the same terms and conditions as are by law prescribed for the release of individuals, and shall be subject to all the rights and liabilities of natural persons. BlstorJ.- 611, ch Note.-81mllar provisions found In former Bonds in judicial proceedings.- ( I) In all judicial proceedings, whenever it may become necessary for any party thereto to give a bond for any purpose, the bond of such party having as surety thereon any surety insurer authorized to do business in this state, may be accepted, by any officer or court whose duty is to approve such bond, without other (e) Any private passenger automobile liability policy in force on January 1, 1972 and thereafter shall reflect by endorsement any reduction in rates for the required coverage under as filed by the insurer, and such reduction shall be computed on a pro rata basis for the remaining term of said policy. Such endorsement may be issued at the renewal date of the policy or the termination of the policy. Any return premium shall be credited to the renewal policy, or, if the policy is terminated, the return premium shall be refunded to the insured. (f) For the purposes of the implementation of , rating organizations as defined in chapter 627 shall be permitted until January 1, 1973, to develop and furnish rates and forms to their members or subscribers. However, members and subscribers of rating organizations shall not participate in the decisions or deliberations of such organizations in the development of such rates under History.- 12, ch PART XI SURETY INSURANCE CONTRACTS Bonds for construction contracts; attorney fees in case of suit Deposit agreements for surety's protection authorized Surety on auto club arrest bond; conditions, limit Estoppel to deny power. surety. This section shall apply also to bonds given in connection with any appellate proceeding for the purpose of obtaining supersedeas, or for any other purpose. (2) Such surety insurer may become surety upon administrators', executors' and guardians' bonds, and in such cases there need only be one surety upon such bonds. HlstorJ.- 612, ch Note.-Simllar provisions found In former Bond premfum allowable as expense or costs.--any receiver, assignee, trustee, committee, guardian, executor or administrator, or other fiduciary required by law to give bond as such, may include as part of his lawful expense such reasonable sum paid such an insurer for such suretyship not exceeding one per cent per annum on the amount of the bond, as the head of department, board, court, judge or officer by whom, or the court or body in which, he was appointed allows; and in all actions or proceedings the party entitled to recover costs may include therein such reasonable sum as may have been paid such an insurer executing or guaranteeing any bond or undertaking therein. BlstorJ.- 613, ch Note.-slmllar provisions found In former Sureties upon official bonds.-

38 (1) Subject to , a solvent surety insurer authorized to transact such business in this state and having a paid-up capital stock (if a stock insurer) or surplus (if a mutual or reciprocal insurer) of not less than two hundred and fifty thousand dollars, may, upon proper proof thereof and production of evidence of solvency, be accepted as surety upon the bonds of all city, county and state officers. (2) Subject to , the various officers of this state whose duty it is to approve the sureties upon such bonds may accept such insurer as one of the sureties, or as the only surety, upon such bond as the solvency of the insurer may warrant. (3) No insurer shall be relieved of its liability upon any such bond by reason of the fact that the books and accounts of the principal have been examined and approved as correct by the proper authorities when in fact there has been a breach of the bond and a loss accruing from such breach. Hlstory.- 614, ch Note.-Bimllar provisions found In former Certain official and fiduciary bonds; special approval of surety and forms required.- (!) No surety insurer shall execute a fidelity or surety bond for an officer or employee of this state or of any county, municipality or other subdivision thereof, or for any officer or employee of any bank, trust company or other fiduciary corporation organized under the laws of this state, except upon such 'assumption of risk and upon forms which have been prescribed or approved by the governor, the department of banking and finance, the department of insurance, and the department of legal affairs, or by any three of them, and until such insurer shall have procured a special authority from the governor, the department of banking and finance, the department of insurance, and the department of legal affairs, or by any three of them for the writing of such fidelity or surety bonds. (2) The governor, department of banking and finance, department of insurance and department of legal affairs shall remove from the list of surety insurers whose bonds are acceptable under this section, the names of any such insurers as in their judgment shall fail or refuse to carry out such obligations promptly and in good faith. History.-~615, ch ; 1 11, 12, 13, 35, ch Note.-Bimllar provisions found In former Bonds for construction contracts; attorney fees in case of suit.- (1) Whenever a surety insurer becomes a surety on a contract bond or bonds for either private or public construction, except for construction projects finan ced under Federal Housing Administration or Veteran's Administration programs, such bond or bonds shall be either: (a) A combination bond containing both performance and payment provisions and in an amount of not less than the total or estimated contract price; or (b) Separate bonds for performance and for payment, but in such instances both bonds shall be issued and each shall be in an amount of not less than fifty percent of the total or estimated contract price. (2) Section (attorney fee) shall also apply as to suits brought by owners, subcontractors, laborers and material men against a surety insurer under payment or performance bonds written by the insurer under the laws of Florida to indemnify such owners, sub contractors, laborers and material men against pecuniary loss by breach of a building or construction contract; except, that the amount to be so recovered for fees or compensation of such a plaintiff's attorney shall not be more than twelve and one-half per cent of the amount which the judgment or decree awards such plaintiff under the bond <exclusive of the costs of suit and attorney fees or compensation). nor shall it be less than one hundred dollars where the judgment or decree is for more than five hundred dollars nor less than fifty dollars where the judgment or decree is five hundred dollars or less. Such owners, subcontractors, laborers and material men shall be deemed to be "insureds" or "beneficiaries" for the purposes of this section. History.- 616, ch ; 11. ch Note.-Bimllar provisions found in former Deposit agreements for surety's protection authorized.-it shall be lawful for any party of whom a bond, undertaking or other obligation is required, to agree with his surety or sureties for the deposit of any or all moneys and assets for which he and his surety or sureties are or may be held responsible, with a bank, savings bank, safe-deposit or trust company, authorized by law to do business as such, or with other depository approved by the court or a judge thereof, if such deposit is otherwise proper, for the safekeeping thereof, and in s\ich manner as to prevent the withdrawal of such money or assets or any part thereof, without the written consent of such surety or sureties, or an order of court, or a judge thereof made on such notice to such surety or sureties as such court or judge may direct; provided, however, that such agreement shall not in any manner release from or change the liability of the principal or sureties as established by the terms of the bond. Hlstory.- 617, ch Note.-Bimllar provisions found In former Surety on auto club arrest bond; conditions, limit.- (1) Any surety insurer which has qualified to transact surety business in this state may, in any year, become surety in an amount not to exceed two hundred dollars with respect to any guaranteed arrest bond certificates issued in such year by an authorized automobile club or association by filing with the department an undertaking thus to become surety. 1488

39 (2) Such undertaking shall be in form to be prescribed by the department and shall state the following: (a) The name and address of the automobile club or clubs or automobile association or associations with respect to the guaranteed arrest bond certificates of which the surety insurer undertakes to be surety. (b) The unqualified obligation of the surety insurer to pay the fine or forfeiture in an amount not to exceed two hundred dollars of any person who, after posting a guaranteed arrest bond certificate with respect to which the insurer has undertaken to be surety, fails to make the appearance to guarantee which the guaranteed arrest bond certificate was posted. (3) The term, guaranteed arrest bond certificate, as used herein, means any printed card or other certificate issued by the automobile club or association to any of its members, which card or certificate is signed by such member and contains a printed statement that such automobile club or association and a named surety company guarantee the appearance of the person whose signature appears on the card or certificate and that they will, in the event of failure of such person to appear in court at the time of trial, pay any fine or forfeiture imposed on such person in an amount not to exceed two hundred dollars. Hlstory.-~618, ch ; 113, 35, ch Note.-Bimllar provisions found In former Estoppel to deny power.-any surety insurer which executes any bond or undertaking of surety under part XI of this chapter shall be estopped in any proceeding to enforce the liability which it has assumed to incur to deny its corporate or other power to execute such bond or assume such liability. Hlstor:r ch Note.-Simllar provisions found In former Especially applicable provisions; nonapplicable chapters Approval of forms Limit of risk Trained employees Illegal dealings m minimum risk rate premium Risk premium defined. PART XII TITLE INSURANCE CONTRACTS Especially applicable provisions; nonapplicable chapters.- (!) Provisions of this code especially applicable as to title insurers are contained in the following sections: (a) Section (7) (as to "business trust insurer"). (b) Section (3) (title insurer must be a stock insurer, except as to existing domestic mutual or business trust insurers). (c) Section (capital, surplus, net trust fund required of new insurers). (d) Section (special surplus requirements; new insurers). (e) Section (capital funds required; old insurers). (f) Section (deposit requirement). (g) Section (definition of "title insurance"). (h) Section ( 4) (nonadmitted assets do not include certain properties of title insurers). (i) Section (5) (title insurers exempt from usual unearned premium reserve). (j) Section (title insurance reserve). (k) Section (special investments by title insurer). (l) Section (rebates prohibited; title insurance) Promulgation of rates Rate deviation Casualty title insurance prohibited Preemption by state Transaction of title insurance and any other kind of insurance prohibited. (m) Section (4) (limited applicability of chapter, "the insurance contract," as to title insurance). (n) Section (power of title insurer to engage in related businesses). (2) None of the provisions of any of the following are applicable as to title insurance: (a) Part I of chapter 626 (insurance representatives; licensing procedures and general requirements); (b) Part II of chapter 626 (general lines agents and solicitors; qualifications and requirements); (c) Part III of chapter 626 (life insurance agents); (d) Part IV of chapter 626 (disability insurance agents); (e) Part V of chapter 626 (insurance adjusters); (f) Part I of chapter 627 (rates and rating organizations) ; (g) Part III of chapter 627 (life insurance policies and annuity contracts) ; (h) Part IV of chapter 627 (industrial life insurance policies); (i) Part V of chapter 627 (group life insurance); (j) Part VI of chapter 627 (disability insurance policies);

40 (k) Part VII of chapter 627 (group, blanket and franchise disability insurance); (1) Part VIII of chapter 627 (credit life and disability insurance) ; (m) Part IX of chapter 627 (property insurance contracts) ; (n) Part X of chapter 627 (casualty insurance contracts); ( o) Part XI of chapter 627 (surety insurance contracts) ; (p) Chapter 629 (reciprocal insurers); and (q) Chapter 632 (fraternal benefit societies). History.- 620, ch ; 2, ch Approval of forms.-no title insurer shall issue or agree to issue any form of title insurance binder, title insurance commitment, preliminary report, title insurance policy, other contract of title insurance or related forms unless the same has first been filed with and approved by the department. No title guarantee or policy form shall be disapproved on the ground that it has on it a blank form for an attorney's opinion on the title. Hlstory o-~3. ch ; 13, 35, cho amount as other state employees receive for similar services. History.- 5, ch ; fl3, 35, cho Illegal dealings in minimum risk rate premium.- (1) No person shall knowingly quote, charge, accept, collect or receive a premium for title insurance less than the minimum risk rate premium promulgated by the department. (2) No i~surer shall know~n~ly accept, collect or receive any sum as mmimum risk rate premium for title insurance, which insurance is not then provided or is not in due course (~ubject to acceptance of the risk) to be provided, unless such sum be promptly entered upon the books of account of such insurer as premium collected in advance. lllotoryo-l6o cho ; 1113, 35, cho Risk premium defined.- (1) "Risk premium" or "premium" for the purpose of part XII of this chapter is the charge as promulgated by the department of insurance which shall be made by a stock insurer for the assumption of the risk or the contribution or deposit allocated to and charged Limit of risk.- by a business trust title insurer for the as (1) No title insurer shall issue any con- sumption of risk, under the several classificatract of title insurance, either as a primary tions of title insurance contracts. Wherever insurer or as a coinsurer or reinsurer, upon an the "':ords "premium". or "risk premium" are estate, lien or interest in property located in used m part XII of this chapter, or in the laws this state, which does not show on its face the of this state, with respect to title insurance dollar amount of the risk assumed and which the same shall be construed to mean "preis in an amount exceeding one half of its sur- ~ium" or "risk premium" as defined in this secplus to policyholders, unless the excess shall! 10 ~ and shal~ not relate to any other charge be simultaneously reinsured in one or more ap- Incidental to title insurance. proved insurers. No title insurer shall circum- (2) The minimum risk premium shall not vent the foregoing limitation by the issuance be c.onstrued to prevent a title insurer from of two or more policies upon the same estate m~k.mg a r~asonabl~ charge in addition to the lien or interest. This subsection shall not b~ mmimum nsk premmm for other services ranconstrued to prohibit: de red the insured.. (a) 0 Th~ simultaneous issuance of policies Rlotor:ro-17, cho ; 1113, 35, cho msurmg different estates, liens or interests in Promulgation ofrates.- the same property provided each of such simultaneous policies except the paramount es- (1) The department of insurance shall have tates, liens or interests to which the insured the power and it shall be its duty subject to estate, lien or interest is subject and provided the applicable rating section of this code to that each policy so simultaneously issued con- promulgate the minimum risk rate premium forms to the limitations and inhibitions of this to be charged in this state by insurers for the subsection; respective types of title insurance contracts (b) Ceding portions of the total risk to au- and services incident thereto and in connecth d o tion therewith to promulgate rules and reguorize msurers. Insurance ceded, including lations incident to the applicability of such 0 coinsurance effected shall be deemed a retention of risk by the insurer assuming the ceded rates. Rates shall be made in accordance with risk and not by the insurer ceding the same. the following: (2) Surplus to policyholders shall be de- (a) Due consideration shall be given to termined from the last annual statement of the past and prospective loss experience, to a reainsurer as provided by sona?le m~rgin for underwriting profit and History.-14. cho contmge~~ies, t? past and pro~pective expenses for administration and handling of risks, and Trained employees.-the depart- other relevant factors. ment shall appoint, employ, prescribe the duties. (b) Rates may be grouped by classificaof and discharge such employees trained and tion or schedule and may differ as to class of knowledgeable in the field of title insurance as risk assumed. it deems nece~sary. The department shall fix (c) Rates shall not be excessive inadethe compensation of all such personnel in such quate; or unfairly discriminatory. ' 1490

41 Ch. 627 INSURANCE CODE: RATES AND CONTRACTS Ch. 627 (2) The mm1mum risk rate premium shall apply to each one hundred dollars of insurance issued to an insured. Only the minimum risk rate premium shall be published by the department. (3) The minimum risk rate premium promulgated for title insurance shall apply throughout this state. Hlstory.- 8, ch ; fill, 35, ch Rate d-eviation.- (1) At any time after the first promulgation of risk rates as provided for in part XII of this chapter, an authorized insurer may petition the department for an order authorizing and permitting a specific deviation in the risk premium. Such petition shall be in writing and sworn to and shall set forth allegations of fact upon which the petitioner will rely including the petitioner's reasons for requesting such deviation. (2) If in the judgment of the department the petition does not set forth upon its face a case justifying a hearing and formal consideration, the department may, at any time within thirty days after receipt of such petition, enter an order denying such petition. In the event the department determines that such petition states a case which justifies a hearing it shall, within thirty days after receipt of such petition, fix a reasonable date for a public hearing upon such petition and shall give notice of such hearing. At any time prior to such hearing any authorized title insurer may join in such petition for like authority to deviate or may file a separate petition praying for such authority, or opposing such deviation. All Application of part XIII Establishment and maintenance of separate accounts Statement of value of benefits Investment of assets Application of part XIII.-Part XIII of this chapter applies to annuity contracts with variable benefits and contracts upon the lives of beneficiaries under life insurance contracts and life insurance policies (and benefits incidental thereto) payable in fixed or variable amounts or both. History.-!, ch ; 1, ch Establishment and maintenance of separate accounts.-a domestic life insurance company may establish one or more separate accounts and allocate thereto amounts, including without limitation proceeds applied under optional modes of settlement or under dividend options, to provide for life insurance or annuities, and benefits incidental thereto, payable in such petitions shall be heard at the same hearing and such petitions shall be ruled upon simultaneously. The order or orders entered by the department granting a deviated rate shall be in the nature of a change and amendment of the promulgated risk rate and the provisions of the rate section of part XII of this chapter shall apply to any such change and amendment and the order or orders affecting the same. Hlstory.- 8, ch ; 1113, 35, ch Casualty title insurance prohib ited.- (1) No title insurance policy or guarantee of title shall b~ issued upon a casualty basis. (2) The term "casualty basis" as used in this section means the issuance of a title insurance policy or guarantee of title with disregard to the possible existence of adverse matters or defects of title. Blstory.- 10, ch PART XIII VARIABLE CONTRACTS Preemption by state.-the state of Florida hereby preempts the regulation of title insurers and title insurance. Blstory.- 11, ch Transaction of title insurance and any other kind of insurance prohibited. (!) No insurer shall transact title insurance and any other kind of insurance in this state. (2) Subsection (1) shall not apply to any insurer actively transacting title insurance and any other kind of insurance in this state on January 1, Hlstory.- 12, ch Department; rules and regulations; qualification of companies to issue variable contracts Policy provisions; effect of other requirements Variable contract reserve requirements. fixed or variable amounts or both. All amounts received by the company which are required by contract to be applied to provide such variable payments or values shall be added to the appropriate separate account. If so provided under applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the company may conduct. Any deficit from mortality experience which may arise in any such separate account shall be adjusted by additions to such account by the company so that the assets of such account are always at least equal to the assets required to satisfy the company's obligations for such variable payments.

42 Ch. 627 INSURANCE CODE: RATES AND CONTRACTS Ch. 627 History.- 2, ch ; 13, 35, ch ; 1, ch Statement of value of benefits. Any contract on a variable basis delivered or issued for delivery in this state, and any group certificate evidencing variable benefits issued pursuant to any such contract on a group basis, shall contain a statement of the essential features of the procedure to be followed by the insurance company in determining the dollar amount of variable benefits or values thereunder and shall state in clear terms that such amount may decrease or increase according to such procedure. However, in the case of variable life or variable endowment contracts the amount of proceeds may never decrease below the face amount of the contract. Any such contract delivered or issued for delivery in this state, and any such group certificate, shall contain on its first page, in a prominent position in ten point type or larger, a clear statement that the benefits or values thereunder are on a variable basis. History.- 3, ch ; 1, ch Investment of assets.- (1) An insurer which issues contracts providing for payments or values that vary directly according to investment experience and which has established a separate account or accounts in connection with such contracts, may invest and reinvest the assets held by such company in such separate account or accounts without regard to any requirements or limitations prescribed by the laws of this state governing the investments of life insurance companies. The investments in such separate account or accounts shall not be taken into account in applying the investment limitations otherwise applicable to the investments of the company. (2) Where the expense factor for purchase or liquidation of securities would not be increased, any securities purchased or liquidated for any contracts with variable benefits sold in this state by a company, shall whenever possible be executed through a security brokerage office located in this state. History.- 4, ch ; 1, ch Department; rules and regulations; qualification of companies to issue variable con tracts.- (1) The department, notwithstanding any other provision of law, shall have the sole authority to regulate the issuance and sale of variable contracts and to issue such reasonable rules and regulations as may be necessary to carry out the purposes and provisions of this part Premium finance company defined Premium finance agreement defined License required. PART XIV PREMIUM FINANCE COMPANIES 1492 (2) No life insurance corporation heretofore or hereafter incorporated pursuant to the provisions of any general or special law of this state shall undertake the issuance of any contract on a variable basis, and no insurance company formed by authority of another state or foreign country and heretofore or hereafter admitted to transact business in this state, shall undertake the issuance or delivery of any contract on a variable basis within this state, until said company has satisfied the department that its condition or methods of operation in connection with the issuance of such contracts on a variable basis will not be such as would render its operation hazardous to the public or its policyholders in this state. In determining the qualification of a company requesting authority to issue or deliver contracts on a variable basis within this state, the department will consider, among other things, (a) The history of the company; (b) The character, responsibility and general fitness of the officers and directors of the company; and (c) The regulation of a foreign company by its state of domicile. The state of entry of an alien company should be deemed its place of domicile for this purpose. History.- 5, ch ; 13, 35, ch ; 1, ch Policy provisions; effect of other requirements.-except for (grace period); (policy loan); (reinstatement); (table of installments); (nonforfeiture benefits; certain interim policies); and (standard nonforfeiture law; life insurance) of part III, (grace period-group insurance) of part V, and as otherwise provided in this part XIII, all pertinent provisions of the Insurance Code shall apply to separate accounts and contracts relating to variable life insurance policies. Any individual variable life insurance contract delivered or issued for delivery in this state shall contain grace, reinstatement, and nonforfeiture provisions appropriate to such a contract. Any group variable life insurance contract delivered or issued for delivery in this state shall contain a grace provision appropriate to such a contract. History.- 2, ch Variable contract reserve requirements.- The reserve liability for variable contracts shall be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees. History.- 2, ch Approval; disapproval of application; and waiting period License provisions and posting.

43 Ch. 627 INSURANCE CODE; RATES AND CONTRACTS Ch. 62i Change of location Grounds for refusal, suspension and revocation of license. ' Administrative fine and probation in lieu of suspension, revocation, or refusal to renew license Examinations Excessive premium finance charge; penalty Licensee's books and records; reports Rebates and inducements prohibited Filing, approval of forms, service charge filing Form and content of premium finance agreements Limitation on service and other charges Delinquency, collection, and cancellation charges ; attorney's fees Restrictions on agreements. premium finance Delivery of copy of premium finance agreement Notice of assignment; payments Statement of account; receipts Refinancing Cancellation of upon default. msurance contract Fees Premium finance company de fined.- (1) An insurance premium finance company is: (a) A person engaged, in whole or in part, in the business of entering into premium finance agreements with insureds; or (b) A person engaged, in whole or in part, in the business of acquiring premium finance agreements from other premium finance companies. (2) Credit unions, banks, building and loan associations, and other lending institutions as defined under chapters 516, 519, 656, 657, 658, and 665 are exempt from the provisions of part XIV of this chapter. (3) The inclusion of a charge for insurance on a bona fide sale of goods or services on installments is not subject to the provisions of Jart XIV of chapter 627. Bistory.- 1, ch Premium finance agreement defined.-premium finance agreement means a promibsory note or other written agreement by which an insured promises or agrees to pay to, or to the order of, a premium finance company the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent, in payment of premiums on an insurance contract, together with a service charge as authorized and limited by law. History.- 1, ch License required.- *(1) Except as provided in and , no person shall engage in the business of a premium finance company without a license therefor obtained from the department, as provided in part XIV of this chapter. Every premium finance company licensed under the provisions of this part shall maintain at all times a net worth of thirty-five thousand dollars, except that any licensed premium finance company in existence on October 1, 1973, and not having a net worth of thirty-five thousand dollars shall have a period of three years from said date to attain such net worth. The increase in 1493 net worth during each year of such three-year period shall not be less than ten thousand dollars or such amount as is needed to attain the required thirty-five thousand dollars net worth. However, in lieu of having a net worth of thirtyfive thousand dollars, a premium finance company may file a surety bond or other acceptable collateral with the department as approved by it in the amount of thirty-five thousand dollars. *(2) The application for license required under part XIV of this chapter shall be in writing and in the form prescribed by the department. Every applicant shall provide proof, on forms prescribed by the department, of a net worth of thirty-five thousand dollars as provided for in subsection (1). Assets to be used in computing the required net worth shall be determined by rules and regulations adopted by the department. (3) When an applicant has more than one office, separate applications for license shall be made for each such office. (4) At the time of filing an application for a license, the applicant shall pay to the department the license fee and, upon original application or upon application subsequent to denial of application, or revocation, suspension or surrender of a license, an investigation fee. (a) The license fee specified in for each license year or part thereof shall be paid for each office where the business of a premium finance company is conducted. (b) The investigation fee specified in , when required by this section, shall be paid for each office where the business of a premium finance company is conducted, except that when an applicant files application for license for more than three offices at the same time, the total investigation fee for all the applications shall be the same as the fee for three offices. His t o ry.-!, ch ; 13, 35, ch ; 2, ch ; ~ 1. ch ; I, ch *Note.-Subsections (1 ) and (2), as amended, take effect October I, Note.- See former Approval; disapproval of application; and waiting period.- (1) Within sixty days after the filing of an

44 Ch. 62i INSURANCE CODE: RATES AND CONTRACTS Ch. 627 application for a license accompanied by payment of the fees for license and investigation, the department shall issue the license or refuse to issue the license, if it is found by it that the management of the premium finance company filing the application is lacking in managerial experience as to make the proposed operation hazardous to the insurance buying public, or which it has good reason to believe is affiliated directly or indirectly through ownership, control, or in other business relations with any person or persons whose business operations are or have been marked as detrimental to the public, policyholders, stockholders, investors, or creditors by manipulation of assets or of accounts or by bad faith. Such license to engage in business in accordance with the provisions of this law at the location specified in the application shall be executed in duplicate by the department, and it shall transmit one copy thereof to the applicant and file a copy in the office of the department. (2 ) If the department refuses tv issue a license, it shall notify the applicant of the denial, return to the applicant the sum paid as a license fee, but retain the investigation fee to cover the costs of investigating the applicant. (3) Each license issued hereunder shall remain in full force and effect until the last day of September of the year for which issued unless earlier surrendered, suspended, or revoked pursuant to part XIV, and may be renewed for the ensuing license year upon the filing of an application in conformity with but subject to all of the provisions of this section. If an application for a renewal of a license is filed with the department before October 1 of any year, the license sought to be renewed shall be continued in full force and effect either until the issuance by the department of the renewal license applied for or until five days after the department refuses to issue such renewal license under the provisions of this section. (4) Only one office may be maintained under each license, but more than one license may be issued to the same licensee pursuant to part XIV. (5) Any person engaged in the business of a premium finance company on October 1, 1963 may continue in operation in accordance with the provisions of part XIV but must obtain a license for each office at which he engages in the business of a premium finance agency by October 1, History.-!. ch ; ch License provisions and posting. Such license shall state the name and address of the licensee and shall be kept conspicuously posted in the office of the licensee and shall not be transferable or assignable. History.-!. ch the date thereof, which endorsement shall be attached to the license for such office and be authority for the operation of the business under such license at such new location. Hlstory.-11. ch ; ch Grounds for refusal, suspension, and revocation of license.- (1) The department may forthwith deny, suspend, revoke, or refuse to renew or continue any license hereunder, if it shall find that: (a) The licensee has failed to pay the annual license fee or any sum of money lawfully demanded under authority of any other section of this chapter, or to comply with any demand, ruling, or requirement of the department lawfully made pursuant to and within the authority of part XIV. (b) The licensee has violated any provision of part XIV or any rule or regulation lawfully made by the department under and within the authority of part XIV. (c) Any fact or condition exists which, if it had existed at the time of the original application for such license, clearly would have warranted the department in refusing originally to issue such license. (2) The department may revoke or suspend only the particular license with respect to which grounds for revocation or suspension may occur or exist; or if it shall find that such grounds for revocation or suspension are of general application to all offices, or to more than one office, operated by such licensee, it shall revoke or suspend all of the licenses issued to such licensee or such number of licenses as such grounds apply to, as the case may be. (3) Any licensee may surrender any license by delivering to the department written notice that he thereby surrenders such licen~. but such surrender shall not affect such licensee's civil or criminal liability for acts committed prior to such surrender. (4) No revocation or suspension or surrender of any license shall impair or affect the obligation of any insured under any lawful premium finance agreement previously acquired or held by the licensee. (5) Every license issued hereunder shall remain in force and effect until the same shall have been surrendered, revoked, suspended, or expires in accordance with the provisions of part XIV; but the department shall have authority to reinstate suspended licenses or to issue new licenses to a licensee whose license or licenses shall have been revoked, if no fact or condition then exists which clearly would have warranted the department in refusing originally to issue such license under part XIV. History.- 1. ch ; Ul3, 35, ch Change of location.-before any li Administrative fine and probation censee changes any office of his to another lo- in lieu of suspension, revocation, or refusal to cation, he shall give written notice thereof to r~new. lict;nst;.-the department may in its the department which shall without charge is- d1scretwn m heu of a suspension, revocation, or sue an endorsement indicating the change and refusal to renew or continue any license, impose 1494

45 Ch. 627 INSURANCE CODE: RATES AND CONTRACTS Ch. 62i on the licensee an administrative penalty or place such licensee on probation pursuant to and of this code. Hlstor;y.- 1, ch ; 1113, 35, ch Examinations.- (!) The department may conduct examinations and investigations of premium finance companies under the provisions of and of this code. (2) As often as it deems necessary and not less frequently than each three years, the department shall examine each licensed premium finance company. The examination shall be for the purpose of ascertaining compliance by the person examined with the applicable provisions of this part. History.-!, ch ; 1 3, 35, ch ; 2, ch Note.-See fanner Excessive premium finance charge; penalty.- (1) Any person, premium finance company, or other legal entity who or which knowingly takes, receives, reserves, or charges a premium finance charge other than that authorized by this law shall thereby forfeit the entire premium finance charge to which such person, premium finance company, or entity would otherwise be entitled and any person who shall have paid such unlawful finance charge may personally or by his legal or personal representative, by suit for recovery thereof brought within two years from the date of such payment, recover from such person, premium finance company, or legal entity twice the entire amount of the premium finance charge so paid. (2) Section shall be applicable to each wilful violation as to which a greater penalty is not provided by another provision of this code or by other applicable laws of this state. Hldor;y.-11, ch Licensee's books and records; re ports.- (1) The licensee shall keep and use in his business such books, accounts, and records as licensee within the state under the authority of part XIV. Such report shall be made under oath and in the form prescribed by the department and shall be accompanied by the annual report filing fee specified in The department may make and publish annually an analysis and recapitulation of such reports. In addition to such annual reports, the department may require of licensees, under oath and in the form prescribed by it, such additional regular or special reports as it may deem necessary to the proper supervision of licensees under part XIV. History.-!, ch ; 13, 35, ch ; 4, ch Note.-See fanner Rebates and inducements pro hibited.- (1) No premium finance company, and no employee of such a company, shall pay, allow, or offer to pay or allow in any manner whatsoever to an insurance agent or any employee of an insurance agent, or to any other person, either as an inducement to the financing of any insurance policy with the premium finance.company or after any such policy has been financed, any rebate whatsoever, either from the service charge for financing specified in the premium finance agreement or otherwise, or shall give or offer to give any valuable consideration or inducement of any kind directly or indirectly, other than an article of merchandise not exceeding one dollar in value which shall have thereon the advertisement of the premium finance company; but a premium finance company may purchase or otherwise acquire a premium finance agreement, provided that it conforms to part XIV in all respects, from another premium finance company with recourse against the premium finance company on such terms and conditions as may be mutually agreed upon; and (2) No filing of the assignment or notice thereof to the insured shall be necessary to the validity of the written assignrr,ent of a premium finance agreement as against creditors or subsequent purchasers, pledgees, or encumbrancers of the assignor. Hlstory.- 1, ch will enable the department to determine Filing, approval of forms, service whether such licensee is complying with the charge filing.- provisions of part XIV and with the rules and (1) No premium finance agreement form or regulations lawfully made by the department related form shall be used in this state by a hereunder. Every licensee shall preserve such premium finance company unless it has been books, accounts, and records, including cards filed with and approved by the department. used in a card system, if any, for at least three (2) Every such filing shall be made not less years after making the final entry in respect to than thirty days in advance of issuance or use. any premium finance agreement recorded there- At the expiration of thirty days from date of in; provided, however, the preservation of pho- filing, a form so filed shall be deemed approved tographic reproductions thereof or records in unless prior thereto it has been affirmatively photographic form shall constitute compliance appl'oved or disapproved by written order of with this requirement. the department. The department may extend (2) Each licensee shall annually, on or by not more than an additional fifteen days the before March 1, file a report with the depart- period within which it may so affirmatively apment giving such information as the department prove or disapprove any such form by giving may require concerning the business and opera- notice of such extension before the expiration tions during the preceding calendar year of each of the initial thirty day period. At the expiralicensed place of business conducted by the tion of any such period as so extended and in 1495

46 Ch. 627 INSURANCE CODE: RATES AND CONTRACTS Ch. 627 the absence of prior affirmative approval or disapproval, any such form shall be deemed approved. (3) In addition each premium finance company shall file with the department the service charge and interest rate plan to be charged in premium financing including all modifications of service charges and interest rate to be paid by the insured or others under a premium finance agreement. Every filing shall state the effective date thereon. Such filing shall be made not less than thirty days prior to its effective date. (4) Each such filing shall be accompanied by the applicable filing fee specified in History.-!, ch ; 13, 35, ch ; 3, ch Note.-See former Form and content of premium finance agreements.- (!) A premium finance agreement shall be in writing, dated, and signed by or on behalf of the insured, and the printed portion thereof shall be in at least eight point type. (2) It shall contain the entire agreement of the parties with respect to the insurance contract, the premiums for which are advanced or to be advanced under it, and: (a) At its top, the words PREMIUM FI NANCE AGREEMENT in at least ten point bold type; and (b) A notice in at least eight point bold type, reading as follows: NOTICE: 1. Do not sign this agreement before you read it or if it contains any blank space._ 2. You are entitled to a completely filled-in copy of this agreement. 3. Under the law, you have the right to pay off in advance the full amount due and under certain conditions to obtain a partial refund of the service charge. (3) A premium finance agreement shall: (a) Contain the name and place of business of the insurance agent negotiating the related insurance contract, the name and residence or the place of business of the insured as specified by him, the name and place of business of the premium finance company to which installment or other payments are to be made, a description of the insurance contract, the premiums for which are advanced or to be advanced under the agreement, and the amount of the premiums for such insurance contract; and (b) Set forth the following items: 1. The total amount of the premiums; 2. The amount of the down payment; 3. The principal balance, which is the difference between subparagraphs 1. and 2.; 4. The amount of the service charge; 5. The balance, which is the sum of subparagraphs 3. and 4., payable by the insured, the number of installments required, the amount of each installment expressed in dollars and the due date or period thereof; (4) The items need not be stated in the sequence or order set forth above, inapplicable items may be omitted; additional items may be included to explain the computations made in determining the amount to be paid by the insured. (5) No premium finance agreement shall be signed by an insured when it contains any blank space to be filled in after it has been signed; however, if the insurance contract, the premiums for which are advanced or to be advanced under the agreement, has not been issued at the time of its signature by the insured and it so provides, the name of the authorized insurer by whom such insurance contract is issued and the policy number and the due date of the first installment may be left blank and later inserted in the original of the agreement after it has been signed by the insured. Hlstory.- 1, ch Limitation on service and other charges.- (1) A premium finance company shall not charge, contract for, receive, or collect a service charge other than as permitted by part XIV of this chapter. (2) A premium finance company may, in a premium finance agreement, contract for, charge, receive, and collect a service charge for financing the premiums under the agreement computed as provided in subsection (3). (3) (a) The service charge provided for in this section shall be computed on the balance of the premiums due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance coverage for which the premiums are being advanced to and including the date when the final payment of the premium finance agreement is payable. (b) The service charge shall be a maximum of nine dollars per one hundred dollars per annum plus an additional charge, which shall not exceed ten dollars per premium finance agreement, which additional charge need not be refunded upon prepayment. However, any insured may prepay his premium finance agreement in full at any time before due date of the final payment, and in such event the unearned service charge shall be refunded in accordance with the "Rule of 78ths" and shall represent at least as great a proportion of the service charge, if any, as the sum of the periodic balances after the month in which prepayment is made bears to the sum of all periodic balances under the schedule of payments in the agreement. When the amount of the refund is less than one dollar, no refund need be made (c) Such service charge shall be inclusive of all charges incident to the premium finance agreement and for the extension of credit provided for therein. (d) Paragraphs (a)-(c) of this subsection apply if the premiums under only one insurance contract are advanced or to be advanced under a premium finance agreement; if premiums under more than one insurance contract are advanced or to be advanced under a premium finance agreement, the service charge

47 Ch. 627 INSURANCE CODE; RATES AND CONTRACTS Ch. 62i shall be computed from the inception date of such insurance contracts, or from the due date of such premiums; however, not more than one minimum service charge shall apply to each premium finance agreement. (e) No insurance agent or premium finance company shall induce an insured to become obligated under more than one premium finance agreement for the purpose of obtaining more than one minimum service charge. Hlstory.-H. ch ; 1, ch Delinquency, collection, and cancellation charges; attorney's fees.- (1) A premium finance agreement may provide for the payment by the insured of a delinquency and collection charge on each installment in default for a period of not less than five days in an amount of one dollar to a maximum not to exceed five per cent of such installment or five dollars, whichever is less, provided that only one such delinquency and collection charge may be collected on any such installment regardless of the period during which it remains in default; and if the default results in the cancellation of any insurance contract listed in the agreement, the agreement may provide for the payment by the insured of a cancellation charge equal to the difference between any delinquency and collection charge imposed in respect to the installment in default and five dollars. (2) A premium finance agreement may, also, provide for the payment of attorney's fees not exceeding twenty per cent of the amount due and payable under the agreement if it is rpferred for collection to an attorney not a salaried employee of the premium finance company holding the agreement. (3) Notwithstanding the provisions of this section, a premium finance company shall not take, receive from, or charge an insured any cancellation charge or attorney's fees unless, within ten days after default in the payment of any installment of a premium finance agreement, the premium finance company has mailed a notice of the default to the insured at his address as shown on the agreement and to any insurance agent named therein at his place of business as shown giving the insured at least five days within which to make the payment in default. Bistory.- 1, ch or remedies which the insured may otherwise have against him. History.- 1, ch Delivery of copy of premium finance agreement.-before the due date of the first installment payable under a premium finance agreement, the premium finance company holding the agreement or the insurance agent shall deliver to the insured, or mail to him at his address as shown in the agreement, a copy thereof or, if the agreement contained any blank space when it was signed and such blank space was subsequently filled in, in accordance with (5), a copy of the agreement as so filled in. History.- 1, ch Notice of assignment; payments. Unless the insured has notice of actual or intended assignment of a premium finance agreement payment thereunder by him to the last know'n holder of the agreement shall be binding upon all subsequent holders or assignees. History.-U. ch Statement of account; receipts. (1) At any time after its execution, but not later than one year after the last paymep.t thereunder, a premium finance company holding a premium finance agreement shall, upon written request of the insured, give or mail to him a written statement of the dates and amounts of payments and the total amount, if any, unpaid thereunder. Such a statement shall be supplied once each year without charge; if any additional statement is requested, the premium fi-: nance company shall supply such statement at a charge not exceeding one dollar for each additional statement so supplied. An insured shall be given a receipt for a payment when made in cash. h' h (2) After the payment of all sums for w 1c an insured is obligated under a premium finance agreement, and upon his written demand, the premium finance company holding the agreement shall deliver, or mail to the insured at his last known address, such one or more good and sufficient instruments as may be necessary to acknowledge payment in full and to release all interest in or rights to the insurance contracts, the premiums for which were advanced or are to be advanced under the agreement. Blstory.- 1, ch Restrictions on premium finance Refinancing.-A premium finance agreements.- company may, upon agreement with the in- (1) No premium finance agreement shall sured, extend the scheduled due date or defer contain any provision by which: the scheduled payment of all or any part of (a) In the absence of default of the insured, any installment or installments payable therethe premium finance company holding the under. The agreement for such extension or deagreement may, arbitrarily and without reason- ferment must be in writing and signed by the able cause, accelerate the maturity of any part parties thereto. The premium finance company or all of the amount owing thereunder; may charge and contract for the payment of an (b) A power of attorney is given to confess extension or deferral charge by the insured judgment in this state; or and collect and receive the same; but such (c) The insured relieves the insurance agent charge may not exceed an amount equal to one or the premium finance company holding the per cent per month simple interest on the agreement from liability for any legal rights amount of the installment or installments, or 1497

48 part thereof, extended or deferred for the period of extension of deferral. Such period shall not exceed the period from the date when such extended or deferred installment or installments, or part thereof, would have been payable in the absence of such extension or deferral, to the date when such installment or installments, or part thereof, are made payable under the agreement of extension or deferment; except that a minimum charge of one dollar for the period of extension or deferral may be made in any case where the extension or deferral charge, when computed at such rate, amounts to less than one dollar. Hlstory.- 1, ch Cancellation of insurance contract upon default.-when a premium finance agreement contains a power of attorney or other authority enabling the premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled unless such cancellation is effectuated in accordance with the following provisions: ( 1) Not less than ten days written notice be served upon the insured or insureds shown on the premium finance agreement of the intent of the premium finance company to cancel his or their insurance contract or contracts unless the defaulted installment payment is received within ten days. (2 J After expiration of such period, the premium finance company shall mail the insurer a request for cancellation, specifying the effective date of such cancellation, mailing a copy to the insured at his last known address as shown on the premium finance agreement. (3) Every such notice of cancellation shall include, in type or print of which its face shall not be smaller than twelve point, a statement that if the insurance contract or contracts provide motor vehicle liability insurance required by the financial responsibility law proof of financial responsibility is required to be maintained continuously for a period of three years, pursuant to chapter 324 and that the operation of a vehicle without such financial responsibility is unlawful. (4) Upon receipt of a copy of such cancellation notice by t!1e insurer or insurers, the insurance contract shall be cancelled with the same force and effect as if the aforesaid notice of cancellation had been submitted by the insured himself, without requiring the return of the insurance contract or contracts. (5) All statutory, regulatory, and contractual restrictions providing that the insured may not cancel his insurance contract unless he or the insurer first satisfies such restrictions by giving a prescribed notice to a governmental agency, the insurance carrier, a mortgagee, an individual, or a person designated to receive such notice for said governmental agency, insurance carrier, or individual shal! apply where cancellation is effected under the provisions of this section. The insurer, in accordance with said prescribed notice where it is required to give such notice in behalf of itself or the insured, shall give notice to such governmental agency, person, mortgagee or individual; and it shall determine and calculate the effective date of cancellation from the day it receives the copy of the notice of cancellation from the premium finance company. (6) Whenever an insurance contract is cancelled in accordance with this section, the insurer shall promptly return whatever gross unearned premiums are due under the contract to the premium finance company effecting the cancellation for the benefit of the insured or insureds. Hlstory.-U, ch Fees.- (1) The department shall collect in advance, and the persons so served shall pay to it in advance, the following fees: (a) Annual license fee $ (b) Investigation fee $ (c) Annual report filing fee $ (d) Form filing fee. $ (2) The fees received under this section shall be credited to the insurance commissioner's regulatory trust fund. History.- 5, ch PART XV PREMIUM FINANCING Premium financing by an insurance agent or agency Premium financing by an insurer or subsidiary Premium finance cost specified Insurers filing; approval of forms; service charge filing Premium financing by an insurance sued or business produced by said agent or agent or agency.- agency, and notwithstand- (1) A general lines agent as defined in the ing. The service charge for financing such code and duly licensed thereunder or a general premium or premiums shall not exceed one dollines insurance agency transacting kinds of in- lar per installment, nor exceed six dollars total surance as provided in , may make service charge per annum, for any premium certain reasonable service charges for financ- balance of one hundred twenty dollars or less. ing such insurance premiums on policies is- For any premium balance greater than one hun- 1498