Section 1764.1 Of Chapter 6. Surplus Line Brokers From California Insurance Code >> Division 1. >> Part 2. >> Chapter 6.
1764.1
. (a) (1) Every nonadmitted insurer, in the case of insurance
to be purchased by a home state insured pursuant to Section 1760,
and surplus line broker, in the case of any insurance with a
nonadmitted carrier for a home state insured to be transacted by the
surplus line broker, shall be responsible to ensure that, at the time
of accepting an application for an insurance policy, other than a
renewal of that policy, issued by a nonadmitted insurer, the
signature of the applicant on the disclosure statement set forth in
subdivision (b) is obtained. In fulfillment of this responsibility,
the nonadmitted insurer and the surplus line broker may rely, if it
is reasonable under all the circumstances to do so, on the disclosure
statement received from a licensee involved in the transaction as
prima facie evidence that the disclosure statement and appropriate
signature from the applicant have been obtained. The surplus line
broker shall maintain a copy of the signed disclosure statement in
his or her records for a period of at least five years. These records
shall be made available to the commissioner and the insured upon
request. This disclosure shall be signed by the applicant, and is not
subject to a limited power of attorney agreement between the
applicant and an agent or broker or a surplus line broker. The
disclosure statement shall be in boldface 16-point type on a
freestanding document. In addition, every policy issued by a
nonadmitted insurer and every certificate evidencing the placement of
insurance shall contain, or have affixed to it by the insurer or
surplus line broker, the disclosure statement set forth in
subdivision (b) in boldface 16-point type on the front page of the
policy.
(2) In a case in which the applicant has not received and
completed the signed disclosure form required by this section, he or
she may cancel the insurance so placed. The cancellation shall be on
a pro rata basis as to premium, and the applicant shall be entitled
to the return of any broker's fees charged for the placement.
(b) The following notice shall be provided to home state insureds
and home state insured applicants for insurance as provided by
subdivision (a), and shall be printed in English and in the language
principally used by the surplus line broker and nonadmitted insurer
to advertise, solicit, or negotiate the sale and purchase of surplus
line insurance. The surplus line broker and nonadmitted insurer shall
use the appropriate bracketed language for application and issued
policy disclosures:
"NOTICE:
1. THE INSURANCE POLICY THAT YOU [HAVE PURCHASED] [ARE APPLYING TO
PURCHASE] IS BEING ISSUED BY AN INSURER THAT IS NOT LICENSED BY THE
STATE OF CALIFORNIA. THESE COMPANIES ARE CALLED "NONADMITTED" OR
"SURPLUS LINE" INSURERS.
2. THE INSURER IS NOT SUBJECT TO THE FINANCIAL SOLVENCY REGULATION
AND ENFORCEMENT THAT APPLY TO CALIFORNIA LICENSED INSURERS.
3. THE INSURER DOES NOT PARTICIPATE IN ANY OF THE INSURANCE
GUARANTEE FUNDS CREATED BY CALIFORNIA LAW. THEREFORE, THESE FUNDS
WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR ASSETS IF THE INSURER
BECOMES INSOLVENT AND IS UNABLE TO MAKE PAYMENTS AS PROMISED.
4. THE INSURER SHOULD BE LICENSED EITHER AS A FOREIGN INSURER IN
ANOTHER STATE IN THE UNITED STATES OR AS A NON-UNITED STATES (ALIEN)
INSURER. YOU SHOULD ASK QUESTIONS OF YOUR INSURANCE AGENT, BROKER, OR
"SURPLUS LINE" BROKER OR CONTACT THE CALIFORNIA DEPARTMENT OF
INSURANCE AT THE FOLLOWING TOLL-FREE TELEPHONE NUMBER ____ OR
INTERNET WEB SITE WWW.INSURANCE.CA.GOV. ASK WHETHER OR NOT THE
INSURER IS LICENSED AS A FOREIGN OR NON-UNITED STATES (ALIEN) INSURER
AND FOR ADDITIONAL INFORMATION ABOUT THE INSURER. YOU MAY ALSO
CONTACT THE NAIC'S INTERNET WEB SITE AT WWW.NAIC.ORG.
5. FOREIGN INSURERS SHOULD BE LICENSED BY A STATE IN THE UNITED
STATES AND YOU MAY CONTACT THAT STATE'S DEPARTMENT OF INSURANCE TO
OBTAIN MORE INFORMATION ABOUT THAT INSURER.
6. FOR NON-UNITED STATES (ALIEN) INSURERS, THE INSURER SHOULD BE
LICENSED BY A COUNTRY OUTSIDE OF THE UNITED STATES AND SHOULD BE ON
THE NAIC'S INTERNATIONAL INSURERS DEPARTMENT (IID) LISTING OF
APPROVED NONADMITTED NON-UNITED STATES INSURERS. ASK YOUR AGENT,
BROKER, OR "SURPLUS LINE" BROKER TO OBTAIN MORE INFORMATION ABOUT
THAT INSURER.
7. CALIFORNIA MAINTAINS A LIST OF APPROVED SURPLUS LINE INSURERS.
ASK YOUR AGENT OR BROKER IF THE INSURER IS ON THAT LIST, OR VIEW THAT
LIST AT THE INTERNET WEB SITE OF THE CALIFORNIA DEPARTMENT OF
INSURANCE: WWW.INSURANCE.CA.GOV.
8. IF YOU, AS THE APPLICANT, REQUIRED THAT THE INSURANCE POLICY
YOU HAVE PURCHASED BE BOUND IMMEDIATELY, EITHER BECAUSE EXISTING
COVERAGE WAS GOING TO LAPSE WITHIN TWO BUSINESS DAYS OR BECAUSE YOU
WERE REQUIRED TO HAVE COVERAGE WITHIN TWO BUSINESS DAYS, AND YOU DID
NOT RECEIVE THIS DISCLOSURE FORM AND A REQUEST FOR YOUR SIGNATURE
UNTIL AFTER COVERAGE BECAME EFFECTIVE, YOU HAVE THE RIGHT TO CANCEL
THIS POLICY WITHIN FIVE DAYS OF RECEIVING THIS DISCLOSURE. IF YOU
CANCEL COVERAGE, THE PREMIUM WILL BE PRORATED AND ANY BROKER'S FEE
CHARGED FOR THIS INSURANCE WILL BE RETURNED TO YOU."