Article 3. Membership of California Insurance Code >> Division 2. >> Part 1. >> Chapter 5. >> Article 3.

Any person having an insurable interest in property in the county in which any such insurer is formed or any person having such an interest in property in any adjoining county may become a member by insuring therein. Every member shall be entitled to all the rights and privileges appertaining to membership, except that at least a majority of the directors shall reside either in the county in which the insurer is formed or in any of the counties which were the original domicile of any of the constituent companies of a county mutual merged under Article 9.5 (commencing with Section 7040) of this chapter, and not more than one member from each of the adjoining counties in which it transacts insurance may become one of its directors. Whenever any public or private corporation, board or association in this State has entered into an agreement for and holds a policy in any county mutual insurer operating under this chapter, any officer, stockholder or trustee of any such corporation, board or association may be recognized as acting for or on its behalf for the purpose of such membership, but shall not be personally liable upon such contract of insurance by reason of acting in such representative capacity. The right of any corporation organized under the laws of this State to participate as a member of such county mutual insurer is hereby declared to be incidental to the purpose for which such corporation is organized and as much granted as the rights and powers expressly conferred.

Not more than one person licensed as an insurance agent, broker or solicitor, or who is a member of an association or partnership or a stockholder or employee of a corporation which is so licensed is eligible to be a director of a county mutual insurer. If a director of the board is licensed as an insurance agent, broker or solicitor, or is a member of an association or partnership or a stockholder or employee of a corporation which is so licensed, neither he nor the association, partnership or corporation shall transact insurance with or for a county mutual insurer as an agent, broker or solicitor, or receive any commission from a county mutual insurer. The secretary or other person who passes upon the risks and upon whose decisions or recommendations the application for insurance is accepted or rejected by the insurer, shall not receive, as any part of his compensation, a commission upon the premiums. His compensation shall be determined by the directors.

Any member of such insurer may commence to withdraw therefrom by surrendering his policy for cancellation, and by giving notice in writing to the secretary at any time during the life of the policy and while the insurer continues the business for which it was organized.

The withdrawal may be completed by paying the member's share, if any, under the terms of his policy, of all claims that exist against the insurer on the day of such completion.

The insurer may cancel any policy by giving the insured 20 days' written notice of cancellation with or without tender of the excess of paid premium above the pro rata premium for the expired time, which excess, if not tendered, shall be refunded on demand. Notice of cancellation shall state that the excess premium (if not tendered) will be refunded on demand. The notice may be served in person or by mail, addressed either to the member's last post office address or, if this is not known, to the address given upon the application which is part of the policy.

In case of cancellation by the insurer it shall also notify in the same manner any holder of a mortgage whose name appears, either on the signed application which is a part of the policy, or otherwise upon the policy and any party to whom loss, if any, is payable.