Chapter 04-052
2004 -- H 7194
SUBSTITUTE A
Enacted 06/11/04
A N A C T
RELATING
TO INSURANCE - FIRE INSURANCE APPLICATIONS
Introduced
By: Representatives San Bento, Gallison, Shanley, Flaherty, and Lowe
Date
Introduced: January 14, 2004
It
is enacted by the General Assembly as follows:
SECTION
1. Section 27-5-2.1 of the General Laws in Chapter 27-5 entitled "Fire
Insurance
Policies and Reserves" is hereby repealed.
27-5-2.1.
Anti-arson application. -- (a) As used in this section:
(1) "Anti-arson application" means any application for an insurance
policy, covering the
peril
of fire or explosion, that includes certain questions contained in subsection
(c) which shall
be
answered by the applicant in addition to the basic information normally
supplied to an insurer
by
an applicant;
(2) "Builders risk policy" means a policy which insures against loss
to buildings in the
course
of new construction, not including new construction being done in conjunction
with any
rehabilitation;
(3) "Director" means the director of the department of business
regulation;
(4) "Highly protected risk" means a fire resistive building that
meets the highest
standards
of fire safety according to insurance company underwriting requirements;
(5) "Policy" means a policy issued by insurers meeting the
requirements of section 27-5-
3
or a policy issued by insurers approved by the director of business regulation
pursuant to
section
27-5-9.1; and
(6) "Property" means the real property and the buildings and
improvements on the
property
which the applicant seeks to insure or re-insure.
(b) Except as provided for in subsection (g), the completion of the anti-arson
application
by
an applicant for a policy shall be mandatory in any of the following instances:
(1) Prior to the initial issuance of a policy;
(2) Upon an addition to or modification of an existing policy with respect to
the named
insured
or mortgagee;
(3) When the coverage under the terms of an existing policy is increased by
more than
twenty-five
percent (25%); or
(4) When there is a change in insurer.
(c) The form of the anti-arson application, to be completed in compliance with
this
section,
shall be the ACORD supplementary property application form 190, or form 190's
successor.
(d) In all cases where the completion of the anti-arson application is
mandatory, no
insurer
or insurance producer may enter into a contract for a policy to be issued after
June 28,
1985,
unless the insurer or insurance producer first receives an anti-arson
application signed and
affirmed
by the applicant. The anti-arson application must be provided by the insurance
company
to
the applicant for completion prior to the issuance of a policy. Nothing in this
section shall
prohibit
the issuance of binders or other contracts for temporary insurance for a period
which
shall
not exceed thirty (30) days, coverage being conditional upon the completion and
return of
the
application form within five (5) working days, and conditional upon the
approval of the
application
form by the insurance company for the issuance of a policy, or payment of any
loss.
(e) A material misrepresentation in the anti-arson application shall be grounds
to rescind
the
policy.
(f) Insured shall notify their insurer, in writing, of any change in the
information
contained
in the anti-arson application, upon renewal or annually, whichever is sooner, and
complete
a new anti-arson application. A material misrepresentation in that notification
shall be
grounds
to rescind the insurance policy.
(g) The provisions of this section shall not apply to any policy with respect
to owner
occupied
real property used predominantly for residential purposes which consists of not
more
than
four (4) dwelling units, to buildings owned and insured by the state or its
political
subdivisions,
to highly protected risks, to nonincomeproducing single-unit seasonal
dwellings, or
to
builders risk policies.
SECTION
2. Section 27-65-1 of the General Laws in Chapter 27-65 entitled
"Commercial
Special Risks" is hereby amended to read as follows:
27-65-1.
Commercial special risks. -- (a) Commercial special risks. -
Notwithstanding
any
other provisions of this title to the contrary and except as limited in
subsection (b) of this
section,
insurers shall not be required to file with, nor to receive approval from, the
insurance
division
of the department of business regulation for policy forms or rates used in the
insurance of
commercial
special risks located in this state. Commercial special risks are defined as:
(1) Risks written as commercial lines insurance, as defined in section
27-34-5(5), and
which
are written on an excess or umbrella basis;
(2) Those risks, or portions of them, written as commercial lines insurance, as
defined in
section
27-34-5(5), and which are not rated according to manuals, rating plans, or
schedules
including
"A" rates;
(3) Risks written as commercial lines insurance that employ or retain the
services of a
"risk
manager" and which also meet any one of the following criteria:
(i) Net worth over fifty million dollars ($50,000,000);
(ii) Net revenue/sales of over one hundred million dollars ($100,000,000);
(iii) More than five hundred (500) employees per individual company or one
thousand
(1000)
employees per holding company in the aggregate;
(iv) Aggregates premiums of over one hundred fifty thousand dollars ($150,000)
excluding
group life, group health, workers' compensation and professional liability
(including
but
not limited to errors and omissions and directors and officers liability); (v)
Is a not for profit,
or
public entity with an annual budget or assets of at least forty-five million
dollars
($45,000,000);
or
(vi) Is a municipality with a population of over fifty thousand (50,000);
(4) Specifically designated commercial special risks including:
(i) All risks classified as highly protected risks as defined in section
27-5-2.1(a)(4);.
Highly
protected risk means a fire resistive building that meets the highest standards
of
fire
safety according to insurance company underwriting requirements;
(ii) All commercial insurance aviation risks;
(iii) All credit property insurance risks which are defined as "insurance
of personal
property
of a commercial debtor against loss, with the creditor as sole
beneficiary" or "insurance
of
personal property of a commercial debtor, with the creditor as primary
beneficiary and the
debtor
as beneficiary of proceeds not paid to the creditor". For the purposes of
this definition,
"personal
property" means furniture, fixtures, furnishings, appliances and equipment
designed for
use
in a business trade or profession and not used by a debtor for personal or
household use;
(iv) All boiler and machinery risks;
(v) All inland marine risks written as commercial lines insurance as defined in
section
27-34-5(5);
and
(vi) All fidelity and surety risks.
(b) Notwithstanding subsection (a) of this section, the following lines of
business shall
remain
subject to all filing and approval requirements contained in this title even if
written for
risks
which qualify as commercial special risks:
(1) Life insurance;
(2) Annuities;
(3) Accident and health insurance;
(4) Automobile insurance which is mandated by statute;
(5) Workers' compensation and employers' liability insurance; and
(6) Issuance through residual market mechanisms.
(c) Any insurer which provides coverage to a commercial special risk shall
disclose to
the
insured that forms used and rates charges are exempt from filing and approval
requirements
by
this subsection. Records of all such disclosures shall be maintained by the
insurer.
(d) Brokers for exempt commercial policyholders as defined in subdivision
(a)(3) of this
section
shall be exempt from the due diligence requirements of section 27-3-38(b).
SECTION
3. This act shall take effect on September 1, 2005.
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LC00757/SUB
A
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