Comprehensive Insurance Notes

Domicile

  • Definition: The location where an insurer is incorporated, not necessarily where they conduct business.

  • Three Types:

    • Domestic: Incorporated in the state. Think: "In my house, in my state."

    • Foreign: Incorporated in another state. Think: "Outside my house, outside my state."

    • Alien: Incorporated in another country. Think: "Unknown."

Certificate of Authority

  • Definition: What an insurer (ER) needs to transact business.

    • Authorized/Admitted: Approved to transact insurance in the state.

    • Unauthorized/Nonadmitted: Not approved to transact business in the state. (Three A's if authorized)

  • Exception: Surplus Lines Broker

    • Deals with difficult-to-cover clients (e.g., those with DUIs/DWIs or arson charges).

    • Can obtain insurance from companies regardless of whether they're admitted in the state.

    • Surplus lines are non-admitted.

Commissioner of Insurance

  • Duties:

    • Supervises insurance business.

    • Conducts examinations, investigations, and hearings.

    • Licenses insurance companies, producers, and agents.

    • Enforces insurance laws and imposes penalties for violations.

    • Approves policy forms (and can deny them).

  • Important Note:

    • The commissioner does not set premium rates or establish fines/penalties; these are determined by law.

    • The commissioner is like a regulator or law enforcement for insurance.

Examinations of Insurers

  • Required at least once every five years.

  • The insurance company pays for the examination.

  • The commissioner can conduct examinations more frequently if desired, and the insurance company pays each time.

  • Do not confuse with continuing education requirements for agents.

Violations, Hearings, Cease and Desist, and Penalties

  • Process:

    • If an insurer or agent is suspected of a violation or unfair trade practice, the department is notified and issues a statement of charges.

    • 60 days to apply for a hearing after notification.

    • 20 days' notice of the hearing must be given.

    • 30 days to hold the hearing.

    • 30 days to make a decision after the hearing.

    • 30 days to hold a hearing after denial or nonrenewal of a license.

  • Cease and Desist Order:

    • Can be issued before or after a hearing.

    • Prevents the individual or company from conducting business until the hearing.

    • Typically issued in extreme cases (e.g., embezzlement, fraud).

  • Penalties:

    • License suspension, revocation, or denial.

    • Fines and other penalties.

Who is Required to be Licensed?

  • Anyone who transacts insurance.

  • Types of Licensed Individuals:

    • Producer/Agent: Represents the insurance company.

    • Broker: Represents the insured.

    • Nonresident: Licensed in a different home state.

    • Adjuster: Investigates claims between insurer and insured.

    • Consultant: Advises on insurance benefits for a fee.

    • Bail Agent/Enforcer: Posts bonds for arrested individuals or enforces terms of release.

    • Reinsurance Intermediary: Broker or manager for reinsurance.

    • Surplus Lines: Conducts business for a Surplus Lines insurer; Non-admitted.

License Requirements

  • Must be at least 18 years old.

  • Must have good moral character.

  • Must pass the licensing exam.

  • Must not have committed any disqualifying acts or crimes.

  • Must pay licensing fees.

Who is NOT Required to be Licensed?

  • Anyone not involved in insurance sales.

  • Examples:

    • Executive, administrative, or clerical staff.

License Renewal Requirements (Nevada)

  • Renew every three years.

  • Complete 30 hours of continuing education courses.

  • 3 hours must be in ethics.

  • Must be in your insurance line of business (e.g., personal lines).

  • Failure to Renew:

    • License can take up to 12 months to be reinstated if it lapses.

Notification Requirements

  • Change of Address, Phone Number, Email: Must notify the commissioner within 30 days.

Record Keeping Requirements

  • Insurance Companies: Must keep records for three years.

  • Agents/Producers: Must keep specific records including:

    • Names of insurer and insured.

    • Policy number and expiration date.

    • Premiums collected.

    • Names of all people they've done business with.

    • Names of anyone who received commissions.

Agent Fiduciary Responsibilities

  • Must treat applicants and insured ethically.

  • Any money received (premiums) must be promptly given to the insurer (within 15 days in most states).

  • Failure to submit funds is considered embezzlement.

  • Agents represent the insurance company.

  • Agents should be backed up by the commissioner of insurance if the insurance company asks you to do anything unethical or unfair in any way.

Commission Sharing

  • Only licensed individuals can share in commissions.

  • Agents are permitted to share commissions on policies they are both licensed for.

Unfair Market Practices

  • Misrepresentation: False, misleading, or deceptive statements.

  • Rebating: Offering benefits or services not listed in the policy.

    • Anything over 100 dollars offered has to be written into the policy.

  • Twisting: Misleading comparison of policies to persuade someone to switch or cancel (lying about the coverage).

  • Unfair Discrimination: Discrimination in rates, premiums, and benefits.

  • Defamation: Maliciously critical statements about a person or company.

  • Fraud: Knowingly or willfully making false or fraudulent statements.

Cancellation and Nonrenewal

  • Cancellation: Occurs before the expiration date.

  • Nonrenewal: Occurs at the expiration date when the insurer chooses not to renew the policy.

  • Notice Requirements:

    • 60 days' notice for cancellation of business or commercial properties.

    • 30 days' notice for cancellation of all other policies.

    • 10 days' notice for cancellation due to nonpayment of premium.

    • 30 days' notice for the insured to cancel after receiving notices of changes to the policy.

  • Regulations:

    • Must provide instructions on how to apply for insurance through an approved risk-sharing plan if canceling.

    • Cannot cancel, refuse to renew, or increase a premium due to not-at-fault claims.

    • Cannot cancel or refuse to renew an automobile policy solely because of age, residence, race, color, creed, national origin, ancestry, or occupation.

    • Cancellations are not effective if the notice does not include a reason for cancellation.

Statutes Common to Property and Casualty Insurance

  • Rates: Must not be excessive, inadequate, unfairly discriminatory, or have the effect of destroying competition.

  • Countersignature of Policies: Insurers must use appointed and licensed agents of Nevada to create or renew an insurance policy.

  • Binders: Can only be issued by the agent issuing the policy and cannot be effective for more than 90 days unless extended by the commissioner.

  • Delivery of Policy: Must be delivered to the insured within 24 hours in person or via first-class mail (including email). Must be delivered to the insurer within ninety days of payment.

  • Payment of Motor Vehicle Physical Damage Claims: Insurer cannot fail to pay a claim within 30 days involving damage to another vehicle.

  • Vehicle Repair: If the legal owner is different than the registered owner, the vehicle must be repaired by a licensed body shop unless a total loss or repair is under $300.

  • Motor Vehicle Physical Damage Appraiser: Must be licensed, and bonded ($2,500 surety bond).

Property Insurance

  • Covers real or personal property.

  • Mobile Home Insurance: Must offer the option to purchase insurance to cover replacement cost.

Personal Auto Regulations

  • Financial Responsibility: Proof of financial responsibility (liability insurance or self-insured retention) is required.

  • Nevada State Limit:

  • Uninsured Motorist Coverage: Required and must equal the insurance part A liability limit.

  • Premium Determination: Insurers must notify the insured of their right to request the reason for a premium increase within 30 days of the policy expiration.

  • Discounts for Older Drivers: Drivers 55 or older can complete a traffic safety course every three years for a premium reduction if they have no at-fault accidents or violations.

  • Policy Coverages and Exclusions: An auto policy can exclude, reduce, or limit coverage for a specific person or people on a policy.

Inland Marine Coverage

  • Covers movable property (personal articles and personal effects).

  • Open Peril Basis

  • Applies anywhere in the world.

Workers' Compensation

  • Provides coverage for employees when an employer is liable.

  • Every business with employees is required to participate.

  • Punishments for Non-Compliance:

    • Charged with a misdemeanor and fined the equivalent of up to six years' worth of premiums plus interest.

    • If an employee is injured or killed with no coverage, the employer is charged with a category C felony, fined between 51,000 and 100,000 dollars, and can be imprisoned for 1 to 5 years.

  • Administrator Investigation:

    • 60 days to investigate a claim.

    • 30 days to render a determination after the investigation.

Terms to Know

  • Insurer: Engaged in the business of entering into insurance contracts.

  • Domestic: Authorized.

  • Unauthorized:

  • Premiums: Consideration for a fee of insurance.

  • Appointment: An agent is appointed by an insurer; the insurer notifies the commissioner, and if the producer terminates, the commissioner is notified as well. An application will be denied or suspended if that applicant has an order to pay child support and is in breach of that order.

*15 days for an insurance company to notify the commissioner that you work for them.
*30 days for the commissioner to determine if the producer is eligible for the appointment.
*30 days for the insurer to notify the commissioner that they are terminating.
*15 days after the insurer notifies the commissioner, they must notify the producer.

License Information: Revocation, Suspension, and Refusal

  • Reasons for Losing Your License:

    • Suspended no longer than 12 months.

    • Withholding monies.

    • Unfair trade practices.

    • Convicted of a felony.

    • Failing to pay tax required by law.

  • Fictitious License Names: May result in a license suspension if the name is close to an already existing name or something easy to confuse.

Casualty Contracts

  • Vehicle Insurance: Insurance for loss or damage to any land vehicle. aircraft, any draft or riding animal, and any property contained in or on those from any hazard or cause.

  • Liability Insurance: Insurance for legal liability for death, injury, or disability to another human being or for damage to property.

Nevada Guarantee Association

  • Protects policy owners and beneficiaries if an insurer becomes impaired or insolvent.

  • Every insurance company has to pay into this association every month.