HB419 Alabama 2018 Session

This bill would recognize and clarify that, under existing law, self-service storage facilities are not engaged in the transaction of insurance business when they provide certain coverages for personal property in connection with and incidental to the rental of storage space in a self-service storage facility

This bill would provide for a limited license as an insurance agent for a self-service storage facility authorizing the sale of insurance related to the rental of storage space at a self-service storage facility

Relating to insurance; to clarify that self-service storage facilities are not engaged in the transaction of insurance business under existing law; to amend Section 27-7-1, Code of Alabama 1975, to include self-service storage facility insurance within the definition of limited lines insurance; and to add Section 27-7-5.3 to the Code of Alabama 1975, to provide for a limited license as an insurance agent to self-service storage facilities. BE IT ENACTED BY THE LEGISLATURE OF ALABAMA: Section 1. Section 27-7-1 of the Code of Alabama 1975, is amended to read as follows: "§27-7-1. "For the purposes of this chapter, the following terms shall have the meanings respectively ascribed to them by this section: "(1) BUSINESS ENTITY. A corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity. "(2) COMMISSIONER. The Alabama Commissioner of Insurance. "(3) HOME STATE. The District of Columbia and any state or territory of the United States in which an insurance producer maintains his or her principal place of residence or principal place of business and is licensed to act as an insurance producer. "(4) INSURANCE. As defined in Section 27-1-2. "(5) INSURANCE PRODUCER or PRODUCER. A person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance. "(6) INSURER. As defined in Section 27-1-2. For the purposes of this chapter, insurer shall also mean an insurance company licensed pursuant to Chapter 3, commencing with Section 27-3-1 of this title; a health care service plan licensed pursuant to Article 6, commencing with Section 10A-20-6.01 of Chapter 20 of Title 10A; a dental service corporation licensed pursuant to Article 12, commencing with Section 22-21-360 of Chapter 21 of Title 22; a health maintenance organization licensed pursuant to Chapter 21A, commencing with Section 27-21A-1 of this title; a mutual aid association licensed pursuant to Chapter 30, commencing with Section 27-30-1 of this title; a fraternal benefit society licensed pursuant to Chapter 34, commencing with Section 27-34-1 of this title; an automobile club or association licensed pursuant to Chapter 39, commencing with Section 27-39-1 of this title; and a legal service insurance corporation licensed pursuant to Chapter 43, commencing with Section 27-43-1 of this title. "(7) LICENSE. A document issued by the commissioner authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent, or inherent, in the holder to represent or commit an insurance carrier. "(8) LICENSEE. A producer or service representative licensed in accordance with this chapter; a reinsurance intermediary licensed in accordance with Chapter 5A; a managing general agent licensed in accordance with Chapter 6A; and a surplus line broker licensed in accordance with Chapter 10. "(9) LICENSEE PENALTIES. For a producer or service representative licensed in accordance with this chapter, the penalties set forth in Section 27-7-19; for a reinsurance intermediary licensed in accordance with Chapter 5A, the penalties set forth in Section 27-5A-11; for a managing general agent licensed in accordance with Chapter 6A, the penalties set forth in Section 27-6A-7; and for a surplus line broker licensed in accordance with Chapter 10, the penalties set forth in Section 27-10-32. "(10) LIFE LINES OF AUTHORITY. Any one or more of the following lines as defined in Section 27-7-14.1: Life; accident and health or sickness, also known as disability; and variable life and variable annuity products. "(11) LIMITED LINE CREDIT INSURANCE. Credit life, credit disability, credit property, credit unemployment, creditor-placed, also known as forced-placed, nonfiling, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection (GAP), family and medical leave insurance, and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the commissioner determines should be designated a form of limited line credit insurance. "(12) LIMITED LINE CREDIT INSURANCE PRODUCER. A person who sells, solicits, or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group, or individual policy. "(13) LIMITED LINES INSURANCE. Limited line credit insurance, insurance on rental vehicles as defined in Section 27-7-5.1, travel insurance as defined in Section 27-7-5.2, self-service storage facility insurance as defined in Section 27-7-5.3, crop insurance as defined in Section 27-7-14.1, portable electronics insurance as defined in Chapter 22A, and any other line of insurance that the commissioner deems necessary to recognize for the purposes of complying with subsection (e) of Section 27-7-28. "(14) LIMITED LINES PRODUCER. A person authorized by the commissioner to sell, solicit, or negotiate limited lines insurance. "(15) NAIC. The National Association of Insurance Commissioners. "(16) NEGOTIATE. The act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers. "(17) PERSON. An individual or a business entity. "(18) PROPERTY LINES OF AUTHORITY. Any one or more of the following lines as defined in Section 27-7-14.1: Property; casualty; and personal lines. "(19) SELL. To exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company. "(20) SERVICE REPRESENTATIVE. A natural person, other than an officer, manager, or managing general agent of the insurer, employed on salary or at an hourly rate by an insurer, managing general agent, or a captive producer to work for, with or through producers in selling, soliciting, or negotiating insurance in the insurer or in the insurers represented by the managing general agent or a captive producer, but only in the property lines of authority. Officers and salaried nonresident traveling representatives of a mutual insurer operating on the premium deposit plan or of a reciprocal insurer not using resident producers for the solicitation of business who inspect risks or solicit insurance in this state and who receive no commissions from the insurer shall be deemed also to be service representatives. A service representative shall otherwise qualify and be licensed as a service representative under this chapter, but shall not be required to take and pass an examination nor be a resident of Alabama if qualified as a service representative in the state of his or her domicile. The service representative must be appointed for each insurer or association of insurers represented and for each class of insurance handled by the insurer or insurers in this state. "(21) SOLICIT. Attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company. "(22) TERMINATE. The cancellation of the relationship between an insurance producer and the insurer or the termination of a producer's authority to transact insurance. "(23) UNIFORM BUSINESS ENTITY APPLICATION. The current version of the NAIC Uniform Business Entity Application for resident and nonresident business entities. "(24) UNIFORM APPLICATION. The current version of the NAIC Uniform Application for resident and nonresident producer licensing." Section 2. Section 27-7-5.3 is added to the Code of Alabama 1975, to read as follows: §27-7-5.3. (a) As used in this section, the following terms shall have the following meanings: (1) LIMITED LICENSEE. A person or entity authorized to sell certain coverages for personal property maintained in self-service storage facilities pursuant to this section. (2) OCCUPANT. A person, his or her sublessee, successor, or assign entitled to the use of storage space at a self-service storage facility under a rental agreement, to the exclusion of others. (3) OWNER. The owner, operator, lessor, or sublessor of a self-service storage facility, his or her agent, or any other person authorized by him or her to manage the self-service storage facility or to receive rent from an occupant under a rental agreement. (4) PERSONAL PROPERTY. Any movable property not affixed to land including, but not limited to, goods, wares, merchandise, motor vehicles, watercraft, and household items and furnishings. (5) RENTAL AGREEMENT. Any agreement or lease, written or oral, that establishes or modifies the terms, conditions, rules, or any other provisions concerning the use and occupancy of storage space at a self-service storage facility. (6) SELF-SERVICE STORAGE FACILITY. Any real property designed and used for the purpose of renting or leasing individual storage space to occupants who are to have access to the facility for the purpose of storing and removing personal property and not for residential purposes. The term does not include a safe-deposit box or vault maintained by banks, trust companies, or other financial entities or a public warehouse within the meaning of Article 1, commencing with Section 8-15-1, of Chapter 15, Title 8. (7) SUPERVISING ENTITY. Any business entity that is a licensed insurance producer or insurer. (b) Any other provision of law to the contrary notwithstanding, the commissioner may issue to an owner that is in compliance with the requirements of this section a limited license authorizing the limited licensee to offer, sell, solicit, or negotiate insurance through a licensed insurer in connection with a self-service storage facility. (c) All limited licensees shall be exempt from the 40-hour pre-qualification course and written examination requirements of Section 27-7-5, and the continuing education requirements of Chapter 8A. (d) A limited licensee may offer, sell, solicit, or negotiate insurance on behalf of a licensed insurer, or as part of a group, commercial, or master policy to provide insurance for that limited licensee's occupants, only in connection with a rental agreement, and only for either an individual policy issued to an individual occupant or as a group, commercial, or master policy for occupants for personal property insurance. A limited licensee shall only be authorized to provide to occupants insurance coverage for the following: (1) The loss of or damage to personal property stored at a self-service storage facility where the loss or damage occurs at the self-service storage facility or while the personal property is in transit to or from the self-service storage facility during the time period covered by the occupant's rental agreement. (2) Other loss directly related to an occupant's rental agreement. (e) No insurance may be issued by a limited licensee pursuant to this section unless the limited licensee provides to a prospective purchaser written material that provides all of the following: (1) A summary of the terms of insurance coverage, including the identity of the insurer. (2) A conspicuous disclosure that the policy of insurance may provide a duplication of coverage already provided by an existing policy of insurance. (3) A description of the process for filing a claim in the event the occupant elects to purchase coverage and experiences a covered loss. (4) Information regarding the price, deductible, benefits, exclusions, conditions, and any other limitations of the policy. (5) A statement that the purchase by the occupant of the kinds of coverage specified in this section from the limited licensee is not required in order to rent storage space. (6) A statement that the limited licensee is not authorized to evaluate the adequacy of the occupant's existing insurance coverages, unless the limited licensee is otherwise licensed. (7) A statement that the occupant may cancel the insurance at any time, and any unearned premium shall be refunded in accordance with applicable law. (f) Any other provision of law to the contrary notwithstanding, if the kinds of coverage described in this section are required as a condition of a rental agreement, that requirement may be satisfied by an occupant or a prospective occupant: (1) Purchasing coverage that is offered, sold, solicited, or negotiated by the limited licensee; or (2) Presenting to the self-service storage facility evidence of other applicable insurance coverage. (g) Any other provision of law or any rule adopted by the commissioner to the contrary notwithstanding, a limited licensee licensed pursuant to this section may not be required to treat monies collected from occupants as funds received in a fiduciary capacity, provided that the charges for coverage shall