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Senate Study Bill 1119 - IntroducedA Bill ForAn Act 1relating to certificates of insurance, including
2penalties and effective date and applicability provisions.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 515.115 Certificates of insurance
2— penalty.
31. As used in this section, unless the context otherwise
4requires:
5a. “Certificate of insurance” means a document or
6instrument, regardless of how the document or instrument is
7titled or described, that is prepared or issued by an insurer
8or insurance producer as evidence of property and casualty
9insurance coverage. “Certificate of insurance” does not include
10a policy of insurance, insurance binder, policy endorsement, or
11automobile insurance identification or information card.
12b. “Commercial real estate transaction” means a non-recourse
13commercial lending transaction in which the underlying property
14serves as the primary collateral securing the borrower’s
15repayment of the loan and the borrower or any of the borrower’s
16members, partners, or shareholders, or any person related
17to the borrower or the borrower’s members, partners, or
18shareholders, does not bear the economic risk of loss in the
19event of a payment default under the terms of the commercial
20lending transaction.
21c. “Insurance producer” means a person required to be
22licensed pursuant to chapter 522B to sell, solicit, or
23negotiate property and casualty insurance.
24d. “Insurer” means a property and casualty insurance company
25regulated under this chapter.
26e. “Person” means the same as defined in section 4.1.
272. a. The commissioner of insurance shall prohibit the use
28of a certificate of insurance form if the form is either of the
29following:
30(1) Unfair, misleading, or deceptive, or violates public
31policy.
32(2) Violates any law, including any rule adopted by the
33commissioner of insurance pursuant to chapter 17A.
34b. A certificate of insurance is not a policy of insurance
35and does not affirmatively or negatively amend, extend,
-1-1or alter the coverage afforded by the policy to which the
2certificate of insurance makes reference. A certificate of
3insurance shall not confer on any person new or additional
4rights beyond what the referenced policy of insurance expressly
5provides.
6c. Notwithstanding any provision of this chapter to the
7contrary, or any language on a certificate of insurance
8that states that the form is for “information only”, a
9binder delivered together with a certificate of insurance in
10connection with a commercial real estate transaction shall
11be valid and may be relied upon by the borrower or by the
12borrower’s lender as evidence of insurance, including in a
13private civil action or an administrative proceeding, until
14the delivery of the insurance policy to the borrower or
15the cancellation of the binder pursuant to section 515.125,
16515.126, or 515.127.
173. a. A person shall not do any of the following:
18(1) Prepare, issue, request, or require the issuance of a
19certificate of insurance that contains any false or misleading
20information concerning the policy of insurance to which the
21certificate of insurance makes reference.
22(2) Prepare, issue, request, or require the issuance of
23a certificate of insurance that purports to affirmatively or
24negatively amend, extend, or alter the coverage provided by the
25policy of insurance to which the certificate of insurance makes
26reference.
27b. A certificate of insurance shall not warrant that the
28policy of insurance referenced in the certificate of insurance
29complies with the insurance or indemnification requirements
30of a contract and the inclusion of a contract number or
31description within a certificate of insurance shall not be
32interpreted as warranting compliance with such requirements.
334. A person is entitled to notice of cancellation,
34nonrenewal, or material change concerning a policy of insurance
35or to any similar notice concerning a policy of insurance
-2-1only if the person has such rights to notice under the terms
2of the policy of insurance or any endorsement to the policy
3of insurance. The terms and conditions of a person’s right
4to notice are governed by the policy of insurance or the
5endorsement and shall not be altered by a certificate of
6insurance.
75. a. The provisions of this section are applicable to all
8certificates of insurance issued in connection with property,
9operations, or risks located in this state, regardless of
10where the policyholder, insurer, insurance producer, or person
11requesting or requiring the issuance of a certificate of
12insurance is located.
13b. A certificate of insurance or any other document or
14correspondence prepared, issued, requested, or required in
15violation of this section is null and void.
166. The commissioner of insurance may do all of the
17following:
18a. Examine and investigate the activities of any person that
19the commissioner reasonably believes has been or is engaged in
20an act or practice prohibited under this section.
21b. Enforce the provisions of this section, including the
22authority to issue orders to cease and desist, and to impose a
23penalty in an amount of five hundred dollars per violation to
24be collected in the name of the state for deposit as provided
25in section 505.7.
26c. Adopt rules pursuant to chapter 17A to administer this
27section.
28 Sec. 2. EFFECTIVE UPON ENACTMENT. This Act, being deemed of
29immediate importance, takes effect upon enactment.
30 Sec. 3. APPLICABILITY. This Act applies to certificates of
31insurance prepared, issued, requested, or required beginning
32ninety days after the effective date of this Act.
33EXPLANATION
34The inclusion of this explanation does not constitute agreement with
35the explanation’s substance by the members of the general assembly.
-3- 1This bill relates to certificates of insurance and includes
2penalties and effective date and applicability provisions.
3The bill provides that a “certificate of insurance” is a
4document or instrument, regardless of how it is described, that
5is prepared or issued by an insurer or insurance producer as
6evidence of property and casualty insurance. The commissioner
7of insurance is directed to prohibit the use of a certificate
8of insurance that is unfair, misleading, or deceptive, or that
9violates any law or a rule adopted by the commissioner.
10A certificate of insurance is not a policy of insurance and
11cannot affirmatively or negatively amend, extend, or alter
12coverage or confer additional rights to be provided by an
13insurance policy.
14The bill provides that notwithstanding any other provision
15of Code chapter 515 to the contrary, or any language on
16a certificate of insurance that states the form is for
17“information only”, a binder delivered together with a
18certificate of insurance in connection with a commercial real
19estate transaction shall be valid and may be relied upon by the
20borrower or by the borrower’s lender as evidence of insurance,
21including in a private civil action or an administrative
22proceeding, until the delivery of the insurance policy to
23the borrower or the cancellation of the binder pursuant to
24the notice requirements contained in Code sections 515.125
25through 515.127. The bill defines a “commercial real estate
26transaction” as a non-recourse commercial lending transaction
27in which the underlying property serves as the primary
28collateral securing the borrower’s repayment of the loan and
29the borrower or any of the borrower’s members, partners, or
30shareholders or any person related to any of those persons,
31does not bear the economic risk of loss in the event of a
32payment default under the terms of the commercial lending
33transaction.
34The bill prohibits a person from preparing, issuing,
35requesting, or requiring the issuance of a certificate of
-4-1insurance that contains false or misleading information
2about the policy of insurance or purports to affirmatively or
3negatively amend, extend, or alter the policy’s coverage. A
4certificate of insurance shall not warrant that the policy
5of insurance referenced in the certificate complies with the
6insurance or indemnification requirements of a contract and the
7inclusion of a contract number or description in a certificate
8of insurance shall not be interpreted as warranting such
9compliance.
10A person is entitled to notice of cancellation, nonrenewal,
11or material changes in an insurance policy or any other similar
12notice concerning the policy only if the person has such rights
13under the terms of the policy or the policy endorsement. These
14rights cannot be altered by a certificate of insurance.
15The provisions of the bill are applicable to all
16certificates of insurance issued in connection with property,
17operations, or risks located in this state, regardless of
18where the policyholder, insurer, insurance producer, or person
19requesting or requiring the issuance of a certificate of
20insurance is located. A certificate of insurance or any other
21document or correspondence prepared, issued, requested, or
22required in violation of the bill’s provisions is null and
23void.
24The commissioner of insurance may examine and investigate
25the activities of any person the commissioner reasonably
26believes has been or is engaged in an act or practice
27prohibited under the bill; enforce the provisions of the bill
28including issuance of cease and desist orders and imposition of
29a penalty of $500 per violation; and adopt rules pursuant to
30Code chapter 17A to administer the bill.
31The bill takes effect upon enactment and is applicable
32to certificates of insurance prepared, issued, requested, or
33required beginning 90 days after the effective date of the
34bill.
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2penalties and effective date and applicability provisions.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 515.115 Certificates of insurance
2— penalty.
31. As used in this section, unless the context otherwise
4requires:
5a. “Certificate of insurance” means a document or
6instrument, regardless of how the document or instrument is
7titled or described, that is prepared or issued by an insurer
8or insurance producer as evidence of property and casualty
9insurance coverage. “Certificate of insurance” does not include
10a policy of insurance, insurance binder, policy endorsement, or
11automobile insurance identification or information card.
12b. “Commercial real estate transaction” means a non-recourse
13commercial lending transaction in which the underlying property
14serves as the primary collateral securing the borrower’s
15repayment of the loan and the borrower or any of the borrower’s
16members, partners, or shareholders, or any person related
17to the borrower or the borrower’s members, partners, or
18shareholders, does not bear the economic risk of loss in the
19event of a payment default under the terms of the commercial
20lending transaction.
21c. “Insurance producer” means a person required to be
22licensed pursuant to chapter 522B to sell, solicit, or
23negotiate property and casualty insurance.
24d. “Insurer” means a property and casualty insurance company
25regulated under this chapter.
26e. “Person” means the same as defined in section 4.1.
272. a. The commissioner of insurance shall prohibit the use
28of a certificate of insurance form if the form is either of the
29following:
30(1) Unfair, misleading, or deceptive, or violates public
31policy.
32(2) Violates any law, including any rule adopted by the
33commissioner of insurance pursuant to chapter 17A.
34b. A certificate of insurance is not a policy of insurance
35and does not affirmatively or negatively amend, extend,
-1-1or alter the coverage afforded by the policy to which the
2certificate of insurance makes reference. A certificate of
3insurance shall not confer on any person new or additional
4rights beyond what the referenced policy of insurance expressly
5provides.
6c. Notwithstanding any provision of this chapter to the
7contrary, or any language on a certificate of insurance
8that states that the form is for “information only”, a
9binder delivered together with a certificate of insurance in
10connection with a commercial real estate transaction shall
11be valid and may be relied upon by the borrower or by the
12borrower’s lender as evidence of insurance, including in a
13private civil action or an administrative proceeding, until
14the delivery of the insurance policy to the borrower or
15the cancellation of the binder pursuant to section 515.125,
16515.126, or 515.127.
173. a. A person shall not do any of the following:
18(1) Prepare, issue, request, or require the issuance of a
19certificate of insurance that contains any false or misleading
20information concerning the policy of insurance to which the
21certificate of insurance makes reference.
22(2) Prepare, issue, request, or require the issuance of
23a certificate of insurance that purports to affirmatively or
24negatively amend, extend, or alter the coverage provided by the
25policy of insurance to which the certificate of insurance makes
26reference.
27b. A certificate of insurance shall not warrant that the
28policy of insurance referenced in the certificate of insurance
29complies with the insurance or indemnification requirements
30of a contract and the inclusion of a contract number or
31description within a certificate of insurance shall not be
32interpreted as warranting compliance with such requirements.
334. A person is entitled to notice of cancellation,
34nonrenewal, or material change concerning a policy of insurance
35or to any similar notice concerning a policy of insurance
-2-1only if the person has such rights to notice under the terms
2of the policy of insurance or any endorsement to the policy
3of insurance. The terms and conditions of a person’s right
4to notice are governed by the policy of insurance or the
5endorsement and shall not be altered by a certificate of
6insurance.
75. a. The provisions of this section are applicable to all
8certificates of insurance issued in connection with property,
9operations, or risks located in this state, regardless of
10where the policyholder, insurer, insurance producer, or person
11requesting or requiring the issuance of a certificate of
12insurance is located.
13b. A certificate of insurance or any other document or
14correspondence prepared, issued, requested, or required in
15violation of this section is null and void.
166. The commissioner of insurance may do all of the
17following:
18a. Examine and investigate the activities of any person that
19the commissioner reasonably believes has been or is engaged in
20an act or practice prohibited under this section.
21b. Enforce the provisions of this section, including the
22authority to issue orders to cease and desist, and to impose a
23penalty in an amount of five hundred dollars per violation to
24be collected in the name of the state for deposit as provided
25in section 505.7.
26c. Adopt rules pursuant to chapter 17A to administer this
27section.
28 Sec. 2. EFFECTIVE UPON ENACTMENT. This Act, being deemed of
29immediate importance, takes effect upon enactment.
30 Sec. 3. APPLICABILITY. This Act applies to certificates of
31insurance prepared, issued, requested, or required beginning
32ninety days after the effective date of this Act.
33EXPLANATION
34The inclusion of this explanation does not constitute agreement with
35the explanation’s substance by the members of the general assembly.
-3- 1This bill relates to certificates of insurance and includes
2penalties and effective date and applicability provisions.
3The bill provides that a “certificate of insurance” is a
4document or instrument, regardless of how it is described, that
5is prepared or issued by an insurer or insurance producer as
6evidence of property and casualty insurance. The commissioner
7of insurance is directed to prohibit the use of a certificate
8of insurance that is unfair, misleading, or deceptive, or that
9violates any law or a rule adopted by the commissioner.
10A certificate of insurance is not a policy of insurance and
11cannot affirmatively or negatively amend, extend, or alter
12coverage or confer additional rights to be provided by an
13insurance policy.
14The bill provides that notwithstanding any other provision
15of Code chapter 515 to the contrary, or any language on
16a certificate of insurance that states the form is for
17“information only”, a binder delivered together with a
18certificate of insurance in connection with a commercial real
19estate transaction shall be valid and may be relied upon by the
20borrower or by the borrower’s lender as evidence of insurance,
21including in a private civil action or an administrative
22proceeding, until the delivery of the insurance policy to
23the borrower or the cancellation of the binder pursuant to
24the notice requirements contained in Code sections 515.125
25through 515.127. The bill defines a “commercial real estate
26transaction” as a non-recourse commercial lending transaction
27in which the underlying property serves as the primary
28collateral securing the borrower’s repayment of the loan and
29the borrower or any of the borrower’s members, partners, or
30shareholders or any person related to any of those persons,
31does not bear the economic risk of loss in the event of a
32payment default under the terms of the commercial lending
33transaction.
34The bill prohibits a person from preparing, issuing,
35requesting, or requiring the issuance of a certificate of
-4-1insurance that contains false or misleading information
2about the policy of insurance or purports to affirmatively or
3negatively amend, extend, or alter the policy’s coverage. A
4certificate of insurance shall not warrant that the policy
5of insurance referenced in the certificate complies with the
6insurance or indemnification requirements of a contract and the
7inclusion of a contract number or description in a certificate
8of insurance shall not be interpreted as warranting such
9compliance.
10A person is entitled to notice of cancellation, nonrenewal,
11or material changes in an insurance policy or any other similar
12notice concerning the policy only if the person has such rights
13under the terms of the policy or the policy endorsement. These
14rights cannot be altered by a certificate of insurance.
15The provisions of the bill are applicable to all
16certificates of insurance issued in connection with property,
17operations, or risks located in this state, regardless of
18where the policyholder, insurer, insurance producer, or person
19requesting or requiring the issuance of a certificate of
20insurance is located. A certificate of insurance or any other
21document or correspondence prepared, issued, requested, or
22required in violation of the bill’s provisions is null and
23void.
24The commissioner of insurance may examine and investigate
25the activities of any person the commissioner reasonably
26believes has been or is engaged in an act or practice
27prohibited under the bill; enforce the provisions of the bill
28including issuance of cease and desist orders and imposition of
29a penalty of $500 per violation; and adopt rules pursuant to
30Code chapter 17A to administer the bill.
31The bill takes effect upon enactment and is applicable
32to certificates of insurance prepared, issued, requested, or
33required beginning 90 days after the effective date of the
34bill.
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