HF 309 — A bill for an act relating to certificates of insurance, including penalties and effective date and applicability provisions. (Formerly HSB 23.) Effective 4-12-17.

House File 309 - IntroducedEnrolled HOUSEHouse FILEFile 309 BYAN COMMITTEEACT ONRELATING COMMERCE (SUCCESSOR TO HSBCERTIFICATES 23)OF AINSURANCE, BILLINCLUDING FORPENALTIES AnAND ActEFFECTIVE relatingDATE toAND certificatesAPPLICABILITY ofPROVISIONS. insurance, including penalties and effective date and applicability provisions.

TLSBSection 1704HV1. (2) 87 av/nh H.F.

309 Section 1.

“Insurance producer” means a person required to be licensed pursuant to chapter 522B to sell, solicit, or negotiateHouse propertyFile and309, casualtyp. insurance.

2 negotiate property and casualty insurance.

A certificate of insurance is not a policy of insurance and does not affirmatively or negatively amend, extend, LSBor 1704HValter (2)the 87coverage -1-afforded av/nhby 1/5the H.F.policy to which the certificate of insurance makes reference.

309 or alter the coverage afforded by the policy to which the certificate of insurance makes reference.

b.House File 309, p.

3 b.

A person is entitled to notice of cancellation, nonrenewal, or material change concerning a policy of insurance or to any similar notice concerning a policy of insurance LSBonly 1704HVif (2)the 87person -2-has av/nhsuch 2/5rights H.F.to notice under the terms of the policy of insurance or any endorsement to the policy of insurance.

309 only if the person has such rights to notice under the terms of the policy of insurance or any endorsement to the policy of insurance.

This Act applies to certificates of insuranceHouse prepared,File issued,309, requested,p. or required beginning ninety days after the effective date of this Act.

EXPLANATION4 Theinsurance inclusionprepared, ofissued, thisrequested, explanationor doesrequired notbeginning constituteninety agreementdays withafter the explanation’seffective substancedate by the members of thethis generalAct. assembly.

LSB______________________________ 1704HV______________________________ (2)LINDA 87UPMEYER -3-JACK av/nhWHITVER 3/5Speaker H.F.of the House President of the Senate I hereby certify that this bill originated in the House and is known as House File 309, Eighty-seventh General Assembly.

309______________________________ ThisCARMINE billBOAL relatesChief toClerk certificates of insurancethe andHouse includesApproved penalties_______________, and2017 effective______________________________ dateTERRY andE. applicability provisions.

TheBRANSTAD billGovernor provides that a “certificate of insurance” is a document or instrument, regardless of how it is described, that is prepared or issued by an insurer or insurance producer as evidence of property and casualty insurance.

The commissioner of insurance is directed to prohibit the use of a certificate of insurance that is unfair, misleading, or deceptive, or that violates any law or a rule adopted by the commissioner.

A certificate of insurance is not a policy of insurance and cannot affirmatively or negatively amend, extend, or alter coverage or confer additional rights to be provided by an insurance policy.

The bill provides that notwithstanding any other provision of Code chapter 515 to the contrary, or any language on a certificate of insurance that states the form is for “information only”, a binder delivered together with a certificate of insurance in connection with a commercial real estate transaction shall be valid and may be relied upon by the borrower or by the borrower’s lender as evidence of insurance, including in a private civil action or an administrative proceeding, until the delivery of the insurance policy to the borrower or the cancellation of the binder pursuant to the notice requirements contained in Code sections 515.125 through 515.127.

The bill defines a “commercial real estate transaction” as a non-recourse commercial lending transaction in which the underlying property serves as the primary collateral securing the borrower’s repayment of the loan and the borrower or any of the borrower’s members, partners, or shareholders or any person related to any of those persons, does not bear the economic risk of loss in the event of a payment default under the terms of the commercial lending transaction.

The bill prohibits a person from preparing, issuing, requesting, or requiring the issuance of a certificate of LSB 1704HV (2) 87 -4- av/nh 4/5 H.F.

309 insurance that contains false or misleading information about the policy of insurance or purports to affirmatively or negatively amend, extend, or alter the policy’s coverage.

A certificate of insurance shall not warrant that the policy of insurance referenced in the certificate complies with the insurance or indemnification requirements of a contract and the inclusion of a contract number or description in a certificate of insurance shall not be interpreted as warranting such compliance.

A person is entitled to notice of cancellation, nonrenewal, or material changes in an insurance policy or any other similar notice concerning the policy only if the person has such rights under the terms of the policy or the policy endorsement.

These rights cannot be altered by a certificate of insurance.

The provisions of the bill are applicable to all certificates of insurance issued in connection with property, operations, or risks located in this state, regardless of where the policyholder, insurer, insurance producer, or person requesting or requiring the issuance of a certificate of insurance is located.

A certificate of insurance or any other document or correspondence prepared, issued, requested, or required in violation of the bill’s provisions is null and void.

The commissioner of insurance may examine and investigate the activities of any person the commissioner reasonably believes has been or is engaged in an act or practice prohibited under the bill;

enforce the provisions of the bill including issuance of cease and desist orders and imposition of a penalty of $500 per violation;

and adopt rules pursuant to Code chapter 17A to administer the bill.

The bill takes effect upon enactment and is applicable to certificates of insurance prepared, issued, requested, or required beginning 90 days after the effective date of the bill.

LSB 1704HV (2) 87 -5- av/nh 5/5