Cooperative Fire Insurance Corporations

V.S.A. tit. 8, ch. 105, subch. 2

in effect

8 V.S.A. § 3911 Incorporators

3911. Incorporators Sixty or more persons residing in the State of Vermont who shall each own in good faith real estate of not less than $20,000.00 in value, and collectively own in good faith insurable real estate in the State of Vermont to the value of $1,200,000.00 or more, may apply to become a cooperative insurance corporation on filing with the Commissioner a declaration as hereinafter provided. Amended 1981, No. 6, § 1.

8 V.S.A. § 3912 Contents of declaration

3912. Contents of declaration Such declaration shall be executed and acknowledged by each of such persons and shall state their intention to form a cooperative insurance corporation for the purpose of engaging in the business of insurance, pursuant to the following provisions, shall show that such persons own in good faith real estate to the amount required and shall also state the town and county in which its principal office is to be located and its corporate name that shall include the word “cooperative.” Amended 1981, No. 6, § 2.

8 V.S.A. § 3913 Bylaws to be filed

3913. Bylaws to be filed There shall be filed with such declaration a copy of the bylaws of such corporation, together with the names and post office addresses of the officers and directors thereof for the first year, and such other information as the Commissioner shall require.

8 V.S.A. § 3914 Statement as to applications

3914. Statement as to applications At the time of such filing, or within one year thereafter, such persons, or those who have been designated as the president and the secretary of such corporation, may file with the Commissioner a sworn statement to the effect that applications for insurance in the amounts respectively indicated in section 3920 of this title have been made in good faith to such corporation. Such statement shall give the names and addresses of such applicants and the amount of insurance applied for by each. In case such corporation charges advance premiums such statement shall show that the premium, specifying the amount, has been paid in full by each such applicant. Amended 1981, No. 6, § 3.

8 V.S.A. § 3915 Issuance of certificate of authority

3915. Issuance of certificate of authority If all the requirements of law have been complied with and the Commissioner is satisfied, after investigation, that such statement is true, he or she shall thereupon file such declaration and cause it to be recorded in his or her office in a book to be kept for that purpose and shall thereupon issue to such corporation a certified copy of the papers so recorded, together with a certificate authorizing such corporation to carry on the business of insurance as indicated in such declaration. A duplicate copy of the certificate so issued shall be filed by the Commissioner with the Secretary of State.

8 V.S.A. § 3916 Name, status, and powers

3916. Name, status, and powers Corporations to which certificates of authority are so issued shall be known as cooperative insurance corporations and may write the kinds of insurance enumerated in subdivisions 3301(a)(2)-(8), and (a)(10) of this title, provided the corporation’s surplus shall not be less than $500,000.00 and provided that such company shall first secure approval from the Commissioner to do so, which approval may be upon such terms and conditions as the Commissioner may prescribe. Amended 1981, No. 6, § 4.

8 V.S.A. § 3920 Doing business as an assessment cooperative corporation or a nonassessment cooperative corporation

3920. Doing business as an assessment cooperative corporation or a nonassessment cooperative corporation (a) An assessment cooperative corporation shall not be authorized or permitted to begin or do business until it has bona fide applications for insurance on property whose total aggregate dollar exposure value at risk amounts to not less than $2,500,000.00. (b) A nonassessment cooperative insurance corporation is one that has received approval of the Commissioner and has met the requirements of subsections 3930(a) and (b) of this title. Amended 1981, No. 6, § 5.

8 V.S.A. § 3925 Bylaws; compulsory provisions

3925. Bylaws; compulsory provisions The bylaws of a cooperative insurance corporation to which a certificate of authority is issued shall include substantially the following provisions: (1) The corporate powers of such corporation shall be exercised by a board of directors, who shall be not less than five in number. Such directors shall be divided into classes and a portion only elected each year. They shall be elected for a term of not more than four years each and shall choose a president, a secretary, and such other officers as may be deemed necessary. After the first year, the directors shall be chosen at an annual meeting to be held on the second Tuesday of January, unless some other day is designated in such bylaws, at which meeting each person insured shall have one vote and may be entitled to vote by proxy under such rules and regulations as may be prescribed by the bylaws. (2) Such corporation shall keep proper books, including a policy register, in which the secretary shall enter the complete record of all its transactions and those of the board of directors and executive committee. Such books shall at all times show fully and truly the condition, affairs, and business of such corporation and shall be open for inspection by every person insured, each day from nine o’clock in the forenoon to four o’clock in the afternoon, Saturdays, Sundays, and legal holidays excepted. (3) If authorized as an assessment cooperative insurance corporation as outlined in subsection 3920(a) of this title, such corporation may assess for the purposes specified in section 3927 of this title, and the bylaws shall specify the manner of giving notice of such assessments, which may be either personal or by mail, and, if by mail, shall be deemed complete if such notice is deposited, postage prepaid, in the post office at the place where the principal office of the corporation is located, directed to the person insured at his or her last known place of residence or business. A person insured who neglects or refuses to pay his or her assessments, for that reason or for any other reason satisfactory to the board of directors or its executive committee, may be excluded from such corporation and, when thus excluded, the secretary shall cancel or withdraw his or her policy or policies, subject to the cancellation provisions in sections 3879 through 3882 and chapter 113, subchapter 2 of this title, provided that such person shall remain liable for his or her pro rata share of losses and expenses incurred on or before the date of his or her exclusion and for the penalty herein provided, in case an action is brought against him or her. If a member of such corporation is so excluded and his or her policy so canceled, the secretary shall forthwith enter such cancellation and the date thereof on the records kept in the office of the corporation and serve notice of such cancellation on the person so excluded, as provided herein for the service of notice of assessment. However, in such event, the person so excluded or whose policy is so canceled shall be entitled to the repayment of an equitable portion of the unearned paid premium on such policy. The officers of such corporation shall proceed to collect all assessments within 30 days after the expiration of the notice to pay the same. Neglect or refusal on their part so to proceed or to perform any of the duties imposed on them by law shall render them individually liable for the amount lost to any person, due to such neglect or refusal, and an action may be maintained by such person against such officers to collect such amount. An action may be brought by the corporation against a person insured therein to recover all assessments that he or she may neglect or refuse to pay, and there may be recovered from him or her in such action both the amount so assessed, with lawful interest thereon, and, as a penalty for such neglect or refusal, 50 percent of such assessment in addition thereto. (4) Any person insured by an assessment cooperative insurance corporation may withdraw therefrom at any time by giving written notice to the corporation, stating the date of withdrawal, paying his or her share of all claims then existing against such corporation, and surrendering his or her policy or policies. (5) Any person insured by a nonassessment cooperative insurance corporation may withdraw from it at any time by giving written notice to the corporation stating the date of withdrawal and surrendering his or her policy or policies. (6) Persons residing or owning property within any state where the corporation is authorized to do business may be insured upon the same terms and conditions as original members and such other terms as may be prescribed in the bylaws of the corporation. (7) The bylaws of such corporation may be amended at any time. Amended 1981, No. 6, § 7; 1991, No. 184 (Adj. Sess.); 2003, No. 20, § 2; 2017, No. 80, § 8.

8 V.S.A. § 3926 Policy provisions

3926. Policy provisions The policies issued by a cooperative insurance corporation shall conform to the regulations prescribed therefor by the Commissioner. Each such policy shall indicate clearly, in words prominently displayed at the top of the first page or across the page thereof, that such policy is issued on the cooperative plan; and if issued on an assessment plan, shall include a provision in the body of the policy to the effect that its acceptance by the person insured shall bind him or her to pay all assessments that may be levied thereon. The face of each such policy shall display in not less than 10 point bold type the following statement: “THIS POLICY MAY BE SUBJECT TO FUTURE SPECIAL ASSESSMENT OF ADDITIONAL PREMIUM UP TO A MAXIMUM OF ONE-HALF THE REGULAR ANNUAL ASSESSMENT.” Each such policy shall include a copy of the bylaws of such corporation or such other matter as the Commissioner shall prescribe. Amended 1981, No. 6, § 8.

8 V.S.A. § 3927 Assessment cooperative insurance corporations

3927. Assessment cooperative insurance corporations The following provisions shall affect such corporations doing business on the assessment plan: (1) Such corporation may issue policies of insurance as enumerated in section 3916 of this title. (2) Such corporation may classify risks covered under these types of insurance at the time of the issuance of the policy, or at subsequent times and issue policies under different rates, and it may collect regular assessments on such risks either on an annual basis or for whatever length of time the policy may be issued. The amounts of such regular assessments shall be sufficient to pay for the period assessed, each member’s pro rata share, based on the risk classification and amount of insurance, of the estimated amount necessary to cover losses, expenses, repayment of debt, and contribution to surplus as may be permitted by the bylaws. (3) Such corporation may borrow, on the credit of the corporation, such funds as are required to pay for extraordinary losses or expenses subject to the approval of the board of directors or as may be provided in the bylaws of such corporation, subject to the maximum limit stated in subdivision (4) of this section. If deemed for the best interest of the corporation, it may estimate the amount necessary to pay all losses and expenses and contributions to surplus for the current year and to supply any deficiency in the preceding year, subject to the maximum limit stated in subdivision (4) of this section, and assess and collect the same from the members. Each assessment shall be made upon all policyholders in proportion to each policyholder’s regular annual assessment. The expense of collecting assessments may be regulated by the bylaws. (4) Such corporation may levy a special assessment to pay for such member’s pro rata share of unexpected losses, expenses and contributions to surplus, based upon the risk classification and amount of insurance at the time of the assessment, as may be permitted by the bylaws, however, in no case shall the sum total of all special assessments during any one year exceed 50 percent of the equivalent of one annual regular assessment. The expense of collecting assessments may be regulated by the bylaws. Amended 1981, No. 6, § 9.

8 V.S.A. § 3929 Loss payment

3929. Loss payment A nonassessment cooperative insurance corporation may borrow on the credit of the corporation sufficient funds to pay any loss. Amended 1981, No. 6, § 10.

8 V.S.A. § 3930 Nonassessment cooperative insurance corporations to commence business

3930. Nonassessment cooperative insurance corporations to commence business (a) When a cooperative insurance corporation reaches and thereafter maintains an unimpaired free surplus position of no less than $1,000,000, it may apply to the Commissioner for relief from the provisions of subdivisions 3925(3)-(5) and sections 3926 and 3927 of this title and may request approval to become nonassessable. The Commissioner may apply the same standards for admission as are found in chapter 101 of this title applicable to the formation of a domestic mutual insurer. Upon the Commissioner’s acceptance of revised articles of incorporation, revised bylaws, and a special financial statement for the calendar year period ending with the last calendar quarter before the request, the Commissioner may allow the corporation to operate as a nonassessment cooperative insurance corporation. The Commissioner may require a statutory financial examination to be conducted at the company’s expense prior to final approval. (b) The Commissioner may prescribe additional surplus if he or she determines that the kind of insurance to be transacted so requires. Added 1981, No. 6, § 11.

8 V.S.A. § 3931 Application of provisions

3931. Application of provisions (a) All the provisions of this part, insofar as consistent with the provisions of this subchapter, shall apply to cooperative insurance corporations. (b) Cooperative fire insurance corporations formed and operated under the provisions set forth in this subchapter shall be considered to be mutual insurance companies for the purpose of engaging in any or all of the transactions authorized by chapter 101 of this title, including those provisions set forth in subchapters 3 and 3A of that chapter. Added 1981, No. 6, § 12; amended 1999, No. 86 (Adj. Sess.), § 7, eff. April 27, 2000.

8 V.S.A. § 3932 Definitions

3932. Definitions For the purposes of this subchapter: (1) “Regular assessment” shall mean that amount charged to members, in advance or arrears, to pay ordinary losses and expenses for one year or the term of the policy and to make a contribution to surplus. (2) “Assessment cooperative insurance corporation” means a corporation meeting the financial requirements of section 3916 of this title, which charges its insureds regular assessments necessary to pay losses, meet expenses, and contribute to surplus. (3) “Nonassessment cooperative insurance corporation” means a corporation meeting the financial requirements of sections 3916, 3930, and 3931 of this title, which charges its insureds premiums in advance necessary to pay losses, meet expenses, and contribute to surplus. (4) “Special assessment” means an additional charge to the policyholder, beyond the regular assessment or premium charge, to satisfy unexpected losses or expenses, or contributions to surplus. Added 1981, No. 6, § 13.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/105Fetched: 10/21/2026