Colorado Surplus Lines flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Surplus Lines Insurance Law

Colorado statute at C.R.S. Title 10, Article 5, Part 8; it governs licensing, placement, disclosure, taxation, and recordkeeping for insurance procured from nonadmitted insurers.

Colorado Division of Insurance

State agency headed by the Commissioner of Insurance; it licenses surplus lines brokers, examines records, and enforces Colorado surplus lines statutes and regulations.

Surplus Lines Broker License

Colorado credential required for a person to procure property or casualty insurance from a nonadmitted insurer for an insured located in Colorado.

Commissioner's Enforcement Authority

The Colorado Commissioner may investigate, examine records, issue orders, suspend or revoke licenses, and impose penalties for violations of surplus lines laws.

Nonadmitted Insurer

An insurer that does not hold a Colorado certificate of authority; it may write Colorado surplus lines business only through a licensed surplus lines broker.

DOI Surplus Lines Regulations

Rules issued by the Colorado Division of Insurance that implement surplus lines statutes, including licensing, diligent search, disclosure, policy stamping, reporting, and records.

Nonresident Surplus Lines Broker

A broker licensed in another state who may obtain a Colorado surplus lines license through reciprocity when the home state is the principal place of business.

Continuing Education Requirement

Colorado surplus lines brokers must complete the state's producer continuing education requirements to renew the license and remain in good standing.

Policy Stamp Requirement

The surplus lines policy or declaration must carry conspicuous notice that the insurer is not authorized in Colorado and is not protected by the guaranty association.

Insurable Interest

A financial interest in the subject matter such that the insured would suffer monetary loss from its damage or destruction; without it the insurance contract is unenforceable.

Principle of Indemnity

Insurance restores the insured to approximately the pre-loss financial position, not to a better position, and prevents profiting from an insured loss.

Admitted Insurer

An insurer holding a certificate of authority from the state to transact insurance; it is subject to state solvency, rate, form, and market conduct regulation.

Binder

Temporary written or oral evidence of insurance that binds coverage pending issuance of the policy, provided the agent has authority to grant it.

Subrogation

The insurer's right, after paying a loss, to pursue a responsible third party and recover amounts paid, preventing the insured from double recovery.

Diligent Search

Documented effort by the surplus lines broker to obtain the required coverage from authorized insurers before placing the risk with a nonadmitted insurer.

Declination Documentation

Written evidence that authorized insurers refused, declined, or lacked capacity to write the risk; it supports the diligent-search requirement in the transaction file.

Lower Premium Prohibition

Surplus lines placement is not permitted solely because a nonadmitted insurer quotes a lower premium than an authorized insurer that can write the risk.

Written Disclosure Notice

Notice to the insured that the surplus lines insurer is not licensed in Colorado, is not guaranty-fund protected, and may be less regulated.

Home State Rule

Under NRRA, the insured's home state governs regulatory compliance and premium tax for a multistate surplus lines risk, even if other states are exposed.

Eligible Surplus Lines Insurer

A nonadmitted insurer authorized in its domicile that meets Colorado capital and surplus standards and appears on the applicable eligibility list.

NAIC IID Listing

The NAIC International Insurers Department Quarterly Listing of Alien Insurers; Colorado uses it to verify eligibility of alien surplus lines insurers.

Guaranty Association Exclusion

Colorado's guaranty association does not cover claims against nonadmitted surplus lines insurers, so insureds bear the risk of insurer insolvency.

Service of Process Consent

An eligible surplus lines insurer must consent to service of process in Colorado, commonly by appointing the Commissioner as attorney for service.

Surplus Lines Premium Tax

Colorado tax equal to 3% of gross surplus lines premiums; the licensed broker collects it from the insured and remits it to the Division.

March 1 Filing Deadline

The annual Colorado surplus lines premium tax return and payment are due March 1 for surplus lines premiums written in the preceding calendar year.

Broker Tax Liability

The surplus lines broker is responsible for remitting the premium tax to Colorado even if the broker failed to collect the tax from the insured.

Gross Premiums Tax Base

The tax base is total premium charged for surplus lines coverage, less return premiums, before deductions for commissions or other expenses.

Late Tax Penalty

Late filing or payment of Colorado surplus lines premium tax triggers statutory penalties and interest and may lead to license discipline.

Five-Year Record Retention

Colorado surplus lines brokers must keep records of each surplus lines transaction for at least five years, subject to examination by the Division.

Transaction File Contents

The file includes the diligent search, declinations, disclosure, policy, premium, tax, and evidence that the insurer was eligible at placement.

Commissioner Record Access

The Commissioner may inspect and copy surplus lines records during examinations or investigations; failure to produce records is a violation.

Electronic Record Standards

Electronic surplus lines records are permitted if they are legible, retrievable, and can be produced to the Division in an acceptable format.