38.2-1802 - Acting as agent for unlicensed insurer prohibited; penalties.
§ 38.2-1802. Acting as agent for unlicensed insurer prohibited; penalties.
A. No person other than a licensed surplus lines broker shall sell, solicit,or negotiate contracts of insurance in this Commonwealth on behalf of anyinsurer which is not licensed to transact the business of insurance in thisCommonwealth. Nothing in this section shall prohibit any person fromobtaining insurance upon his own life or property from an unlicensed insurer.
B. Any person violating the provisions of this section shall be guilty uponconviction of a Class 1 misdemeanor and punished for each offense. Inaddition, any person violating this section shall be (i) liable on any claimagainst any unlicensed insurer that arises out of a contract or policy sold,solicited, or negotiated by the person or which the person assisted inselling, soliciting, or negotiating, or (ii) punished as provided in §§38.2-218 and 38.2-1831, or (iii) subject to both (i) and (ii).
C. Nothing in this section shall apply to the selling, soliciting, ornegotiating of contracts of insurance on:
1. Vessels or craft, their cargo, freight, marine builder's risk, maritimeprotection and indemnity, ship repairer's legal liability, tower's liabilityor other risks commonly insured under ocean marine insurance policies asdistinguished from inland marine insurance policies, provided that a propertyand casualty or limited lines property and casualty agent licensed in thisCommonwealth sells, solicits, or negotiates these classes of insurance onbehalf of any insurer not licensed to transact the business of insurance inthis Commonwealth; or
2. The rolling stock and operating properties of railroads used in interstatecommerce or of any liability or other risks incidental to their ownership,maintenance or operation.
D. A property and casualty or limited lines property and casualty agentlicensed in this Commonwealth who, pursuant to the provisions of subdivisionC 1, sells, solicits, or negotiates ocean marine insurance on behalf of anyinsurer not licensed to transact the business of insurance in thisCommonwealth shall provide a notice to the insured stating that the insurancepolicy is to be placed with an insurer not licensed to transact the businessof insurance in the Commonwealth and stating that (i) in the event of theinsolvency of the insurer, there is no protection under the Virginia Propertyand Casualty Insurance Guaranty Association against financial loss toclaimants or policyholders because of the insolvency of an unlicensedinsurer, and (ii) the insured may not be protected under the insurance lawsof this Commonwealth. The notice required by this subsection shall be in aform prescribed by the Commission and shall be signed and dated by the agentand the insured. The signatures required by this subsection may be inelectronic form. The agent shall keep a copy of the notice for at least threeyears after the effective date of the policy to which the notice pertains. Acopy of the notice shall be given to the insured prior to placement of theinsurance.
(Code 1950, § 38.1-281; 1952, c. 317; 1956, c. 173; 1979, c. 513, §38.1-327.3; 1982, c. 264; 1983, c. 480; 1986, c. 562; 1987, cc. 519, 521;2001, c. 706.)