230-RICR-20-05-9. Insurance Coverage for Lead Poisoning (formerly Insurance Regulation 101) (version Adoption, 04/08/2003 to 10/17/2005)

Page 1 of 11 State of Rhode Island and Providence Plantations DEPARTMENT OF BUSINESS REGULATION Division of Insurance 233 Richmond Street Providence, RI 02903 INSURANCE REGULATION 101 INSURANCE COVERAGE FOR LEAD POISONING Table of Contents Section 1 Authority Section 2 Purpose and Applicability Section 3 Definitions Section 4 Policy Exclusions for Lead Poisoning Section 5 Insurance Coverage for Lead Poisoning in Compliant Properties Section 6 Insurance Coverage for Lead Poisoning in Noncompliant Properties Section 7 Limits of Coverage Section 8 Rates for Coverage Section 9 Information to be Filed with the Department Section 10 Property Owners Who are ineligible for Lead Liability Coverage Section 11 FAIR Plan Section 12 Severability Section 13 Effective Date Section 1 Authority This Regulation is promulgated pursuant to R.I. Gen. Laws §§ 42-128.1-9, 42-14- 17 and 42-35-3. Section 2 Purpose and Applicability The purpose of this Regulation is to establish a uniform policy regarding lead poisoning coverage in pre-1978 residential rental property liability insurance and to set forth requirements to assure the availability of insurance coverage for losses and damages caused by lead poisoning. This Regulation applies to liability coverage written by licensed carriers on all pre-1978 residential rental properties. This Regulation does not apply to excess or umbrella coverage or coverage written, pursuant to R.I. Gen. Laws § 27-3-38 through 42 and Regulation 11, by approved surplus lines insurers. Section 3 Definitions 1. “Act” means the Insurance Coverage portion of the Lead Hazard Mitigation Act codified at R.I. Gen. Laws § 42-128.1-9. Page 2 of 11 2. “Compliant Rental Property(ies)” means any pre-1978 residential rental property for which any one of the alternative methods of Prima Facie Evidence of Compliance can be produced by the owner of the property. 3. “Department” means the Rhode Island Department of Business Regulation. 4. “Dwelling” or “Dwelling Unit” means an enclosed space used for living and sleeping by human occupants as a place of residence, including but not limited to, a house, an apartment, or condominium, but does not include hotels, temporary housing, rooming or boarding houses and rooms rented in otherwise owner occupied homes. 5. “FAIR Plan” means the basic property insurance and placement program established by R.I. Gen. Laws § 27-33-1 et seq. and Insurance Regulation 15. 6. “Lead Liability” means the legal liability of owners of dwellings for losses to third parties arising from exposure to lead. 7. “Lead Liability Coverage” means an insurance policy providing coverage to an insured for that insured’s Lead Liability. 8. “Lead Poisoning” means a confirmed venous blood lead level measured in micrograms of lead per deciliter of whole blood, established by rule of the Rhode Island Department of Health. 9. “Liability Coverage” means any insurance policy providing coverage for the legal liability of owners of Rental Properties for losses to third parties. 10. “Non-Compliant Rental Property(ies)” means any pre-1978 residential rental property for which none of the alternative methods of Prima Facie Evidence of Compliance can be produced by the owner of the property. 11. “Prima Facie Evidence of Compliance” means (1) a certificate of compliance of an independent clearance inspection and affidavit of visual inspection required to maintain the validity of the independent clearance inspection as defined by R.I. Gen. Laws § 42-128.1-4(5)(i)and(ii), (2) proof of a clearance exam showing that lead hazards are mitigated as defined by R.I. Gen. Laws § 42-128.1-4(5)(iii), (3) proof of abatement as defined by R.I. Gen. Laws § 42-128.1-4(3) or (4) a Certificate of Presumptive Compliance as defined by R.I. Gen. Laws § 42-128.1- 4(5)(iii). 12. “Rental Property(ies)” means pre-1978 premises containing dwelling unit(s) that are let, leased or rented to person(s) for the purposes of living, sleeping, cooking, or eating therein. Page 3 of 11 13. “Stand Alone Lead Liability Coverage” means an insurance policy which provides coverage only for the legal liability of owners of dwellings for losses to third parties arising from exposure to lead. 14. “Surplus Lines Broker” means a person or corporation licensed by the Department pursuant to R.I. Gen. Laws § 27-3-38 through 42 to place insurance with approved surplus lines insurers. Section 4 Policy Exclusions for Lead Poisoning Any policy form approved by the Department prior to the effective date of this Regulation which excludes liability coverage for Lead Poisoning, shall terminate on June 30, 2004. As of July 1, 2004 if a liability policy is issued insuring a Compliant Rental Property then coverage for Lead Poisoning shall be included in the policy. If a Rental Property is Non-Compliant, coverage for Lead Liability may be excluded by endorsement in accordance with R.I. Gen. Laws § 42-128.1-9 and this Regulation. Section 5 Insurance Coverage for Lead Poisoning in Compliant Properties 1. With respect to Compliant Rental Properties, insurers issuing commercial and personal lines liability insurance policies covering Rental Properties are not permitted to insure said Rental Property against liability risks and refuse to issue Lead Liability Coverage if the property owner provides any form of Prima Facie Evidence of Compliance as defined herein. 2. R.I. Gen. Laws § 42-128.1-9 does not restrict an insurer’s ability to establish and utilize underwriting guidelines. An insurer may refuse to issue insurance for a Rental Property even if the property owner provides any form of Prima Facie Evidence of Compliance. Such refusal must be in accordance with the insurers’ underwriting guidelines, Section 5(1) above and not in violation of any other insurance laws and/or regulations including but not limited to R.I. Gen. Laws § 27-29-1 et seq which restricts insurers from declining risks based upon age or geographic location. Section 6 Insurance Coverage for Lead Poisoning in Noncompliant Properties 1. With respect to Non-Compliant Rental Properties, an insurer issuing commercial and personal lines liability policies may decline to insure the Non-Compliant Rental Property against liability risks or may accept general liability coverage but reject that portion of the risk related to Lead Liability Coverage. 2. If the insurer declines to issue coverage for Lead Liability, the insurer must assist the insured in placing Lead Liability coverage through the FAIR Plan. The insurer’s duty to assist the insured in placing the insurance through the FAIR Plan may be accomplished by providing a written notice to the insured either directly by the insurer or through one of the insurer’s own agents or brokers, in at Page 4 of 11 least 16-point type, clearly stating that the policy coverage does not include Lead Liability and that the insured is eligible for Lead Liability coverage through the FAIR Plan unless otherwise ineligible as provided in Section 10 of this Regulation. The notice must be clearly identifiable by the insured. The notice must provide information on how to contact the FAIR Plan, including address and telephone number(s), including a toll free number. The notice must also comply with Regulations 38 and 97, where applicable. Such written notice shall be given on each renewal of the policy, unless the insurer decides to accept the Lead Liability Coverage. Section 7 Limits of Coverage 1. For Compliant Properties, if Lead Liability is included in the policy coverage pursuant to the requirements of this Regulation and R.I. Gen. Laws § 42-128.1-9, the coverage must be equal to the underlying policy limits of Liability Coverage for personal injury/bodily injury coverage. Such coverage is not severable by either the insured or the insurer. 2. With regard to Non-Compliant Rental Properties, if an insurer offers Lead Liability in the policy coverage pursuant to the requirements of this Regulation and R.I. Gen. Laws § 42-128.1-9, the coverage offered must be equal to the underlying policy limits of Liability Coverage for personal injury/bodily injury coverage. For Non-Compliant rental properties, Lead Liability coverage is severable from general liability at the discretion of the insured or the insurer as long as the requirements of Section 6 of the Regulation are met. Section 8 Rates and Forms for Lead Coverage 1. Insurers shall file with the Department rates for Lead Liability Coverage for approval. The rates filed shall not be excessive, inadequate or unfairly discriminatory and shall give consideration to the standards set forth in R.I. Gen. Laws § 42-128.1-9(e). Approval from the Department must be obtained before the rates may be used. 2. Insurers shall file with the Department the proposed language of endorsements for Lead Liability exclusions for Non-Compliant properties. Approval from the Department must be obtained before the form may be used. 3. Insurers shall file rates and forms for proposed coverage and endorsements no later than October 1, 2003. Subsequent to initial approval, all changes to rates and/or forms must be filed with and approved by the Department before being used. 4. Insurers that qualify for an exemption from filing requirements pursuant to R.I. Gen. Laws § 27-65-1 et seq. are subject to this Regulation and shall make the filings required hereunder. Page 5 of 11 Section 9 Information to be Filed with the Department A. Each insurer writing liability insurance for Rental Properties in Rhode Island shall file with the Department annually, prior to February 1 of each year, a report on the form attached hereto as Exhibit A, detailing the following information with regard to personal and commercial lines for the prior calendar year. 1. The number of policies in force covering Rental Properties for which the insurer wrote any Liability Coverage and the total direct written premium for the liability coverage provided; 2. The number of policies in force covering Rental Properties for which the insurer wrote liability coverage and excluded Lead Liability Coverage by endorsement and the total direct written premium for the liability coverage provided; 3. The number of Rental Properties for which notice of eligibility to the FAIR Plan was given by the insurer; 4. The average premium for policies including Lead Liability Coverage; 5. The average premium for policies excluding Lead Liability Coverage; 6. Claim information including the number of claims made, settlements or judgments under Lead Liability Coverage and the total amount of payments made for Lead Liability during the calendar year; 7. Disclosure of underwriting rules restricting business based upon age or geographic location of the risk and the legal basis for said rule; and 8. Identification of the type(s) of Prima Facie Evidence of Compliance which the insured is accepting for Compliant Rental Properties. B. Each Surplus Lines Broker procuring liability insurance for Rental Properties in Rhode Island shall file with the Department annually, prior to February 1 of each year, a report on the form attached hereto as Exhibit B, detailing the following information with regard to personal and commercial lines for the prior calendar year. 1. The number of policies in force covering Rental Properties for which the Surplus Lines Broker placed any liability coverage and the total direct written premium for the liability coverage provided; 2. The number of policies in force covering Rental Properties for which the Surplus Lines Broker placed liability coverage which excluded Lead Page 6 of 11 Liability Coverage and the total direct written premium for the liability coverage provided; 3. The average premium for policies procured including Lead Liability Coverage; 4. The average premium for policies procured excluding Lead Liability Coverage; 5. The identity of Approved Surplus Lines Insurers with whom the Broker placed insurance for Rental Properties by policy count. C. The FAIR Plan shall file with the Department annually, prior to February 1 of each year, a report, detailing the following information with regard to personal and commercial lines for the prior calendar year. 1. The number of applications received for either Stand Alone Lead Liability Coverage or general liability coverage which includes Lead Liability Coverage; 2. The number of Rental Properties for which the FAIR Plan wrote general liability coverage; 3. The number of Rental Properties for which the FAIR Plan wrote general liability coverage which included Lead Liability Coverage; 4. The number of Rental Properties for which the FAIR Plan wrote Stand Alone Lead Liability Coverage; 5. With regard to the Stand Alone Lead Liability policies, the identity of the insurer writing the general liability insurance reported as the number of policies per insurance company; 6. The number of Rental Properties for which Lead Liability Coverage was offered by the FAIR Plan and rejected by the insured; 7. The number of properties rejected for Lead Liability Coverage by the FAIR Plan in accordance with Section 10 of this Regulation; 8. The average premium for Stand Alone Lead Liability Coverage; 9. The average premium for general liability coverage which included Lead Liability Coverage; 10. The number of Compliant Rental Properties for which the FAIR Plan wrote Stand Alone Lead Liability Coverage; Page 7 of 11 11. The number of Non-Compliant Rental Properties for which the FAIR Plan wrote Stand Alone Lead Liability Coverage; 12. The geographic location, by zip code or other method approved in advance by the Department, of all Compliant Rental Properties for which the FAIR Plan provided Lead Liability Coverage; and 13. The geographic location, by zip code or other method approved in advance by the Department, of all Non-Compliant Rental Properties for which the FAIR Plan provided Lead Liability Coverage D. An insurer or Surplus Lines Broker that fails to make such filing will be subject to administrative action pursuant to R.I. Gen. Laws §§ 42-14-16 and 42-35-1 et seq. Section 10 Property Owners Who Are Ineligible for Lead Liability Coverage The FAIR Plan is not required to issue Lead Liability Coverage to any property owner who fails to remediate the property after a notice of violation issued subsequent to June 30, 2004. If a notice of violation is issued subsequent to June 30, 2004 and the property owner has not brought the property into compliance within ninety (90) days of the issuance of the notice, any insurance policy issued to that property owner shall be subject to cancellation and/or non-renewal. If a residential rental property owner owns only one (1) property and has one (1) unremediated dwelling unit at which a child was poisoned prior to July 2, 2004, that property owner shall be ineligible for Lead Liability Coverage. If a residential rental property owner owns more than one (1) property and has more than two (2) unremediated dwelling units at which a child was poisoned prior to July 1, 2002, that property owner shall be ineligible for Lead Liability Coverage. Section 11 FAIR Plan The FAIR Plan shall be obligated to provide Lead Liability Coverage not only for Non-Compliant Rental Properties but also for Compliant Rental Properties either under its own homeowner policy or a Stand Alone Lead Liability policy. The FAIR Plan shall be permitted to use reasonable underwriting guidelines as approved by the Department to underwrite the property. The Stand Alone Lead Liability policy and the underwriting guidelines shall be in accordance with Regulation 15. Section 12 Severability If any section, term, or provision of this Regulation should be adjudged invalid for any reason, that judgment should not effect, impair, or invalidate any remaining section, term, or provision, which shall remain in full force and effect. Page 8 of 11 Section 13 Effective Date This Regulation shall be effective twenty (20) days from the date of filing with the Secretary of State. The filing requirements of Section 9 of this Regulation shall be effective for the 2005 calendar year. Therefore, the first annual filings under Section 9 must be made on February 1, 2006. EFFECTIVE DATE: April 8, 2003 Page 9 of 11 EXHIBIT A Information Concerning Lead Liability Coverage Name of Insurer: _______________________________________________________ NAIC/Group Number: ___________________________________________________ Calendar Year for Which Information is Reported: ____________________________________ Date of Submission: ____________________________________________________________ Identity of Person Completing Form (name and telephone number) ________________________ Each individual insurer must provide the following information regarding residential Rental Properties built prior to 1978. This information may not be reported on a group basis. The following information is for commercial lines only Policies in force covering Rental Properties: number _______________ direct written premium ________ Policies in force covering Rental Properties that exclude Lead Liability Coverage: number _______________ direct written premium ________ Number of Rental Properties for which notice of eligibility to the FAIR Plan was given: ______________ Average Premium for Commercial Lines including Lead Liability Coverage: _______________________ Average Premium for Commercial Lines excluding Lead Liability Coverage: _______________________ Number of Claims: ________ Settlements: _________ Judgments: _________ Total Claim Payments: __________________________ Does the insurer have underwriting rules restricting business based upon age or geographic location of risk? Yes □ No □ If the answer to the preceding question is in the affirmative, attach a copy of said rules to this form and indicate how such rules comply with R.I. Gen. Laws § 27-29-4 (iii) and (iv). Prima Facie Evidence of Compliance (indicate whether the insurer is accepting or rejecting Rental Properties when the property owner provides one of the following forms of compliance) Independent Clearance Inspection and Affidavit of Visual Inspection – Accepting □ Rejecting □ Clearance Exam Showing Mitigation - Accepting □ Rejecting □ Proof of Abatement - Accepting □ Rejecting □ Certificate of Presumptive Compliance - Accepting □ Rejecting □ Page 10 of 11 The following information is for personal lines only Policies in force covering Rental Properties: number _______________ direct written premium ________ Policies in force covering Rental Properties that exclude Lead Liability Coverage: number _______________ direct written premium ________ Number of Rental Properties for which notice of eligibility to the FAIR Plan was given: ______________ Average Premium for Personal Lines including Lead Liability Coverage: ___________________________ Average Premium for Personal Lines excluding Lead Liability Coverage: ___________________________ Number of Claims: ________ Settlements: _________ Judgments: _________ Total Claim Payments: __________________________ Does the insurer have underwriting rules restricting business based upon age or geographic location of risk? Yes □ No □ If the answer to the preceding question is in the affirmative, attach a copy of said rules to this form and indicate how such rules comply with R.I. Gen. Laws § 27-29-4 (iii) and (iv). Prima Facie Evidence of Compliance (indicate whether the insurer is accepting or rejecting Rental Properties when the property owner provides one of the following forms of compliance) Independent Clearance Inspection and Affidavit of Visual Inspection – Accepting □ Rejecting □ Clearance Exam Showing Mitigation - Accepting □ Rejecting □ Proof of Abatement - Accepting □ Rejecting □ Certificate of Presumptive Compliance - Accepting □ Rejecting □ Page 11 of 11 EXHIBIT B Information Submitted by Surplus Lines Broker Regarding Lead Liability Coverage Name of Broker: _____________________________ Surplus Lines Broker License Number: ____________________________ Calendar Year ______________ Date Submitted: ________________________ The following information must be submitted regarding residential Rental Properties built prior to 1978. The following information is for commercial lines only Policies in force covering Rental Properties: number _______________ direct written premium ________ Policies in force covering Rental Properties that exclude Lead Liability Coverage: number _______________ direct written premium ________ Average Premium for Commercial Lines Policies including Lead Liability Coverage: _________________ Average Premium for Commercial Lines Policies excluding Lead Liability Coverage: _________________ Name of Approved Surplus Lines Insurer Number of Insurance Policies Written on Rental Properties The following information is for personal lines only Policies in force covering Rental Properties: number _______________ direct written premium ________ Policies in force covering Rental Properties that exclude Lead Liability Coverage: number _______________ direct written premium ________ Average Premium for Personal Lines Policies including Lead Liability Coverage:____________________ Average Premium for Personal Lines Policies excluding Lead Liability Coverage: ____________________ Name of Approved Surplus Lines Insurer Number of Insurance Policies Written on Rental Properties