Lapsed Errors And Omissions Insurance

(1) Licensees Who Fail to Maintain Errors & Omissions (E&O) Insurance (a) Penalty Fees for Reinstatement of a Suspended License: Any licensee whose license is suspended for more than thirty (30) days pursuant to T.C.A. § 62-13-112 for failure to maintain E&O insurance must provide proof of insurance that complies with the LICENSING CHAPTER 1260-01 required terms and conditions of coverage to the Commission and must pay the following applicable penalty fee in order to reinstate the license: 1. For a license suspended due to a lapse in E&O coverage for more than thirty (30) days but within one hundred twenty (120) days: (i) Two Hundred Dollars ($200.00) if the licensee’s insurance carrier back- dated the licensee’s E&O insurance policy to indicate continuous coverage; or (ii) Four Hundred Dollars ($400.00) if the licensee’s insurance carrier did not back-date the licensee’s E&O insurance policy to indicate continuous coverage. (iii) Two Hundred Dollars ($200.00) if the licensee is broker-released, retires, or voluntarily surrenders their license. 2. For a license suspended due to a lapse in E&O coverage for more than one hundred twenty (120) days but less than six (6) months, a Five Hundred Dollar ($500.00) penalty fee; 3. For a license suspended due to a lapse in E&O coverage for six (6) months up to one (1) year, a Five Hundred Dollar ($500.00) penalty fee plus a penalty fee of One Hundred Dollars ($100.00) per month, or portion thereof, for months six (6) through twelve (12). (b) Conditions for Reissuance of a Revoked License: Upon revocation of a license pursuant to T.C.A. § 62-13-112 for failure to maintain E&O insurance, any individual seeking reissuance of such license shall: 1. Reapply for licensure, including payment of all fees for such application; 2. Pay the penalty fees outlined in subparagraph (a) above; 3. Pass all required examinations for licensure, unless the Commission waives such examinations; and 4. Meet any current education requirements for licensure, unless the Commission waives such education requirements. (2) Principal Brokers of Licensees Who Fail to Maintain E&O Insurance: (a) A principal broker shall ensure, at all times, that all licensees affiliated with that principal broker shall hold E&O insurance as required by law. A failure to do so shall constitute failing to exercise adequate supervision over the activities of a licensed affiliated broker. (b) For any principal broker who has an affiliated licensee whose license is suspended pursuant to T.C.A. § 62-13-112 for failure to maintain E&O insurance, there shall be no penalty to the principal broker if either of the following two (2) circumstances occur within thirty (30) days of that affiliated licensee’s license suspension: 1. The affiliated licensee has provided proof of insurance which complies with the required terms and conditions of coverage to the Commission; or LICENSING CHAPTER 1260-01 2. The principal broker releases that affiliated licensee whose license is suspended for failure to maintain E&O insurance. (c) After the aforementioned thirty (30) day period, if the affiliated licensee has neither provided the required proof of insurance nor been released by the principal broker, the Commission authorizes a formal hearing on the matter of the principal broker’s failure to exercise adequate supervision over an affiliated licensee who failed to maintain E&O insurance but also authorizes that a consent order shall be sent to the principal broker, offering that principal broker the opportunity to settle the matter informally, thereby making formal hearing proceedings unnecessary, according to the following schedule: 1. Notwithstanding the provisions of Tenn. Comp. R. & Regs. 1260-02-.32, if the principal broker’s affiliated licensee reinstates his or her license, or the principal broker releases the affiliated licensee, more than thirty (30) days after suspension but within one hundred twenty (120) days after suspension, the consent order shall contain the following civil penalties: (i) Two Hundred Dollars ($200.00) if the affiliated licensee’s insurance carrier back-dated the licensee’s E&O insurance policy to indicate continuous coverage; (ii) Four Hundred Dollars ($400.00) if the affiliated licensee’s insurance carrier did not back-date the licensee’s E&O insurance policy to indicate continuous coverage; or (iii) Two Hundred Dollars ($200.00) if the affiliated licensee is broker-released, retires, or voluntarily surrenders their license. 2. If the principal broker’s affiliated licensee reinstates his or her license, or the principal broker releases the affiliated licensee, more than one hundred twenty (120) days after suspension, the consent order referenced in this subparagraph (c) above shall contain a civil penalty of one thousand dollars ($1,000.00). 3. Where a principal broker does not accept any authorized consent order for failure to supervise an affiliated licensee’s E&O insurance, the hearing shall be held before an administrative law judge sitting alone, pursuant to the Uniform Administrative Procedures Act, compiled at title 4, chapter 5. 4. Nothing in this rule shall be construed as limiting the Commission’s authority to: (i) Authorize a consent order in a different amount than listed herein; (ii) Seek any other legal discipline—including revocation or suspension of a license—for a failure to supervise an affiliated licensee’s E&O insurance; (iii) Review an initial order under the Uniform Administrative Procedures Act; or (iv) Not seek discipline against a principal broker for failure to supervise an affiliated broker’s maintenance of E&O insurance if the Commission determines that such discipline is not appropriate under the facts of that matter.