The Vermont Statutes Online

Title 8: Banking and Insurance

Chapter 105: Fire and Casualty Insurance

• Subchapter 001: GENERALLY

• § 3861. Discrimination and rebates prohibited

  A fire or casualty insurance company doing business in the State shall not make or permit any distinction or discrimination in favor of individuals, between insureds of the same class, in the amount or payment of premiums, or rates charged for policies of insurance, or in the dividends or other benefits payable thereon, or in any of the terms and conditions of the contracts it makes; nor shall a fire or casualty insurance company doing business in this State or an agent thereof make a contract of insurance, or agreement as to such contract, other than as plainly expressed in the policy issued thereon; nor shall such company or agent pay or allow, or offer to pay or allow, and no person shall accept as an inducement to insurance, a rebate or premium payable on the policy, or a special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement not specified in the policy contract of insurance. A person who violates any of the provisions of this section shall be subject to an administrative penalty of not more than $2,000.00. (Amended 1995, No. 167 (Adj. Sess.), § 8.)

• § 3862. Minimum capital stock

  A domestic stock fire insurance company shall not be organized with a capital stock less than $200,000.00 paid in, in cash. (Amended 1965, No. 65, eff. May 19, 1965.)

• § 3863. Repealed. 1967, No. 344 (Adj. Sess.), § 8.

• § 3864. Penalty for violation of sections 3463 and 3862

  Such an insurance company failing to comply with the requirements of sections 3463 and 3862 of this title, within 60 days after notice from the Commissioner, shall reinsure its outstanding risks and proceed to liquidate its affairs, or the Commissioner may apply to the Superior Court for an injunction against such company and its officers. Subsequent proceedings shall be had in accordance with the general provisions of law relating to insurance companies.

• § 3865. Mill mutual; fees

  A mutual fire insurance company of another state which insures only factories or mills, or property connected with such factories or mills, may be admitted to transact business in this State upon complying with the conditions set forth in the statutory laws of this State, except that in lieu of all other taxes, licenses, and fees whatsoever, it shall pay to the Commissioner:

  (1) for filing its charter and bylaws, a fee of $30.00;

  (2) for filing a statement under oath of its president and secretary, showing its financial condition and standing upon forms furnished by him or her, a fee of $20.00; and annually thereafter on or before March 31, it shall pay to the Commissioner a fee of $20.00 for the filing of its annual statement and an annual license fee of $5.00;

  (3) its fire marshal tax.

• § 3866. Returns, rate of tax, exemption

  Such companies shall also make annual returns to the Commissioner of Taxes in form satisfactory to him or her, and shall pay to the Commissioner of Taxes annually, in the month of February, a tax at the rate of two percent on gross premium deposits upon policies on risks located in this State in force on December 31 next preceding, after deducting the unabsorbed portion of such premium deposits computed at the average rate of return actually made on annual policies expiring during such year. However, none of the requirements of any resident agent law of this State shall apply to such a company so long as it insures only factories or mills, or property connected with such factories or mills.

• § 3867. Proof of loss

  A fire insurance policy shall not be void by reason of failure to make and deliver a proof of loss to the insurer, until the insurer notifies the insured in writing to make and deliver proof of loss in accordance with the terms of the policy and the insured fails to make and deliver such proof of loss within 30 days from the time of receiving such notice. An omission or defect in such proof of loss shall not render the policy void or constitute a defense to an action thereon, unless the insurer notifies the insured thereof in writing within 10 days after receiving such proof of loss, particularly specifying in such notice all the omissions and defects in such proof of loss and the insured neglects for 30 days after receiving such notice to make and deliver a new proof of loss wherein such omissions and defects are corrected.

• § 3868. When loss due and payable

  The amount of the loss under a fire insurance policy shall be due and payable in 60 days after receipt by the insuring company of satisfactory proofs, and the insured may commence an action after the expiration of that time to recover the same.

• § 3869. Contracts considered made in Vermont

  Every fire insurance contract written on any property located in this State shall be deemed to be made, executed, and delivered in this State.

• §§ 3870-3878. Repealed. 1973, No. 217 (Adj. Sess.), § 23.

• § 3879. Cancellation of fire and casualty insurance

  (a) A notice of cancellation of a policy, to which section 3880 of this title applies, unless that policy is otherwise controlled by chapter 113, subchapter 2 of this title, shall be effective only if it is based on one or more of the following reasons:

  (1) nonpayment of premium; or

  (2) fraud or material misrepresentation affecting the policy or in the presentation of a claim thereunder, or violation of any of the terms or conditions of the policy; or

  (3) substantial increase in hazard provided that cancellation for this reason shall be effective only after prior approval of the Commissioner.

  (b) This section shall not apply to any policy or coverage which has been in effect less than 60 days at the time notice of cancellation is mailed or delivered by the insurer unless it is a renewal policy.

  (c) This section shall not apply to nonrenewal. (Added 1977, No. 223 (Adj. Sess.), § 4.)

• § 3880. Notice of cancellation

  (a) No notice of cancellation of a fire, casualty, marine, or multi-peril policy of insurance, unless otherwise provided and controlled by chapter 113, subchapter 2 of this title, shall be effective unless mailed or delivered by the insurer to the named insured at least 45 days prior to the effective date of cancellation; provided, however, that where cancellation is for nonpayment of premium or substantial increase in hazard at least 15 days’ notice of cancellation shall be given. In all instances, the reason or reasons for cancellation shall accompany or be included in the notice of cancellation. An insurer shall not be held liable in any claim or suit for damages arising solely from the insurer’s compliance with the requirement that the reason for cancellation be specified. This section shall not apply to workers’ compensation policies.

  (b) The Commissioner shall have the authority to waive any provision of subsection (a) of this section upon the written request of an insurer specifying the reasons therefor.

  (c) This section shall not apply to nonrenewal. (Added 1977, No. 223 (Adj. Sess.), § 5; amended 1981, No. 165 (Adj. Sess.), § 1; 1989, No. 171 (Adj. Sess.), § 1, eff. Sept. 1, 1990.)

• § 3881. Notice of nonrenewal

  No insurer shall refuse to renew a policy of insurance at its expiration or anniversary if written for a term of more than one year unless such insurer or its agent shall mail or deliver to the named insured at the address shown in the policy, at least 45 days’ advance notice of its intention not to renew. This section shall not apply if other provisions of chapter 113, subchapter 2 of this title are applicable and controlling or if the insurer has manifested its willingness to renew, or in case of nonpayment of premium, or if the insured fails to pay any advance premium required by the insurer for renewal. However, notwithstanding the failure of an insurer to comply with this section, the policy shall terminate on the effective date of any other insurance policy with respect to any property designated in both policies. Renewal of a policy shall not constitute a waiver or estoppel with respect to grounds for cancellation which existed before the effective date of such renewal. (Added 1977, No. 223 (Adj. Sess.), § 6; amended 1989, No. 171 (Adj. Sess.), § 2, eff. Sept. 1, 1990.)

• § 3882. Renewal policies

  (a) If the insurer has the necessary information to issue the renewal policy, the insurer shall confirm in writing at least 45 days prior to expiration its intention to renew the policy and the premium at which the policy is to be renewed. The insured shall have the right to renew the policy at this premium.

  (b) An insurer not complying with subsection (a) of this section shall grant its insured renewal coverage at the rate or premium in effect under the expiring or expired policy or at rates lawfully in effect on the expiration date, which have been approved by the Commissioner. This shall be done on a pro rata basis and shall continue for 45 days after the insurer confirms renewal coverage and premium. This subsection shall not apply if the insured accepts the renewal policy.

  (c) An insurer may transfer a policy to an affiliate, as defined by subdivision 3681(1) of this title, upon expiration of the policy without providing notice of nonrenewal, provided that:

  (1) the rating by A. M. Best or a similarly qualified rating service of the affiliate is equal to or better than the transferring insurer;

  (2) there is no diminution in the terms and conditions of coverage; and

  (3) notice of the transfer is provided to the insured at least 45 days prior to the transfer by first class mail, and in connection with such notice the insurer:

  (A) complies with any requirements of federal law relating to notice of adverse credit determination;

  (B) includes in the notice of transfer a telephone number of the insurer, or the producer, if any, and a toll free telephone number of the insurer in the case of personal lines policies, where the insured can learn additional information concerning the transfer and the reasons for the transfer; and

  (C) complies with the other provisions of this section relating to renewal policies. (Added 1977, No. 223 (Adj. Sess.), § 7; amended 1989, No. 171 (Adj. Sess.), § 3, eff. Sept. 1, 1990; 2007, No. 135 (Adj. Sess.), § 1.)

• § 3883. Notice requirements

  When notice required under section 3880 or 3881 of this title is provided by mail, such notice shall be by certified mail, except that in the case of cancellation for nonpayment of premium, notice shall be by certified mail, certificate of mailing, or any other similar first-class mail tracking method used or approved by the U.S. Postal Service, including Intelligent Mail barcode Tracing (IMb Tracing). A certificate of mailing from the U.S. Postal Service does not include a certificate of bulk mailing. (Added 1989, No. 171 (Adj. Sess.), § 5, eff. Sept. 1, 1990; amended 2023, No. 110 (Adj. Sess.), § 21, eff. July 1, 2024.)

• § 3884. Required renewals; continuation of agents’ contracts and brokers’ accounts

  (a) In the event of an insurer’s cancellation of an agent’s contract or a broker’s account placement authority with such insurer, each policyholder of such an agent or broker shall be entitled to renew his or her policy, upon timely payment of premium, for one additional annual policy period commencing at the next annual anniversary date of the policy; except that an insurer shall have the right to cancel such policy pursuant to section 3879 and chapter 128, subchapter 3 of this title.

  (b) The terminated agent or broker shall be entitled to receive commissions on account of all business continued or written pursuant to this section at the insurer’s prevailing commission rate for such line of insurance. However, this subsection shall not apply to an agent who agrees to represent exclusively one insurer or a group of insurers under common management or an agent or broker whose license has been revoked by the commissioner or whose contract or account has been terminated for insolvency, abandonment, gross and willful misconduct, or failure to pay over to the insurer monies due to the insurer after receipt of a written demand therefor.

  (c) If, after hearing, the Commissioner finds that the financial condition of the insurer is insecure to the extent that continuation of agents’ contracts and brokers’ accounts represent a potential hazard to the policyholders in this State, or that any other condition of the insurer represents such a hazard, the Commissioner may issue an order relieving the insurer from its obligation to provide the renewal policies otherwise required by subsection (a) of this section. (Added 1985, No. 230 (Adj. Sess.), § 1.)

• § 3885. Penalties

  A person who violates a provision of section 3879, 3880, 3881, 3882, 3883, or 3884 of this title may be subject to an administrative penalty of $2,000.00 for each violation. (Added 1995, No. 167 (Adj. Sess.), § 8a.)

• Subchapter 002: COOPERATIVE FIRE INSURANCE CORPORATIONS

• § 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.)

• § 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 which shall include the word “cooperative.” (Amended 1981, No. 6, § 2.)

• § 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.

• § 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.)

• § 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.

• § 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)-(a)(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.)

• §§ 3917-3919. Repealed. 1981, No. 6, § 14.

• § 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.)

• §§ 3921-3923. Repealed. 1981, No. 6, § 14.

• § 3924. Repealed. 1999, No. 86 (Adj. Sess.), § 6, eff. April 27, 2000.

• § 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 which 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.)

• § 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 which 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.)

• § 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.)

• § 3928. Repealed. 1981, No. 6, § 14.

• § 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.)

• § 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.)

• § 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 chapter 105, subchapter 2 of this title 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.)

• § 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.)

• Subchapter 003: FIRE INSURANCE VALUATIONS

• § 3961. Valuation of property

  Whenever a fire insurance company shall write a policy covering a building in this State and shall attach thereto the so-called co-insurance clause, or any similar clause requiring the insured to carry insurance in amount equal to any percentage of the value of such building, the insured may ask for a valuation of such building insured, which valuation may be agreed upon in writing by the insuring company and the insured, and shall be the valuation of the property insured for the purpose of fixing the liability of the company during the life of the policy.

• § 3962. Application to Commissioner

  In case the insuring company and the insured do not agree on the valuation, as provided in section 3961 of this title, the insured may file with the Commissioner a request for a valuation, which shall contain a complete description of the building showing location, the name of the company, and the agent, if any, through whom the insurance is placed and the date of the policy.

• § 3963. Time and place for making valuation

  Upon the receipt of such a request, the Commissioner shall appoint a time and place for making such valuation which shall be not later than 15 days thereafter, unless an earlier date is agreed upon by the parties interested, and he or she shall give proper notice thereof to all concerned.

• § 3964. Appointment of appraisers to determine valuation

  The owner of a building and the insurance company or agent shall each file with the Commissioner a list of not less than three disinterested persons competent to act as appraisers of the building described in the notice. The Commissioner shall select one person from each of the lists so submitted who shall together act as appraisers of the property, and, in case these two cannot agree, he or she shall select a third competent and disinterested person who shall act as third appraiser only as to matters regarding which the two appraisers first appointed cannot agree.

• § 3965. Appraisers’ award and expenses

  An award in writing of any two appraisers, when filed with the Commissioner, shall determine the sound value of the building. Each of the two appraisers first appointed shall be paid by the party nominating him or her and the third appraiser shall be paid by the parties equally.

• § 3966. Duration of valuation fixed

  The value of any building fixed as provided in sections 3964 and 3965 of this title shall be considered the true value of the building during the term for which any fire insurance policy is issued to cover thereon, if issued within three years from the date of such award, and such value shall continue as the basis of valuation for the purpose of ascertaining the amount of insurance required under a co-insurance clause until a new valuation has been made on an application by the insured or by the company, or agent placing the insurance thereon, provided that a new valuation shall not be required oftener than once in three years.

• § 3967. Effect on rate

  The rate charged for a fire insurance policy covering a building valued in accordance with the provisions of section 3964 of this title shall not be increased above the rate fixed for the same form of policy, containing or having attached thereto a co-insurance clause, where no request has been made to have the value of the property fixed.

• § 3968. Penalty for violations

  If an insurance company violates a provision of sections 3961-3967 of this title or if the Commissioner is satisfied, after a hearing, that a company declines or refuses to write insurance on any building because of the requirement that the value of such building shall be agreed upon as provided in section 3964 of this title, the Commissioner shall suspend its authority to do business in this State for such period, not exceeding one year, as he or she may deem advisable.

• Subchapter 004: RESERVE FUND

• § 4001. Assessments; accumulations; limitation

  Domestic mutual fire insurance companies, in any year in which the assessments required to pay losses and expenses would not equal five percent of the face of its premium notes, may lay assessments not to exceed five percent and carry the amount not necessary to pay losses and expenses of such year to a surplus account for the payment of future fire losses and expenses. Such surplus shall at no time exceed 10 percent of the face of the premium notes then in force.

• § 4002. Use of fund

  In a year in which the fire losses and expenses of a company accumulating a surplus under the provisions of section 4001 of this title shall exceed the amount of a three percent assessment on the face of the premium notes assessable for such losses and expenses, such excess, to an amount not exceeding three percent by such premium notes, in the discretion of the directors of such company, may be taken from such surplus and applied towards the payment of such excess of losses and expenses.