Chapter 612

612.31(3)(a) (a) Liability insurance. Insurance against loss or damage for which the insured is liable caused by the sickness, personal injury or death of any other person or by loss or damage to the property of the other person.

612.31(3)(b) (b) Errors and omissions. Insurance against loss, expense and liability resulting from errors, omissions or neglect in the performance of any official, vocational or professional service, except loss or damage covered by par. (a).

612.31(3)(c) (c) Medical payments and other supplemental insurance. Insurance against loss, damage and expense, including loss of time, arising out of bodily injury to, or sickness, disease or death of the insured or another person, caused by accident, for which the insurer assumes an obligation to pay irrespective of the member’s legal liability therefor.

612.31(4) (4) Excluded business. Town mutuals may not transact the following insurance business:

612.31(4)(a) (a) Life insurance and annuities;

612.31(4)(b) (b) Disability insurance except under sub. (3) (a) and (c);

612.31(4)(c) (c) Liability insurance except under sub. (3) (a) and (b);

612.31(4)(d) (d) Automobile liability insurance except under sub. (3) (a);

612.31(4)(e) (e) Worker’s compensation insurance;

612.31(4)(f) (f) Elevator liability or steam boiler liability insurance;

612.31(4)(g) (g) Ocean marine insurance;

612.31(4)(h) (h) Inland marine insurance except as a supplementary coverage to property in a fixed location insured under sub. (1);

612.31(4)(i) (i) Fidelity or surety insurance;

612.31(4)(j) (j) Credit insurance;

612.31(4)(k) (k) Mortgage guaranty insurance;

612.31(4)(L) (L) Title insurance;

612.31(4)(m) (m) Assuming reinsurance; or

612.31(4)(n) (n) Loss, damage or liability caused by nuclear reaction or nuclear radiation or radioactive contamination, whether directly or indirectly resulting from an insured peril under the policy.

612.31(7) (7) Special requirements. The commissioner may, as a condition for transacting specified types of business, establish by rule special requirements concerning minimum surplus, the minimum number of members or insured risks, the operating territory, required reinsurance, and approval by a specified percentage of the members, so far as such requirements are necessary to protect the interests of insureds and the public.

612.31 History History: 1973 c. 22; 1975 c. 147 s. 54; 1975 c. 372; 1979 c. 102 s. 236 (5), (13); 1979 c. 110 s. 60 (11); 2015 a. 90.

612.32 612.32 Territory. No town mutual may insure any risks located outside the territory authorized in its articles, except:

612.32(1) (1) Real property outside territory. Town mutuals may insure real property and contents in villages and cities partially located in the specified territory, real property and contents in an immediately adjoining county owned by a member who has real property and contents insured by the town mutual within the specified territory, and real property and contents used exclusively by the member and his or her family for recreational purposes.

612.32(2) (2) Temporary removal.

612.32(2)(a) (a) Farm property. A town mutual may provide coverage for livestock while temporarily located outside the town mutual’s territory, for farm products while temporarily located for a period not exceeding 2 years outside the town mutual’s territory, and for farm machinery and farm vehicles while temporarily located for a period not exceeding one year outside its territory, subject to limitations in the policy or in the articles or bylaws with respect to the distance from the territory to which the property may be removed without suspension of the coverage.

612.32(2)(b) (b) Household property. A town mutual may provide coverage for household goods and effects and other personal property while temporarily removed from the location stated in the policy, whether within or outside the town mutual’s territory.

612.32(3) (3) Nonproperty coverage. A town mutual may write nonproperty insurance under s. 612.31 (3) without regard to its territorial limits provided the coverage is included in a policy providing principally coverage under s. 612.31 (1) on property within its territory.

612.32 History History: 1973 c. 22; 1979 c. 102 s. 236 (13); 1979 c. 110 s. 60 (11); 1979 c. 355; 1981 c. 218; 1985 a. 189; 2015 a. 90.

612.33 612.33 Reinsurance.

612.33(1) (1) Permitted and prohibited reinsurance. A town mutual may cede reinsurance only to an insurer authorized to do business in this state under ch. 611 or 618, or under arrangements which are approved in advance by the commissioner and which are subject to the controls the commissioner prescribes.

612.33(2) (2) Required reinsurance.

612.33(2)(a) (a) Windstorm and hail insurance. If a town mutual provides coverage against windstorm or hail, or other perils involving a similar potential for catastrophic losses, which are designated by the commissioner by rule, it shall obtain reinsurance for each such risk or else stop-loss reinsurance with an insurer authorized to do such business in this state, to an extent or in an amount specified by the commissioner by rule. The commissioner may prescribe detailed requirements for such reinsurance by rule or by order.

612.33(2)(b) (b) Nonproperty insurance. To the extent that a town mutual provides insurance under s. 612.31 (3), it shall obtain reinsurance of at least a 90 percent proportional share of each risk or it shall obtain excess of loss reinsurance with a retention in a similar dollar amount with an insurer authorized to do such business in this state, in either instance not to exceed $25,000 on each risk. The commissioner may permit a town mutual to retain a larger percentage or have a greater excess of loss retention level if he or she finds that the interests of the members will not be endangered thereby, or may require it to reinsure a larger percentage or obtain a lesser excess of loss retention level if he or she finds that the interests of the members make it advisable. The commissioner may by rule require other reinsurance.

612.33(2)(c) (c) Information for policyholder. Each policy providing coverage reinsured under par. (a) or (b) where the reinsurance is specifically applicable to the policy shall contain a clause advising the policyholder of the existence of the reinsurance and of his or her right to obtain the name and address of the reinsurer and the terms of the reinsurance.

612.33(2)(d) (d) Contents of reinsurance contract. Each required reinsurance contract that is specifically applicable to particular direct policies shall contain the following provisions:

612.33(2)(d)1. 1. That any claimant who could recover from the town mutual may, if the town mutual would be unable to fully satisfy its financial obligations to the claimant, recover from the town mutual, the reinsurer, or both, and that the claimant may recover from the reinsurer in the same way that he or she could recover from the town mutual but only in the amount for which the reinsurer is liable according to the terms of the reinsurance contract; and

612.33(2)(d)2. 2. That there shall be no diminution in the amount recoverable from the reinsurer under subd. 1. as a result of any delinquency proceedings pertaining to the town mutual, nor as a result of a breach of the reinsurance contract by the town mutual.

612.33(2)(e) (e) Approval of reinsurance contract. Every reinsurance contract required under this subsection shall be on a form approved by the commissioner under s. 612.51. The commissioner shall approve the form unless he or she finds that it would be contrary to the law or to the interests of insureds or the public.

612.33 History History: 1973 c. 22; 1979 c. 102 ss. 121, 236 (5), (13); 1979 c. 110 s. 60 (11); 1985 a. 189; 2001 a. 65; 2015 a. 90.

612.34 612.34 Rates.

612.34(1) (1) Regulation of assessments. Town mutuals need not file information under ch. 625 about special assessments unless ordered to do so by rule or order of the commissioner.

612.34(2) (2) Classifications. No classification plan for the purpose of determining premiums or assessment shares may be used unless it has been approved by the commissioner. The commissioner shall approve the plan unless he or she finds that it would be contrary to the law, including the standards of s. 625.11, or contrary to the interests of insureds or of the public.

612.34(3) (3) Mandatory advance premiums. Notwithstanding members’ liability for subsequent assessments under s. 612.54, town mutuals shall charge advance premiums expected to be adequate for any insurance for which they must obtain reinsurance under s. 612.33 (2) (b).

612.34 History History: 1973 c. 22; 1979 c. 102 s. 236 (5).

612.35 612.35 Borrowing and repayment. A town mutual may borrow money to pay losses or expenses, but before obtaining a loan which would bring its indebtedness, including debit balances from reinsurance arrangements under s. 612.33 (1) above 50 percent of its assets including assessments levied and collectible which are not overdue, it shall report the amount and purpose of the loan and all outstanding loans and debit balances to the commissioner. The commissioner may thereupon order the town mutual to levy an assessment to repay its indebtedness, establish a surplus, or both, within a reasonable time not less than 60 days after notice.

612.35 History History: 1973 c. 22.

612.36 612.36 Investments.

612.36(1) (1) General. Except as provided in sub. (2), town mutuals are subject to ch. 620 but shall be restricted as provided in s. 620.03 (1) unless individually exempted by the commissioner under s. 620.03 (2). In applying the restrictions of ch. 620 all assets of town mutuals shall be treated as if they were required to satisfy the compulsory surplus requirement, except to the extent that the commissioner by rule determines otherwise.

612.36(2) (2) Real estate. Section 620.23 (1) (c) does not apply to town mutuals. Except under s. 620.21 (2), no town mutual may own real estate that in the aggregate exceeds, in value measured at cost, one mill on the dollar of the insurance in force.

612.36 History History: 1973 c. 22; 1977 c. 339.

612.51 612.51 Contract forms.

612.51(2) (2) Rules. The commissioner may by rule prescribe forms to be used for policies, applications or for particular clauses.

612.51(3) (3) Articles and bylaws. The articles and bylaws shall be attached to or clearly incorporated by reference in every policy issued by a town mutual. They may be incorporated by reference only if each new member is supplied a copy of them and each policy specifies how additional copies may be obtained.

612.51(4) (4) Limited coverage. Recovery as to any or all items of personal property insured under a policy may be limited to a percentage of the value at the time of the loss, by a clearly expressed statement to that effect in that policy.

612.51 History History: 1973 c. 22; 1975 c. 375; 1979 c. 102 s. 236 (5); 2007 a. 168.

612.52 612.52 Undertaking to pay premiums and assessments. An applicant for insurance shall sign an undertaking agreeing to pay the advance premiums for any insurance on the applicant’s behalf and any assessment which may be levied in accordance with the terms of the policy, the articles, the bylaws, the statutes, and the reasonable expenses of collecting the assessment and any reasonable penalties for nonpayment. The undertaking may provide that for such collection the applicant shall waive any exemptions otherwise applicable to the property covered by the policy.

612.52 History History: 1973 c. 22; 1979 c. 102; 1981 c. 218.

612.53 612.53 Loss adjustment. The commissioner may promulgate rules for loss adjustment procedures.

612.53 History History: 1973 c. 22; 2015 a. 90.

612.54 612.54 Assessments.

612.54(1) (1) Conditions for levying assessments.

612.54(1)(a) (a) Mandatory assessments. The board of a town mutual shall levy an assessment whenever the amount of any loss or expense that is due exceeds the assets or whenever any required surplus is impaired.

612.54(1)(b) (b) Optional assessments. The board may at any time levy assessments as provided in the articles, for the purpose of paying losses or expenses, repaying borrowed money or creating a reasonable surplus.

612.54(2) (2) Limitations on assessability. The commissioner may by order authorize a town mutual to limit assessability of policies to a multiple of the advance premium if the town mutual’s surplus and business practices satisfy the commissioner of its solidity even with the limited assessability.

612.54(3) (3) Classification. Assessments may be levied at the same rate on all members or according to a classification plan approved under s. 612.34 (2). Assessments not exceeding the annual premium of the terminated policy may also be levied on persons whose membership has terminated within 4 months before the assessment, to pay losses incurred before the end of the month of termination of membership, to repay money borrowed to pay those losses and to pay other expenses.

612.54(4) (4) Notice. Notice of any assessment shall be sent by mail to each person subject to it, at least 30 days prior to the date it is payable. The notice shall state:

612.54(4)(a) (a) The rate of the assessment and the class of business or coverage to which it applies;

612.54(4)(b) (b) The reason for the assessment;

612.54(4)(c) (c) The amount to be paid by the individual person;

612.54(4)(d) (d) The date on which the assessment is due;

612.54(4)(e) (e) The person to whom payment is to be made; and

612.54(4)(f) (f) The consequences of failure to pay, as provided in sub. (5).

612.54(5) (5) Consequences of default.

612.54(5)(a) (a) Penalty. Every person who fails to pay his or her assessment within the time specified in the notice under sub. (4) shall pay to the town mutual a penalty of 2 percent of the assessment for each week or part thereof during which the assessment remains unpaid, until the accumulated penalty equals 100 percent of the assessment. Thereafter the amount of the assessment and accumulated penalty shall bear interest at the legal rate.

612.54(5)(b) (b) Termination of coverage. If, at the time of a loss, any assessment any part of which is to cover losses or expenses already incurred under the same policy or under a previous policy covering the same property and the same insureds has remained unpaid in any part for 30 days after it is due, the loss shall not be paid except to a mortgagee under a mortgagee clause that provides for payment despite policy defenses. The policy shall also terminate after the loss. This paragraph shall apply only to any assessment some part of which is to cover incurred losses or expenses.

612.54(5)(c) (c) Enforcement. An assessment shall constitute a personal obligation of each member and payment may be enforced by appropriate action.

612.54(6) (6) Notice to mortgagee. If losses under any policy are payable to a mortgagee despite default on an assessment and the assessment on the policy is not paid within the time specified in the notice to the member, the secretary shall, within 30 days after the expiration of such time, give like notice to the mortgagee. If the mortgagee pays the assessment within 20 days from the date of notice, the policy shall continue in force, as to the mortgagee’s interest only, until the expiration of its regular term, subject to subsequent assessments of which the mortgagee is notified, and to cancellation by either party.

612.54 History History: 1973 c. 22; 1979 c. 102 s. 236 (13), (21); 1981 c. 218.

612.61 612.61 Licensing of agents. Persons soliciting insurance for town mutuals shall comply with s. 628.05.

612.61 History History: 1973 c. 22; 1975 c. 371.

612.61 Annotation Legislative Council Note, 1975: Present s. 612.61 is replaced by s. 628.05, which is part of this act. The terms remain the same. It is preserved only as a cross reference to s. 628.05. [Bill 16-S]

612.70 612.70 Waiver of notice and informal action. Sections 181.0704, 181.0706, 181.0821 and 181.0823 apply to town mutuals. Section 181.0821 applies to a committee of the board except that references to “board” shall be read as “committee”.

612.70 History History: 1973 c. 22; 1997 a. 79.

612.81 612.81 Register of deeds. No town mutual need file any corporate documents with any register of deeds for corporation law or regulatory purposes. All such documents held by registers of deeds on May 24, 1973, may be disposed of under s. 59.43 (12) (b).

612.81 History History: 1973 c. 22; 1995 a. 201.