Mississippi Real Estate Commission

§73-35-16. Real estate licensees required to obtain errors and omissions insurance coverage

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persons required to submit proof of errors and
omissions insurance; minimum requirements of group policy issued to
commission; public bid for group insurance contract; requirements for
independent coverage; rules and regulations

(1) The following words and phrases shall have the meanings ascribed
herein unless the context clearly indicates otherwise:


(a) “Aggregate limit” means a provision in an insurance contract
limiting the maximum liability of an insurer for a series of losses
in a given time period such as the policy term.


(b) “Claims-made” means policies written under a claims-made basis
which shall cover claims made (reported or filed) during the year
the policy is in force for incidents which occur that year or during
any previous period the policyholder was insured under the
claims-made contract. This form of coverage is in contrast to the
occurrence policy which covers today’s incident regardless of
when a claim is filed even if it is one or more years later.


(c) “Extended reporting period” means a designated period of time
after a claims-made policy has expired during which a claim may
be made, and coverage triggered as if the claim had been made
during the policy period.

(d) “Licensee” means any active individual broker, brokersalesperson or salesperson, any partnership or any corporation.


(e) “Per-claim limit” means the maximum limit payable, per
licensee, for damages arising out of the same error, omission or
wrongful act.


(f) “Prior acts coverage” applies to policies on a claims-made versus
occurrence basis. Prior acts coverage responds to claims that are
made during a current policy period, but the act or acts causing
the claim or injuries for which the claim is made occurred prior
to the inception of the current policy period.


(g) “Proof of coverage” means a copy of the actual policy of
insurance, a certificate of insurance or a binder of insurance.


(h) “Retroactive date” means a provision, found in many claims made policies, that the policy shall not cover claims for injuries
or damages that occurred before the retroactive date even if the
claim is first made during the policy period.


(2) The following persons shall submit proof of insurance:


(a) Any active individual broker, active broker-salesperson or active
salesperson;


(b) Any partnership (optional); or


(c) Any corporation (optional).


(3) Individuals whose licenses are on inactive status are not required to
carry errors and omissions insurance.


(4) All Mississippi licensees shall be covered for activities contemplated
under this chapter.

(5) Licensees may obtain errors and omissions coverage through the
insurance carrier approved by the Mississippi Real Estate Commission
and provided on a group policy basis. The following are minimum
requirements of the group policy to be issued to the commission,
including, as named insureds, all licensees who have paid their required
premium:


(a) All activities contemplated under this chapter are included as
covered activities;


(b) A per-claim limit is not less than One Hundred Thousand Dollars
($100,000.00);


(c) An annual aggregate limit is not less than One Hundred Thousand
Dollars ($100,000.00);


(d) Limits apply per licensee per claim;


(e) Maximum deductible is Two Thousand Five Hundred Dollars
($2,500.00) per licensee per claim for damages;


(f) Maximum deductible is One Thousand Dollars ($1,000.00) per
licensee per claim for defense costs; and


(g) The contract of insurance pays, on behalf of the injured person(s),
liabilities owed.


(6)(a) The maximum contract period between the insurance carrier and
the commission is to be five (5) consecutive policy terms, after
which time period the commission shall place the insurance out
for competitive bid. The commission shall reserve the right to
place the contract out for bid at the end of any policy period.


(b) The policy period shall be a twelve-month policy term.

(c) The retroactive date for the master policy shall not be before July
1, 1994.


(i) The licensee may purchase full prior acts coverage on July
1, 1994, if the licensee can show proof of errors and
omissions coverage that has been in effect since at least
March 15, 1994.


(ii) If the licensee purchases full prior acts coverage on July 1,
1994, that licensee shall continue to be guaranteed full prior
acts coverage if the insurance carriers are changed in the
future.


(iii) If the licensee was not carrying errors and omissions
insurance on July 1, 1994, the individual certificate shall be
issued with a retroactive date of July 1, 1994. This date shall
not be advanced if the insurance carriers are changed in the
future.


(iv) For any new licensee who first obtains a license after July
1, 1994, the retroactive date shall be the effective date of
licensure.


(v) For any licensee who changes status of license from
inactive to active, the retroactive date shall be the effective
date of change to “active” licensure.


(d) Each licensee shall be notified of the required terms and
conditions of coverage for the policy at least thirty (30) days
before the renewal date of the policy. A certificate of coverage,
showing compliance with the required terms and conditions of
coverage, shall be filed with the commission by the renewal date
of the policy by each licensee who elects not to participate in the
insurance program administered by the commission.

(e) If the commission is unable to obtain errors and omissions
insurance coverage to insure all licensees who choose to
participate in the insurance program at a premium of no more
than Two Hundred Fifty Dollars ($250.00) per twelve (12)
months’ policy period, the requirement of insurance coverage
under this section shall be void during the applicable contract
period.


(7) Licensees may obtain errors and omissions coverage independently if
the coverage contained in the policy complies with the following
minimum requirements:


(a) All activities contemplated under this chapter are included as
covered activities;


(b) A per-claim limit is not less than One Hundred Thousand Dollars
($100,000.00);


(c) The deductible is not more than Two Thousand Five Hundred
Dollars ($2,500.00) per licensee per claim for damages and the
deductible is not more than One Thousand Dollars ($1,000.00)
per licensee per claim for defense costs; and


(d) If other insurance is provided as proof of errors and omissions
coverage, the other insurance carrier shall agree to a noncancelable policy or to provide a letter of commitment to notify
the commission thirty (30) days before the intention to cancel.


(8) The following provisions apply to individual licensees:


(a) The commission shall require receipt of proof of errors and
omissions insurance from new licensees within thirty (30) days
of licensure. Any licenses issued at any time other than policy
renewal time shall be subject to a pro rata premium.

(b) For licensees not submitting proof of insurance necessary to
continue active licensure, the commission shall be responsible for
sending notice of deficiency to those licensees. Licensees who
do not correct the deficiency within thirty (30) days shall have
their licenses placed on inactive status. The commission shall
assess fees for inactive status and for return to active status when
errors and omissions insurance has been obtained.


(c) Any licensee insured in the state program whose license becomes
inactive shall not be charged an additional premium if the license
is reactivated during the policy period.


(9) The commission is authorized to adopt such rules and regulations as it
deems appropriate to handle administrative duties relating to operation
of the program, including billing and premium collection.

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