2009 California Insurance Code - Section 11650-11665 :: Article 2. Policy Provisions

INSURANCE CODE
SECTION 11650-11665

11650.  Every contract insuring against liability for compensation
and every compensation policy is conclusively presumed to contain all
of the provisions required by this article.

11651.  Every such contract or policy shall contain a clause to the
effect that the insurer will be directly and primarily liable to any
proper claimant for payment of any compensation for which the
employer is liable, subject to the provisions, conditions and
limitations of the policy.

11652.  Every such contract or policy shall contain a clause to the
effect that, as between the employee and the insurer, notice to or
knowledge of the occurrence of the injury on the part of the employer
will be deemed notice or knowledge, as the case may be, on the part
of the insurer.

11653.  Every such contract or policy shall contain a clause to the
effect that jurisdiction of the employer will, for the purpose of the
law imposing liability for compensation, be jurisdiction of the
insurer.

11654.  Every such contract or policy shall contain a clause to the
effect that the insurer will in all things be bound by and subject to
the orders, findings, decisions or awards rendered against the
employer under the provisions of the law imposing liability for
compensation, subject to the provisions, conditions and limitations
of the policy. The insurance contract shall govern as between the
employer and insurer as to payments by either in discharge of the
employer's liability for compensation.

11655.  Such policy shall not contain any provisions relieving the
insurer from payment when the employer becomes insolvent or obtains a
discharge in bankruptcy, or otherwise, during the period that the
policy is in operation or the compensation remains owing.

11656.  Such policy shall also provide that the employee has a first
lien upon any amount which becomes owing to the employer from the
insurer on account of the policy, and that in case of the legal
incapacity or inability of the employer to receive the money and pay
it to the claimant, the insurer will pay it directly to the claimant.
To the extent of such payment, the obligations of the employer to
the claimant are thereby discharged.

11656.1.  Upon request of the State Department of Social Services,
the State Compensation Insurance Fund may issue one workers'
compensation insurance policy insuring all recipients of in-home
supportive services under Article 7 (commencing with Section 12300),
Chapter 3, Part 3, Division 9 of the Welfare and Institutions Code
for whom and to the extent that the State Department of Social
Services has an obligation to perform or assure the performance of
rights, duties and obligations relating to such services as specified
in Section 12302.2 of the Welfare and Institutions Code.

11656.5.  In order to permit employees of small farms to be brought
under the provisions of the Workers' Compensation Law, employers of
agricultural labor who are members of any nonprofit agricultural
association or who are members of, or stockholders in, any nonprofit
cooperative agricultural marketing association of producers, some or
all of whom may not be required to carry compensation insurance, may,
under such conditions as the commissioner may prescribe in order to
effectuate the purpose of Article 2, Chapter 3, of this part, be
insured under a group compensation insurance policy.

11656.6.  An insurer may issue a workers' compensation policy
insuring an organization or association of employers as a group if
the organization or association complies with the following
conditions:
   (a) Files with the commissioner or a licensed workers'
compensation rating organization designated by him or her the
following:
   (1) A copy of its articles of incorporation and bylaws or its
agreement of association and rules and regulations governing the
conduct of its business, all certified by the custodian of the
originals thereof.
   (2) A statement setting forth its reasons for desiring insurance
as a group.
   (3) A statement certifying that at least 75 percent of its regular
membership is engaged in a common trade or business, and an
agreement that the percentage of membership will be maintained during
the time that a group workers' compensation policy issued to the
organization or association is in force.
   (4) An agreement that only those members who are engaged in a
common trade or business shall be named by the organization or
association in any statement to the commissioner, a licensed workers'
compensation rating organization, or insurer as eligible for
insurance as a member of the group, and an agreement that it will
immediately notify its insurer if any member of the organization
fails to remain a member in good standing in accordance with the
basic law, rules, and regulations of the organization or association.
   (5) A statement in writing undertaking to establish and maintain a
safety committee which, by education and otherwise, will seek to
reduce the incidence and severity of accidents.
   (6) An agreement in writing duly executed stating that, if the
insurer notifies the organization or association of the nonpayment of
a premium by an insured member of the organization or association
within 60 days after the premium was due, the organization or
association may be liable to pay to the insurer the amount of any
past due premium that does not exceed the amount of the dividends
that are due to the organization or association or its members from
the insurer.
   However, this agreement shall not be required, nor shall an
organization or association be liable for payment, unless the
governing board of the organization or association and the insurer
agree in writing to use dividends due for the payment of past due
premiums. The organization or association shall promptly notify the
insurer of the known insolvency of any member of the group plan, and
shall request, upon learning of the insolvency, removal of the member
from the group plan. A copy of the resolution of the governing board
of the organization or association authorizing the execution of the
agreement shall be filed with the commissioner or a licensed workers'
compensation rating organization designated by the commissioner and
with any insurer issuing a group policy.
   (b) "Common trade or business," as used in this article, shall
mean:
   (1) In agricultural enterprises, operations in which the principal
payroll of the employer develops under any combination of the
classifications of the Manual of Rules, Classifications and Basic
Rates of Workers' Compensation Insurance approved by the Insurance
Commissioner as applicable to farms, nurserymen, cultivating or
gardening of flowers, and classifications embracing other operations
that may be conducted by a nonprofit cooperative association composed
of producer members and combinations of nonprofit cooperative
agricultural marketing associations having a central organization
composed of member associations.
   (2) In the building and construction industry, operations in the
construction or repair of commercial or residential buildings or in
general engineering construction in which the principal payroll
develops under any combination of the classifications applicable to
the construction or repair as they appear in the Manual of Rules,
Classifications and Basic Rates for Workers' Compensation Insurance
approved by the Insurance Commissioner. Commercial buildings, as
defined in this paragraph, shall mean any nonresidential buildings.
   (3) In the transportation and warehousing industry, operations in
which the principal payroll of the employer develops under any
combination of the classifications of the Manual of Rules,
Classifications and Basic Rates of Workers' Compensation Insurance
approved by the Insurance Commissioner as applicable to for-hire
motor carriers subject to regulation by the Public Utilities
Commission and warehousemen.
   (4) In the timber and lumber industry, operations in which the
principal payroll of the employer develops under any combination of
the classifications of the Manual of Rules, Classifications and Basic
Rates of Workers' Compensation Insurance approved by the Insurance
Commissioner as applicable to land clearing, logging or lumbering,
log, chip, and lumber hauling, planing or molding mills, sawmills or
shingle mills, veneer or veneer products manufacturing, box or box
shook manufacturing, cabinet works, door, door frame, or sash
manufacturing and wood fiber preparation. However, no classification
applicable to for-hire motor carriers under the provisions of
paragraph (3) of this subdivision shall be included in any
combination of classifications authorized by this paragraph.
   (5) For public agencies providing industrial, domestic, or
agricultural water service, operations in which the principal payroll
of the employer develops under any combination of the
classifications of the Manual of Rules, Classifications and Basic
Rates of Workers' Compensation Insurance approved by the Insurance
Commissioner as applicable to irrigation, drainage, reclamation, or
waterworks operations.
   (6) For sheltered workshops and rehabilitation facilities licensed
pursuant to Section 1191.5 of the Labor Code, operations in which
the principal payroll of the employer develops under any combination
of classifications of the Manual of Rules, Classifications and Basic
Rates of Workers' Compensation Insurance approved by the Insurance
Commissioner.
   (7) For all other enterprises, operations in which the principal
payroll develops under a single manual classification or a
combination of classifications under which a group policy may be
issued pursuant to subdivision (d).
   (8) For manufacturing facilities as identified in Sector 31 to 33,
inclusive, of the North American Industry Classification System
(NAICS), operations in which the principal payroll of the employer
develops under any combination of classifications of the Manual of
Rules, Classifications, and Basic Rates of Workers' Compensation
Insurance approved by the Insurance Commissioner applicable to
establishments engaged in the mechanical, physical, or chemical
transformation of materials, substances, or components into new
products.
   (c) Except as provided in subdivision (d), "principal payroll,"
for the purpose of this section, means not less than 51 percent of
the total payroll for the preceding policy year or, in the case of an
employer who has no preceding full year's payroll, not less than 51
percent of his or her estimated annual payroll. Principal or
estimated annual payroll shall not include the payroll of those
employees set forth in the standard exceptions contained in the
Manual of Rules, Classifications, and Basic Rates of Workers'
Compensation Insurance approved by the Insurance Commissioner.
   (d) An insurer may issue a workers' compensation policy insuring
an organization or association of employers as a group if, in
addition to complying with the conditions set forth in subdivision
(a), the organization or association has had at least 50 percent of
its present membership for at least one year prior to the issuance of
the policy, and not less than 75 percent of the payroll of each
employer to be insured under the group policy developed under the
same two manual classifications, or either of them, for the preceding
policy year or, in the case of an employer who has had no preceding
full-year's payroll, not less than 75 percent of his estimated annual
payroll develops under the classification or classifications.
However, no classification applicable to for-hire motor carriers
under the provisions of paragraph (3) of subdivision (b) shall be
included in any combination of classifications authorized by this
subdivision.

11656.7.  Each member of an organization insured under a group
policy shall be treated as a single and separate entity as respects
rates, classifications and rating plans.
   Two or more policies whose experience is combined for any purpose
whatsoever, shall be considered group insurance and subject to the
provisions of this article unless employers insured by such policies
are engaged in operations having a common pay roll or where any
rating plan or rating system and the rules applicable to them
approved by the commissioner under the provisions of Article 2,
Chapter 3, Part 3, Division 2, require or permit the insurance of
more than one employer in a single policy.

11656.8.  Nothing in Section 11656.6 or 11656.7 shall be construed
to supersede, modify, or otherwise affect in any way the provisions
of Section 11656.5.

11656.9.  To encourage and facilitate the participation of agencies,
entities or institutions, public or private, in economic opportunity
programs authorized under Public Law 88-452, insurers may insure the
workers' compensation liability to enrollees of sponsoring agencies
pursuant to Chapter 9 (commencing with Section 4201) of Part 1 of
Division 4 of the Labor Code under a master policy, subject to the
approval of the Insurance Commissioner.

11657.  Subject to the provisions of Sections 11659 and 11660,
limited workers' compensation policies may be issued insuring either
the whole or any part of the liability of any employer for
compensation, provided that the policy is previously approved, as to
substance and form, by the commissioner. Subject to those provisions,
the policy may restrict or limit the insurance in any manner
whatsoever.

11658.  (a) A workers' compensation insurance policy or endorsement
shall not be issued by an insurer to any person in this state unless
the insurer files a copy of the form or endorsement with the rating
organization pursuant to subdivision (e) of Section 11750.3 and 30
days have expired from the date the form or endorsement is received
by the commissioner from the rating organization without notice from
the commissioner, unless the commissioner gives written approval of
the form or endorsement prior to that time.
   (b) If the commissioner notifies the insurer that the filed form
or endorsement does not comply with the requirements of law,
specifying the reasons for his or her opinion, it is unlawful for the
insurer to issue any policy or endorsement in that form.
   (c) The withdrawal of a policy form or endorsement by the
commissioner pursuant to this section shall not affect the status of
the policyholder as having secured payment for compensation or affect
the substitution of the insurer for the policyholder in workers'
compensation proceedings as set forth in the provisions of Chapter 4
(commencing with Section 3700) of Part 1 of Division 4 of the Labor
Code during the period of time in which the policy form or
endorsement was in effect.
   (d) This section shall not apply to limited policies submitted for
approval to the commissioner pursuant to Section 11657.

11659.  Such approved form of policy, limited pursuant to Section
11657, shall not be otherwise limited except by indorsement thereon
in accordance with a form prescribed by the commissioner or in
accordance with rules adopted by the commissioner. Such indorsement
form shall not be subject to Section 11658. Before prescribing such
indorsement form or adopting such rule, the commissioner shall
consult concerning it with the Workers' Compensation Appeals Board.

11660.  Failure to observe the requirements of Sections 11657 and
11659 shall render a policy issued under Section 11657, and not
complying therewith, unlimited.

11661.  An insurer shall not insure against the liability of the
employer for the additional compensation recoverable for serious and
willful misconduct of the employer or his agent. An insurer may,
however, provide insurance against the expense of defending any suit
for serious and willful misconduct against an employer or his agent.

11661.5.  An insurer shall not insure an employer against his
liability for additional compensation arising out of injuries to
illegally employed persons under 16 years of age, as provided for by
Part 4 (commencing with Section 1171) of Division 2 of the Labor
Code.

11661.6.  (a) An insurer shall not insure an employer against his or
her obligation to reimburse the insurer for the amount of increase
in indemnity payment as provided for by subdivision (e) of Section
4650 of the Labor Code. Every contract insuring against liability for
compensation and every compensation policy shall provide that the
insured employer is obligated to reimburse the insurer for the amount
of increase in indemnity payment required by Section 4650 of the
Labor Code, if the late indemnity payment which gives rise to the
increase in the amount of payment is due less than seven days after
the insurer receives the completed claim form from the employer.
   (b) An insurer shall not report the amount of any increase in
indemnity required by Section 4650 of the Labor Code as incurred
indemnity to the Insurance Commissioner's designated statistical
agent.

11662.  Whenever any employer is insured against liability for
compensation with any insurer, such insurer is subrogated to the
rights of the employer to recover losses arising out of any of the
following acts by the insurer:
   (a) Assuming the liability of the employer for compensation in the
manner provided by the law relating thereto.
   (b) Payment of any compensation for which the employer is liable.
   Such insurer may enforce any such subrogated rights in its own
name.

11663.  As between insurers of general and special employers, one
which insures the liability of the general employer is liable for the
entire cost of compensation payable on account of injury occurring
in the course of and arising out of general and special employments
unless the special employer had the employee on his or her payroll at
the time of injury, in which case the insurer of the special
employer is solely liable. For the purposes of this section, a
self-insured or lawfully uninsured employer is deemed and treated as
an insurer of his or her workers' compensation liability.

11663.5.  (a) Upon receiving a written request from an insured or
the agent or broker of record where authorized by the insured, an
insurer shall provide a premium and loss history report to the
requesting party for the account's tenure or the three-year period
ending with the inception of the current policy period, whichever is
shorter, plus loss experience during the current policy period that
is in force if any of the following occur.
   (1) The policy is canceled or nonrenewed.
   (2) The policyholder requests the information within 60 days prior
to the renewal date of an existing policy.
   (3) The policyholder's current insurer's rating is downrated by a
nationally recognized insurance rating service to a financial rating
below secure or good or to a rating that would negatively impact the
ability of the policyholder to conduct its business operations.
   (4) The policyholder's current insurer is conserved by the
department under Section 1011, or is ordered to cease writing
business under Sections 1065.1 and 1065.2.
   The premium and loss history report, and the loss experience
information for the current policy period, shall be provided within
10 business days of receiving the request.
   (b) This section applies only to workers' compensation insurance.
   (c) This section shall not apply to a policyholder who, through
automated or other means, is provided direct, ongoing access to
claims information by the insurer.
   (d) For purposes of this section, a loss history report includes,
but is not limited to, a list of individual claims detailed by date
of claim and total incurred and paid losses.

11664.  (a) This section applies only to policies of workers'
compensation insurance.
   (b) A notice of nonrenewal shall be in writing and shall be
delivered or mailed to the producer of record and to the named
insured at the mailing address shown on the policy. Subdivision (a)
of Section 1013 of the Code of Civil Procedure shall be applicable if
the notice is mailed.
   (c) An insurer, at least 30 days, but not more than 120 days, in
advance of the end of the policy period, shall give notice of
nonrenewal, and the reasons for the nonrenewal, if the insurer
intends not to renew the policy.
   (d) If an insurer fails to give timely notice required by
subdivision (c), the policy of insurance shall be continued, with no
change in its premium rate, for a period of 60 days after the insurer
gives the notice.
   (e) A notice of nonrenewal shall not be required in any of the
following situations.
   (1) The transfer of, or renewal of, a policy without a change in
its terms or conditions or the rate on which the premium is based
between insurers that are members of the same insurance group.
   (2) The policy has been extended for 90 days or less, if the
notice required in subdivision (c) has been given prior to the
extension.
   (3) The named insured has obtained replacement coverage or has
agreed, in writing, within 60 days of the termination of the policy,
to obtain that coverage.
   (4) The policy is for a period of no more than 60 days and the
insured is notified at the time of issuance that it may not be
renewed.
   (5) The named insured requests a change in the terms or conditions
or risks covered by the policy within 60 days prior to the end of
the policy period.
   (6) The insurer has made a written offer to the insured to renew
the policy at a premium rate increase of less than 25 percent.
   (A) If the premium rate in the governing classification for the
insured is to be increased 25 percent or greater and the insurer
intends to renew the policy, the insurer shall provide a written
notice of a renewal offer not less than 30 days prior to the policy
renewal date. The governing classification shall be determined by the
rules and regulations established in accordance with subdivision (c)
of Section 11750.3.
   (B) For purposes of this section, "premium rate" means the cost of
insurance per unit of exposure prior to the application of
individual risk variations based on loss or expense considerations
such as scheduled rating and experience rating.

11665.  (a) An insurer who issues a workers' compensation insurance
policy to a roofing contractor holding a C-39 license from the
Contractors State License Board shall perform an annual payroll audit
for the contractor. The insurer may impose a surcharge on each
policyholder audited under this subdivision in an amount necessary to
recoup the reasonable costs of conducting the annual payroll audits.
   (b) The commissioner shall direct the rating organization
designated as his or her statistical agent to compile pertinent
statistical data on those holding C-39 licenses, as reported by the
appropriate state entity, on an annual basis and provide a report to
him or her each year. The data shall track the total annual payroll
and loss data reported on those holding C-39 licenses in accordance
with the standard workers' compensation insurance classifications
applicable to roofing operations. The first report shall be filed no
later than March 1, 2008, and shall cover the data compiled for the
2005 calendar year.(c) This section shall become operative on January
1, 2007, and shall remain in effect only until January 1, 2011, and
as of that date is repealed, unless a later enacted statute, that is
enacted before January 1, 2011, deletes or extends that date.


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