23-88-103. Rate credits or reduced rates in rural fire protection districts or areas.

23-88-103. Rate credits or reduced rates in rural fire protection districts or areas. (a)(1) It is found and determined by the General Assembly that: (A) Rural fire protection districts are beneficial to all property owners in the districts; (B) Many of the districts are financed wholly or in part by dues or subscription payments made by members of the district; (C) Some owners of property in the districts fail or refuse to become members of and pay the dues or subscription charges to the district and that under present law insurance companies are permitted to give nonmember property owners the same rate credit as is granted to paying members of the district; and (D) The giving of equal rate credit to paying and nonpaying property owners in the district is most inequitable and should be corrected. (2) Therefore, it is the intent and purpose of this section to prohibit insurers from giving nonpaying property owners in rural fire protection districts the rate credit given paying members of the district. (b) Any property or casualty insurance company which gives any rate credit or any special reduced rates on risks located in a rural fire protection district or in any area protected by a rural fire department, which district or department is wholly or partially funded by assessments, dues, or subscription payments paid by owners of property located in the district or property owners who are members of an association supporting the rural fire department, shall give the rate credit or reduced rate only on risks insured by persons who pay the appropriate assessment, dues, or subscription payments for support of the district or department. (c)(1)(A) It is unlawful for any insurance agent or company to knowingly write an initial policy of fire insurance coverage on any risk located in a rural fire protection district or in any area protected by a rural fire department at any special reduced rate or with any rate credit based on the location of the risk in such a district or area without having first obtained from the insured or from the fire department providing service in the district or area evidence showing that a current assessment, dues, or subscription payments for the property to be insured have been paid to the fire department serving the area in which the insured property is located. (B) The evidence required by the insurer may be, but is not limited to, a receipt, cancelled check, or other valid proof of payment provided by the insured. (2)(A) If any agent is found by the Insurance Commissioner to have violated the provisions of this subsection, the agent shall be liable for an administrative penalty of one hundred dollars ($100) for the first violation and five hundred dollars ($500) for the second violation. (B) For any subsequent violation, the agent shall be liable for an administrative penalty of five hundred dollars ($500) plus an amount equal to the difference between the amount of the premium actually charged on the particular policy involved based on the special rate and the amount of premium which would have been charged if the special rate had not been applied.