Mich. Admin. Code R. 257.532 - Security equivalent; qualifications for certificate; excess insurance requirement

Current through Vol. 22-05, April 1, 2022

Rule 2.

(1) A certificate of self-insurance that is issued pursuant to these rules constitutes security equivalent to that afforded by a policy of insurance that provides for the payment of benefits pursuant to the no-fault law.
(2) Pursuant to section 3101d of the no-fault law, the director may issue a certificate of self-insurance to an applicant who possesses all the following qualifications:
(a) Registers in the applicant's name more than 25 motor vehicles, excluding trailers, in this state.
(b) Agrees, in writing, to comply with all of the provisions of the no-fault law, the financial responsibility law contained in chapter V of the Michigan vehicle code, and these rules.
(c) Has not been declared bankrupt or had a financial manager appointed or any substantially equivalent action taken within the 5-year period immediately preceding the date of application.
(d) Possesses a net worth of more than $15,000,000.00 and complies with the provisions of subrule (3) of this rule.
(e) Possesses a sound financial condition, has sufficient liquid assets, and utilizes financial practices and methods that would not bring into question its ability to pay claims fully and in a timely manner.
(f) Establishes a fully funded loss reserve as described in R 257.536.
(g) Has not had a certificate of self-insurance denied or canceled by this state or any other state within 1 year preceding the date of application, and has maintained insurance coverage on the vehicles described in R 257.533(4)(f) at all times as required by law.
(h) Submits to the director a completed application for a certificate of self-insurance with all required documents attached.
(3) The applicant shall, in addition to meeting the qualifications specified in subrule (2) of this rule, secure and maintain an excess insurance policy, as described in R 257.537, with policy limits and retention amounts commensurate to its risks and exposure that are acceptable to the director.
(4) Except as provided in subrule (6) of this rule, a parent company and its subsidiaries shall make separate applications for the issuance of a certificate of self-insurance pursuant to these rules.
(5) Except for a parent company and its wholly owned subsidiaries making a combined application for the issuance of a certificate of self-insurance pursuant to the provisions of subrule (6) of this rule, a parent company and its subsidiaries shall not combine or commingle net worth, motor vehicle registrations, or loss reserves for the purpose of qualifying or maintaining qualification for a certificate of self-insurance pursuant to these rules.
(6) A parent company and its wholly owned subsidiaries may make a combined application for the issuance of a certificate of self-insurance if either of the following provisions is satisfied:
(a) Both the parent company and each wholly owned subsidiary included in the combined application otherwise meet the qualifications for the issuance of a certificate of self-insurance set forth in this rule.
(b) Both of the following conditions are met:
(i) Both the parent company and each wholly owned subsidiary included in the combined application enter into a written indemnity agreement jointly and severally binding each entity for any liability under the no-fault law, the financial responsibility law contained in chapter V of the Michigan vehicle code, and these rules. The language and form of the written agreement must be approved by the director.
(ii) For each wholly owned subsidiary included in the combined application, the parent company guarantees in writing its subsidiary's liability for payment of benefits under the no-fault law, the financial responsibility law contained in chapter V of the Michigan vehicle code, and these rules. The form and substance of the guarantees must be approved by the director.

Notes

Mich. Admin. Code R. 257.532
1993 AACS; 2018 MR 5, Eff. 3/15/2018

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