Senate BillNo. 1011


Introduced by Senator Monning

February 13, 2014


An act to amend Section 5005.1 of the Corporations Code, relating to corporations.

LEGISLATIVE COUNSEL’S DIGEST

SB 1011, as introduced, Monning. Nonprofit corporations: self-insurance.

The Nonprofit Corporation Law authorizes certain nonprofit corporations that are organized chiefly to provide health or human services, other than hospitals, to establish an insurance pool to self-insure against various risks, including, among others, tort liability and any loss arising from physical damage to motor vehicles owned or operated by the nonprofit corporation.

This bill would extend these provisions to authorize the establishment of an insurance pool to self-insure against the loss or damage to property of every kind, including, but not limited to, losses and expenses related to the loss of property.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P1    1

SECTION 1.  

Section 5005.1 of the Corporations Code is
2amended to read:

3

5005.1.  

(a) Except for a liability which may be insured against
4pursuant to Division 4 (commencing with Section 3200) of the
5Labor Code, an authorized corporation may do any of the
6following:

P2    1(1) Insure itself against all or any part of any tort liability.

2(2) Insure any employee of the corporation against all or any
3part of his or her liability for injury resulting from an act or
4omission in the scope of employment.

5(3) Insure any board member, officer, or volunteer of the
6corporation against any liability that may arise from any act or
7omission in the scope of participation with the corporation.

8(4) Insure itself against any loss arising from physical damage
9to motor vehicles owned or operated by the corporation.

begin insert

10(5) Insure itself against the loss or damage to property of every
11kind, including, but not limited to, losses and expenses related to
12the loss of property.

end insert

13(b) The insurance authorized pursuant to this section shall only
14be available to an authorized corporation where that corporation
15has joined with two or more other authorized corporations in an
16arrangement providing for the pooling of self-insured claims or
17losses. The pooling arrangement shall not be considered insurance
18nor be subject to regulation under the Insurance Code.

19(c) Nothing in this section shall be construed to authorize a
20corporation organized pursuant to this division to pay for, or to
21insure, contract, or provide for payment for, any part of a claim or
22judgment against an employee of the corporation for punitive or
23exemplary damages.

24(d) Any insurance pool established pursuant to this section shall
25have initial pooled resources of not less than two hundred fifty
26thousand dollars ($250,000).

27(e) All participating corporations in any pool established
28pursuant to this section must agree to pay premiums or make other
29mandatory financial contributions or commitments necessary to
30ensure a financially sound risk pool.

31(f) For the purpose of this section, an authorized “corporation”
32means any corporation that meets all of the following criteria:

33(1) Is organized chiefly to provide or fund health or human
34services, but does not include a hospital.

35(2) Is exempt frombegin insert federal incomeend insert taxationbegin delete under paragraph (3)
36of subsection (c) of Section 501end delete
begin insert as an organization described in
37Section 501 (c)(3)end insert
of the United States Internal Revenue Code.



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