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CA Department of Insurance

Motor Club

California Insurance Code Section 12162.5 requires that all motor clubs applying for a Certificate of Authority must have a net worth of not less than $250,000. "Net worth" means the excess of total assets over all total liabilities. As a newly organized domestic corporation not taking over the facilities and personnel of an existing motor club, this Department requires an additional $75,000 (total of $325,000) in order that the minimum $250,000 be "maintained" and not diminished by first year start up costs.

At the outset, the applicant should address a letter to the Corporate Affairs bureau of the California Department of Insurance at 45 Fremont Street, 24th Floor, San Francisco, CA  94105, requesting approval of the name under which the applicant intends to transact its business pursuant to the provisions of California Insurance Code Section 881.  An application may list up to three names, in order of preference, and must be accompanied by a filing fee payable to the California Department of Insurance. See the "Name Approval/Change" fee category on the Schedule of Fees and Charges. Name approval requests for domestic companies in the process of formation must be accompanied by a disclosure of the company's principals.

The applicant must file articles of incorporation with the Secretary of State. After the corporation has been formed and duly qualified, it may apply to this Department for an organizational permit so that it can raise the necessary capital to commence its operations. The permit application is an important step in the qualification of the motor club in that it requires detailed biographical information concerning the officers and directors, the contemplated plan of operation of the corporation, a projection of anticipated income and disbursements for a substantial period of years, and other essential data.

The admission procedure involving the licensing of a new motor club is detailed and time consuming.  In addition to the procedures explained above, it encompasses detailed actuarial and financial studies and projections indicating the company's anticipated income and disbursements over a period of years; it requires detailed field investigation of the background of each officer, director, and key management personnel of the applicant so as to determine their fitness and capability to engage in motor club business; and it includes a detailed description and analysis of the applicant's proposed plan of operation in the State of California, including samples of the contracts which it intends to issue, methods to be employed in the training and recruitment of its sales force, description of the method by which its accounting and bookkeeping records will be maintained so as to provide the periodic statements required by this Department, etc.

Other essential legal requirements and provisions applicable to a newly formed motor club may be found in the latest edition of the California Insurance Code, in Title 10 of the California Code of Regulations, Sections 2600 through 2613.08, and in California Corporations Code Sections 300 and following.


STAGE I: APPLICATION FOR CERTIFICATE OF AUTHORITY - NONADMITTED


This memorandum and its enclosures will respond to your recent request inquiring about motor club admission requirements.  The procedure in this office for admission to California is customarily instituted by Applicant furnishing this Department with the following:

  1. a copy of Applicant's latest audited and/or certified financial statement,

  2. a properly completed and executed Application to render motor club service, and

  3. payment of the statutory filing fee. See the "Certificate of Authority" fee category on the Schedule of Fees and Charges. The fee is deemed earned upon receipt and is not refundable.

If a preliminary perusal thereof discloses no defects obviously fatal to admission, proceed to the second stage of the application process.

Upon timely filing of a complete application, it will be reviewed in its entirety. If the review of the complete filing discloses fatal defects to admission, Applicant will be so informed and a request will be made to the Applicant to withdraw the application within thirty (30) days. If the Applicant does not do so within that period of time, the application will be denied. If the application reveals defects or deficiencies which may be corrected or overcome, the Applicant will be given thirty (30) days from the date of the Department's deficiency letter to do so. If the Applicant fails to conform within that period of time, the application will be deemed abandoned and the Department will take no further action on the file. No exception will be made. In all cases, if the Applicant again applies for admission, a new statutory filing fee will be imposed. See the "Certificate of Authority" fee category on the Schedule of Fees and Charges.

Contemporaneously with the filing of the application for admission, please inform us of the following:

The city or cities of this State wherein the following will be situated, assuming that the Motor Club is to be admitted.

  1. The Motor Club's base of operations for this State.

  2. The Motor Club's statutory principal agent and agent for service of process.

  3. The person in charge of the Motor Club's operations for California.

California Insurance Code §12162.5 requires that all motor clubs applying for a Certificate of Authority must have a net worth of not less than $250,000.  "Net worth" means the excess of total assets over all total liabilities.

You may, before filing an application for admission, write a letter to the Insurance Commissioner, attention Name Reservation Unit, at 45 Fremont Street, 21st Floor, San Francisco, California 94105, requesting approval of the motor club's name pursuant to Insurance Code §881.  See the "Name Approval/Change" fee category on the Schedule of Fees and Charges. There is no fee for filing same after the application for certificate of authority filing fee is paid.  We advise procuring name approval before filing for admission.  In the absence of a name conflict or other noncompliance with the Code, names of foreign applicants are customarily reserved for 180 days from the date of approval and, if an application for admission is timely filed, until the application is denied, abandoned or withdrawn.  Approval, at least informally, should be likewise obtained from the Secretary of State.


STAGE II: APPLICATION FOR CERTIFICATE OF AUTHORITY


California Insurance Code Sections relating to Motor Clubs: 12140-12159; 12160-12170; 12250-12256; 12280-12281 and 12311.

Forms to be used in connection with your application to transact business as a motor club in California:

A biographical affidavit form must be completely filled out and duly executed by each officer, director and key managerial personnel of the motor club. Please note that the biographical affidavit form provides that "If answer is 'none' or 'No exceptions', so state." These affidavits should be carefully completed by the affiants and certified by each such affiant. If additional forms are required, Applicant may reproduce them by xerox or some other method.

One copy of the Questionnaire should be completed and duly executed by an officer of the Applicant.

Accidental death and dismemberment benefits, legal defense reimbursement benefits, and bail bond benefits must be provided to members of a motor club directly by an insurer; i.e., the insurer and not the motor club must assume the risk involved in these benefits. The providing of these benefits constitutes the transaction of insurance and must be provided under a policy of insurance underwritten by an admitted insurer. Although a bail bond benefit may be provided through an admitted insurer, a bail bond certificate is not acceptable by California courts and thus may not be offered in this State.

Please include a detailed description and analysis of the Applicant's proposed plan of operation in the State of California, including samples of the contracts which it intends to issue, methods to be employed in the training and recruitment of its sales force, description of the method by which its accounting and bookkeeping records will be maintained in order to provide the periodic statements required by this Department, etc.

The Applicant will have sixty (60) days from the date of this letter in which to submit a complete filing. If same is not provided within sixty (60) days, the file will be considered abandoned and the filing fee will be forfeited.

Upon timely filing of a complete application, it will be reviewed in its entirety. If the review of the complete filing discloses fatal defects to admission, Applicant will be so informed and a request will be made to the Applicant to withdraw the application within thirty (30) days. If the Applicant does not do so within that period of time, the application will be denied. If the application reveals defects or deficiencies which may be corrected or overcome, the Applicant will be given thirty (30) days from the date of the Department's deficiency letter to do so. If the Applicant fails to conform within that period of time, the application will be deemed abandoned and the Department will take no further action on the file. No exception will be made. In all cases, if the Applicant again applies for admission, a new statutory filing fee will be imposed. See the "Certificate of Authority" fee category on the Schedule of Fees and Charges.

NOTICE: Submit an original and duplicate copy of your application and supporting documents. The duplicate filings will facilitate a simultaneous review of the application by the Department’s Legal and Financial Analysis Divisions.

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