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As used in this chapter, the following terms shall have the following meanings, respectively, unless the context clearly indicates otherwise:
(1) Account. Any one of the three accounts created by Section 27-42-6.
(2) Affiliate. A person who directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person on December 31 of the year immediately preceding the date the insurer becomes an insolvent insurer.
(3) Association. The Alabama Insurance Guaranty Association created under Section 27-42-6.
(4) Claimant. Any insured making a first party claim or any person instituting a liability claim. The term does not include a person who is an affiliate of an insolvent insurer.
(5) Commissioner. The Commissioner of Insurance of the State of Alabama.
(6) Control. The possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, 10 percent or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not exist in fact.
(7) Covered claim. An unpaid claim, including one of unearned premiums, which arises out of, and is within the coverage and not in excess of, the applicable limits of an insurance policy to which this chapter applies, issued by an insurer, if such insurer becomes an insolvent insurer after January 1, 1981, and (i) the claimant or insured is a resident of this state at the time of the insured event; or (ii) the property from which the claim arises is permanently located in this state. The term does not include any of the following:
a. Any amount due any reinsurer, insurer, insurance pool, self-insurer, or underwriting association, as subrogation recoveries or otherwise.
b. Any first party claims by a high net worth insured.
c. Any amount awarded as punitive or exemplary damages, except for punitive damages awarded under the Alabama Wrongful Death Act.
d. Any amount sought as a return of premium under any retrospective rating plan.
(8) High net worth insured. Any insured whose net worth exceeds twenty-five million dollars ($25,000,000) on December 31 of the year prior to the year in which the insurer becomes an insolvent insurer; provided that an insured's net worth on that date shall be deemed to include the aggregate net worth of the insured and all of its subsidiaries and affiliates as calculated on a consolidated basis.
(9) Insolvent insurer. An insurer licensed to transact insurance in this state, either at the time the policy was issued or when the insured event occurred, and against whom an order of liquidation with a finding of insolvency has been entered after January 1, 1981, by a court of competent jurisdiction in the insurer's state of domicile or of this state under the provisions of Chapter 32 of this title, which order of liquidation has not been stayed or been the subject of a writ of supersedeas bonds or other comparable order.
(10) Insured. Any named insured, additional insured, vendor, lessor, or other party identified as an insured under a policy.
(11) Member insurer. Any person who (i) writes any kind of insurance to which this chapter applies under Section 27-42-3, including the exchange of reciprocal or interinsurance contracts, and (ii) is licensed to transact insurance in this state.
(12) Net direct written premiums. Direct gross premiums written in this state on insurance policies to which this chapter applies, less return premiums thereon and dividends paid or credited to, policyholders on such direct business. “Net direct written premiums” do not include premiums on contracts between insurers or reinsurers.
(13) Net worth. The total assets of a person, less the total liabilities against those assets as determined in accordance with generally accepted accounting principles. A person's net worth shall be deemed to include the aggregate net worth of the person and all of its subsidiaries and affiliates as calculated on a consolidated basis.
(14) Person. Any individual or legal entity, including governmental entities.
(15) Residency. For purposes of determining residency in this chapter, the residency of a claimant or insured that is a corporation, partnership, association, or voluntary organization is the state in which the claimant's or insured's principal place of business is located.
(16) Self-insurer. A person that covers its liability through a qualified individual or group self-insurance program or any other formal program created for the specific purpose of covering liabilities typically covered by insurance.
Cite this article: FindLaw.com - Alabama Code Title 27. Insurance § 27-42-5 - last updated January 01, 2019 | https://codes.findlaw.com/al/title-27-insurance/al-code-sect-27-42-5.html
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