(a) In this section, “customer” means a person or firm to which a corporation or partnership sells or attempts to sell an insurance policy or from which a corporation or partnership accepts an application for insurance.
(b) The department shall issue a license to a corporation or partnership if the department determines that:
(1) the corporation or partnership is:
(A) organized under the laws of this state or another state; and
(B) authorized by its articles of incorporation or its partnership agreement to act as an agent;
(2) at least one officer of the corporation or one active partner of the partnership and all other persons performing any acts of an agent on behalf of the corporation or partnership in this state are individually licensed by the department separately from the corporation or partnership;
(3) the corporation or partnership will have the ability to pay any amount up to $25,000 that it might become legally obligated to pay under a claim made against it by a customer and caused by a negligent act, error, or omission of the corporation or partnership or a person for whose acts the corporation or partnership is legally liable in the conduct of its business under this code;
(4) if engaged in the business of insurance, the corporation or partnership intends to be actively engaged in that business as required under Section 4001.104(a) ;
(5) each location from which the corporation or partnership will engage in business in this state under authority of a license issued by the department is registered separately with the department;
(6) the corporation or partnership has submitted the application, appropriate fees, and any other information required by the department; and
(7) an officer, director, member, manager, partner, or other person who has the right or ability to control the corporation or partnership has not:
(A) had a license suspended or revoked or been the subject of any other disciplinary action by a financial or insurance regulator of this state, another state, or the United States; or
(B) committed an act for which a license may be denied under Subchapter C, Chapter 4005.
(c) A corporation or partnership shall maintain the ability to pay a claim described by Subsection (b)(3) by obtaining:
(1) an errors and omissions policy insuring the corporation or partnership against errors and omissions in at least the amount of $250,000, with a deductible of not more than 10 percent of the full amount of the policy, issued by:
(A) an insurer authorized to engage in the business of insurance in this state; or
(B) if a policy cannot be obtained from an insurer authorized to engage in the business of insurance in this state, a surplus lines insurer under Chapter 981; or
(2) a bond in the principal amount of $25,000 that is:
(A) executed by the corporation or partnership as principal and a surety company authorized to engage in business in this state as surety;
(B) payable to the department for the use and benefit of customers of the corporation or partnership; and
(C) conditioned that the corporation or partnership shall pay any final judgment recovered against it by a customer.
(d) A binding commitment to issue a policy or bond described by Subsection (c) is sufficient in connection with an application for a license.
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