SECTIONS 5050-5063 - California Statutes

INSURANCE CODE

SECTION 5050-5063

5050. Two hundred fifty (250) or more persons residing in one
county of this State may incorporate for the purpose of forming a
mutual fire insurer upon all such persons agreeing to:
(a) Secure fire insurance from such insurer when organized through
policies to be issued by such insurer having face amounts
aggregating one million five hundred thousand dollars ($1,500,000) or
more covering their property of the same or greater value. Such
insurer shall retain net of reinsurance aggregate amounts on such
policies at least equal to such amount.
(b) Pay the premium for such insurance immediately upon
notification by such insurer that it is prepared to issue such
policies providing such insurance.
(c) Pay to the insurer immediately upon its incorporation a
special deposit of at least one dollar ($1) on each one hundred
dollars ($100) of insurance applied for under (a) above, such special
deposit to be applied to future premiums payable by such persons
either after the expiration of three years or upon the commissioner
determining that the insurer has a surplus earned by insurance
operations in the amount of at least fifteen thousand dollars
($15,000), whichever occurs first.

5050.1. If such persons have not performed all acts and secured all
agreements necessary to complete the incorporation of such insurer
within one year from the date of their first securing an agreement
from any person, all proceedings and agreements in connection with
such incorporation shall become null and void and all persons
entering into such agreements shall be released therefrom.

5050.5. Any county mutual fire insurer heretofore or hereafter
incorporated and doing business under the provisions of this chapter
may, if it has issued an insurance policy against fire, and as long
as it maintains an excess of admitted assets over liabilities of at
least fifty thousand dollars ($50,000), endorse such policy to extend
the coverage thereof to include insurance of the kinds included in
Sections 107, 112, 120 and 122 (excluding liability insurance).

5051. Upon the payment in advance of two thousand nine hundred
fifty dollars ($2,950) cash, lawful money of the United States, to
the commissioner for all services to be rendered by him in the matter
of organization of the insurer, such persons shall file with the
commissioner a declaration of their intention to incorporate for the
purposes expressed in Section 5050. The declaration shall be signed
by all of such persons, and shall contain a copy of the articles of
incorporation proposed to be adopted.

5052. The commissioner shall examine the proposed articles of
incorporation. If they conform to this chapter he shall deliver to
such persons a certificate permitting them to incorporate such
insurer. The certificate shall be directed to the clerk of the county
in which such insurer is proposed to be organized and shall contain
a copy of the proposed articles of incorporation.

5053. The duly executed articles of incorporation and a copy of the
certificate of the commissioner shall be filed with the Secretary of
State in conformity with Section 200 of the Corporations Code. Upon
organizing under the articles of incorporation and obtaining from the
commissioner a certificate of authority, the county mutual fire
insurer may carry on a fire insurance business as provided by this
chapter. The term and nature of the certificate of authority, annual
renewal fee therefor, the due date and delinquent date of the fee
shall be the same as prescribed by Article 3 (commencing with Section
699) of Chapter 1 of Part 2 of Division 1 for stock and mutual
insurers governed by that article.

5054. The articles of incorporation and certificate obtained by any
county mutual fire insurer operating under the provisions of this
chapter are subject to control and modification by the Legislature of
this State.

5055. The by-laws and all amendments thereto shall be filed with
the commissioner within sixty days after their adoption.

5056. Such insurer shall have not less than seven, nor more than 11
directors, a majority of whom shall constitute a quorum to do
business.
The by-laws or the articles may provide or be amended to provide
for either concurrent terms of one year for all directors or
staggered terms of not more than five years. If provision is made for
staggered terms, such terms shall, except for the first directors
elected for staggered terms, be uniform for all directors and so
arranged that as nearly equal a number of directors as is feasible
shall be elected each year.
The directors shall be elected by ballot from the members of the
insurer. They shall hold office for the terms for which they were
elected, and until their successors are elected and qualified.

5057. The annual meeting of the members of the insurer shall be
held on the second Monday of February of each year, unless its board
of directors fixes the time for the annual meeting in which event the
board may select any day between the second and third Mondays of
February.

5058. In the election of the first board of directors each member
shall be entitled to one vote. At every subsequent election each
member shall be entitled to as many votes as there are directors to
be elected.

5059. A member may cast his votes in person or by proxy,
distributing them among the directors to be elected, or among a less
number of the directors, or cumulating them upon one candidate, as he
sees fit.

5060. The directors shall elect, from their own number, a president
and a vice president. They shall also elect a treasurer and a
secretary, who need not be members of the insurer nor natural
persons. All of such officers hold their office for one year from the
date of their election, and until their successors are elected and
qualified.

5061. The treasurer and secretary shall give bonds to the insurer
for the faithful performance of their duties, in such amounts as are
prescribed by the board of directors.

5062. No incorporators or persons acting in their behalf or other
persons participating in the management of such insurer shall advance
to or for the subscribers or members any premium, special deposit or
assessment required to be paid. It is the intent of this chapter
that no person shall have a proprietary interest in such insurer,
except equally with all other members.

5063. No such insurer may enter into any general agency or
management contract whereby it authorizes or delegates to a person
the right to assume virtual control of its operations or of the
production of business for it in this State or any specified portion
thereof.