38.2-1046 - Purpose of deposits; enforcement of lien. - Virginia Statutes

§ 38.2-1046. Purpose of deposits; enforcement of lien.

A. An insurer's deposits required by § 38.2-1045 shall be held as a specialfund in trust for the insurer's liabilities which are incurred or which maybe incurred as a result of a loss sustained by (i) this Commonwealth or anyof its political subdivisions, (ii) any citizen or inhabitant of thisCommonwealth, or (iii) any other person owning property in this Commonwealth,when the insurer fails to meet its obligations incurred in this Commonwealth.Policyholders, without preference, shall have a lien on the deposits for theamounts due or which may become due as a result of any failure of the insurerto meet its obligations. General creditors, without preference, shall beentitled to have a similar lien on the deposits which shall be subordinate tothe claims of the policyholders.

B. Whenever any such insurer becomes insolvent or bankrupt, or makes anassignment for the benefit of its creditors, any person given a lien by thissection may file a bill in the Circuit Court of the City of Richmond for thebenefit of himself and all others given a lien by this section to subjectsuch securities as may be on deposit with the State Treasurer or its agent tothe payment of the liens thereon. The State Treasurer shall be made a partyto such suit and a copy of such bill shall be served upon the Commissioner ofInsurance as if he were a party to such suit. The funds shall be distributedby the court.

(Code 1950, § 38-50; 1952, c. 317, § 38.1-110; 1981, c. 208; 1986, c. 562;1988, c. 298; 1992, c. 20; 1995, c. 60.)