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The Pennsylvania Code website reflects the Pennsylvania Code changes effective through 54 Pa.B. 1806 (March 30, 2024).

31 Pa. Code § 107.3. Minimum amount of contingent liability.

§ 107.3. Minimum amount of contingent liability.

 (a)  No assessable policy form submitted for Department approval after February 1, 1975, will be approved unless contract language comparable to the following subsections, where applicable, is included. Calculation of the actual amount of contingent liability, where possible, is acceptable.

 (b)  Where the policy states an annual premium which remains constant for all years, the contingent liability for each year the policy is in force shall be an amount equal to the annual premium stated in the policy.

 (c)  Where the policy states an annual premium which varies from year to year for any reason, the contingent liability required for each year the policy is in force shall be an amount equal to the average yearly cost or premium of the policy for the period it has been in effect.

 (d)  Where the policy does not state an annual premium other than an initial maintenance charge or policy writing fee which is not designed to form a fund for the payment of losses, the contingent liability for assessment shall not be greater than the proportionate share of losses, loss adjustment expenses and reasonable operational expenses sustained by the insurer during the most recent annual assessment period or applicable portion thereof.

 (e)  Where any policy is terminated for any reason before being in force for 1 year, the contingent liability required shall be an appropriate pro rata amount of the contingent liability otherwise required.


   The provisions of this §  107.3 amended November 14, 1975, 5 Pa.B. 2980. Immediately preceding text appears at serial pages (18377) and (18378).

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