Certificate of Insurance

Section 4010 requires that a private carrier of passengers file with the Commission:

[E]vidence of a currently effective certificate of insurance or a surety bond evidencing protection against liability imposed by law for the payment of damages for personal injury to, or death of, any person or property damage, or both.

The Commission's GO 160-A, adopted December 17, 1998, defines the type of insurance required by the Commission. Under subpart (3) of that order:

The protection required under Section (1) hereof shall be evidenced by the deposit with the Public Utilities Commission, covering each vehicle used or to be used in conducting the operation of each such vehicle carrier, of the appropriate Commission-authorized certificate of bodily injury liability and property damage liability insurance issued by a company licensed to write such insurance in the State of California, or by nonadmitted insurers subject to Sections 1763 and 1765.1 of the Insurance Code, or of an original bond or surety company licensed to write surety bonds in the State of California.

NIAC, however, was formed and is operated in accordance with Section 5005.1 of the California Corporations Code. California corporations formed and operating under Section 5005.1 may provide insurance against tort liability, so long as they form a pooling arrangement with other corporations:

The insurance authorized pursuant to this section only be available to an authorized corporation where that corporation has joined with two or more other authorized corporations in an arrangement providing for the pooling of self-insured claims or losses. The pooling arrangement shall not be considered insurance nor be subject to regulation under the Insurance Code (California Corp. Code § 5005.1(b)). (Emphasis added.)

NIAC is unique in the sense that it exists for the purpose of providing insurance to nonprofits by the pooling of premium contributions, and yet it is not, pursuant to state law, licensed, nor regulated, as an insurance company by the Department of Insurance.

Nonprofit corporations, such as NIAC, which hold property for charitable purposes, are regulated by the Attorney General:

A corporation holding assets in charitable trust is subject at all times to examination by the Attorney General, on behalf of the state, to ascertain to what extent, if at all, it has failed or is failing to comply with trusts it has assumed. In case of any such failure the Attorney General, in the name of the state, may institute against any person or persons the proceedings necessary to correct the failure. (California Corp. Code § 7240.)

NIAC's formation and other specified corporate matters are regulated by the Corporations Code. However, NIAC is regulated by the Attorney General since it is formed as a charitable, nonprofit corporation, holding property for charitable purposes.

NIAC, therefore, requested that the Commission approve the liability coverage provided to NIAC's members as adequate evidence of liability protection under Section 4010 and pursuant to GO 160-A.