Tennessee Storage Insurance Law

Tennessee Storage Insurance Law

State of Tennessee
PUBLIC CHAPTER NO. 293
SENATE BILL NO. 1147
By Tracy
Substituted for: House Bill No. 980
By Sargent, Pitts, Haynes, Watson, Eldridge, Keisling, Powers, Kevin Brooks
AN ACT to amend Tennessee Code Annotated, Title 56, Chapter 6 and Title 66, Chapter 31, relative
to the sale of insurance for self storage unit possessions in a storage facility.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 56, Chapter 6, is amended by adding
Sections 2 through 8 as a new, appropriately designated part:
SECTION 2. For purposes of this part:
(1) "Commissioner'' means the commissioner of commerce and insurance or the
commissioner's designee;
(2) "Covered personal property" means personal property covered under an
occupant's self-service storage insurance policy;
(3) "Department" means the department of commerce and insurance;
(4) "Enrolled occupant" means an occupant who elects coverage under a self-service
storage insurance policy issued to an owner;
(5) "Leased space" means the storage space or spaces at the self-service storage
facility that is leased or rented to an occupant pursuant to a rental agreement;
(6) "Location" means any physical location in this state or any website, or similar
location directed to residents of this state;
(7) "Occupant" means a person, or a sublessee, successor or assign of such person,
entitled to the use of leased or rented storage space at a self-service storage facility under a
rental agreement, to the exclusion of others;
(8) "Owner" means:
(A) The owner, operator, lessor or sublessor of a self-service storage facility,
the agent of such person; or
(B) Any person authorized by such person to manage the facility or to receive
rent from an occupant under a rental agreement;
(9) "Personal property" means movable property not affixed to land and includes, but
is not limited to, goods, wares, merchandise, household items and vehicles;
(10) "Rental agreement" means any agreement or lease, written or oral, that
establishes or modifies the terms, conditions, rules or any other provisions concerning the
use and occupancy of leased or rented storage space at a self-service storage facility;
(11) "Self-service storage facility":
(A) Means any real property designed and used for the purpose of renting or
leasing storage space to occupants who are to have access to such space for the
purpose of storing and removing personal property; and
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(B) Does not include any part of the real property used for residential
purposes;
(12) "Self-service storage insurance":
(A) Means insurance which may provide coverage for the repair or
replacement of covered personal property against any one (1) or more of the
following causes:
(i) Loss;
(ii) Theft;
(iii) Damage; or
(iv) Other similar causes of loss; and
(B) Does not include a homeowner's, renter's, private passenger automobile,
commercial multi-peril or similar policy;
(13) "Self-service storage transaction" means the lease of self-service storage space
by an owner to an occupant pursuant to a rental agreement;
(14) "Supervising entity" means a business entity that is a licensed insurance
producer or insurer; and
(15) "Vehicle" means a motor vehicle, a trailer or a semitrailer as defined in§§ 55-1-
103 and 55-1-1 05 and a vessel as defined in § 69-9-204.
SECTION 3. (a) An owner shall hold a limited lines business entity producer's license to sell
or offer coverage under a policy of self-service storage insurance. An owner who complies
with this part shall be entitled to a limited lines license, without examination, authorizing the
owner to sell or offer coverage under a policy of self-service storage insurance.
(b) A limited lines license issued to an owner under this section shall authorize any
employee or authorized representative of the owner to sell or offer coverage under a policy of
self-service storage insurance to an occupant at each location at which the owner engages in
self-service storage transactions.
(c) In connection with an owner's initial application for licensure and at renewal, the
owner shall provide a list to the commissioner of all locations in this state at which the owner
offers coverage.
(d) Notwithstanding any law to the contrary, a license issued pursuant to this section
shall authorize the licensee and its employees or authorized representatives to engage in
activities permitted in this part.
SECTION 4. (a) At every location where self-service storage insurance is offered to
occupants, brochures or other written materials shall be made available that:
(1) Disclose that self-service storage insurance may provide a duplication of
coverage already provided by an occupant's homeowner's insurance policy, renter's
insurance policy or other source of coverage;
(2) State that the enrollment by the occupant in a self-service storage
insurance program is not required in order to lease self-service storage space;
(3) Summarize the material terms of the insurance coverage, including:
(A) The identity of the insurer;
(B) The identity of the supervising entity;
(C) The amount of any applicable deductible and how it is to be paid;
(D) Benefits of the coverage; and
(E) Key terms and conditions of coverage such as whether covered
personal property may be repaired or replaced;
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(4) Summarize the process for filing a claim; and
(5) State that the enrolled occupant may cancel enrollment for coverage under
a self-service storage insurance policy at any time and the person paying the
premium shall receive a refund of any applicable unearned premium.
(b) Self-service storage insurance may only be offered or sold on a periodic basis in
connection with the rental of leased space at the self-service storage facility on a master,
corporate, commercial, group, or individual policy basis and only with respect to personal
property insurance that provides coverage to an occupant at the self-service storage facility
where the insurance is transacted for the loss of or damage to stored personal property that
occurs at such facility.
(c) Eligibility and underwriting standards for occupants electing to enroll in coverage
shall be established for each self-service storage insurance program.
SECTION 5. (a) Notwithstanding any law to the contrary, the employees and authorized
representatives of an owner may sell or offer self-service storage insurance to occupants and
shall not be subject to licensure as an insurance producer under this part; provided, that:
(1) The owner obtains a limited lines license to authorize its employees or
authorized representatives to sell or offer self-service storage insurance pursuant to
Section 3 of this act;
(2) The insurer issuing the self-service storage insurance either directly
supervises or appoints a supervising entity to supervise the administration of the
program, including development of a training program for employees and authorized
representatives of the owner. The training required by this subdivision (a)(2) shall
comply with the following:
(A) The training shall be delivered to employees and authorized
representatives of an owner who are directly engaged in the activity of selling
or offering self-service storage insurance;
(B) The training may be provided in electronic form. If the training is
conducted in an electronic form, the supervising entity shall implement a
supplemental education program regarding self-service storage insurance that
is conducted and overseen by the supervising entity; and
(C) Each employee and authorized representative shall receive basic
instruction concerning the self-service storage insurance offered to customers
and the disclosures required under Section 4;
(3) No employee or authorized representative of an owner of self-service
storage space shall advertise, represent or otherwise hold themselves out as a non-
limited lines licensed insurance producer; and
(4) No employee or authorized representative of an owner shall be
compensated based primarily on the number of occupants enrolled for self-service
storage coverage; provided, however, the employee or authorized representative may
receive compensation for activities under the limited lines license which is incidental
to overall compensation.
(b)(1) The charge for self-service storage insurance coverage may be assessed and
collected by the owner; provided, however, such charge shall be a separate item
within or an addendum to a rental agreement.
(2) Owners assessing and collecting such charges shall not be required to
maintain such funds in a segregated account; provided, the owner is authorized by
the insurer to hold such funds in a non-segregated account and remits such amounts
to the supervising entity within sixty (60) days of receipt.
(3) All funds received by an owner from an enrolled occupant for the sale of
self-service storage insurance shall be considered funds held in trust by the owner in
a fiduciary capacity for the benefit of the insurer.
(4) Owners may receive compensation for assessing and collection services.
SECTION 6. If an owner or its employee or authorized representative violates this part, the
commissioner is authorized to:
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(1) After notice and hearing, impose on a person licensed pursuant to this act civil
penalties not to exceed five hundred dollars ($500) per violation and five thousand dollars
($5,000) in the aggregate for such conduct; and
(2) After notice and hearing, impose on a person licensed pursuant to this act other
penalties that the commissioner deems necessary and reasonable to carry out the purpose
of this act, including:
(A) Suspending the privilege of transacting self-service storage insurance
pursuant to this act at specific business locations where violations have occurred; and
(B) Suspending or revoking the authority of individual employees or authorized
representatives to act under a license issued pursuant to Section 3.
SECTION 7. Notwithstanding any other law to the contrary:
(1) An insurer may terminate or otherwise change the terms and conditions of a policy
of self-service storage insurance only upon providing the policyholder and enrolled
occupants with at least thirty (30) days written notice;
(2) If the insurer changes the terms and conditions, then the insurer shall provide the
owner with a revised policy or endorsement and each enrolled occupant with a revised
certificate, endorsement, updated brochure or other evidence indicating a change in the
terms and conditions has occurred and a summary of material changes;
(3) Notwithstanding subdivision (1):
(A) An insurer may terminate an enrolled occupant's enrollment under a self-
service storage insurance policy upon fifteen (15) days written notice for discovery of
fraud or material misrepresentation in obtaining coverage or in the presentation of a
claim thereunder; and
(B) An insurer may immediately terminate an enrolled occupant's enrollment
under a self-service storage insurance policy:
(i) For nonpayment of premium;
(ii) If the enrolled occupant ceases to have active business with the
owner; or
(iii) If an enrolled occupant exhausts the aggregate limit of liability, if
any, under the terms of the self-service storage insurance policy and the
insurer sends written notice of termination to the enrolled occupant within
thirty (30) calendar days after exhaustion of the limit. Provided, however, if
notice is not timely sent, enrollment shall continue notwithstanding the
aggregate limit of liability until the insurer sends written notice of termination to
the enrolled occupant;
(4) If a self-service storage insurance policy is terminated by a policyholder, then the
policyholder shall mail or deliver written notice to each enrolled occupant advising the
enrolled occupant of the termination of the policy and the effective date of termination. The
written notice shall be mailed or delivered to the enrolled occupant at least thirty (30) days
prior to the termination; and
(5)(A) Whenever notice by an insurer is required pursuant to this section, the notice
shall be in writing and may be mailed or delivered to the owner at the owner's mailing
address and to its affected enrolled occupants' last known mailing addresses on file
with the insurer;
(B) If notice is mailed pursuant to this section, then the insurer or owner, as
the case may be, shall maintain proof of mailing in a form authorized or accepted by
the United States Postal Service or other commercial mail delivery service;
(C) An insurer or owner may comply with any notice required by this section
by providing electronic notice to an owner or its affected enrolled occupants, as the
case may be, by electronic means. If notice is accomplished through electronic
means, the insurer or owner, as the case may be, shall maintain proof that the notice
was sent.
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SECTION 8. (a) A sworn application for a license under this part shall be made to and filed
with the commissioner on forms prescribed and furnished by the department.
(b) The application shall:
(1) Provide the name, residence address and other information required by
the department for an individual that is designated by the applicant as the individual
responsible for the owner's compliance with this part and the name of the principal,
officer, employee, or representative who holds a current producer license in this state;
and
(2) Provide the location of the applicant's home office.
(c) Initial licenses issued pursuant to this part shall be valid for a period of twenty-four
(24) months and expire biennially on March 1 of the renewal year assigned by the
commissioner.
(d)(1) Except as provided in subdivision (d)(2), each owner licensed under this part
shall pay to the commissioner a fee as prescribed by the commissioner, but in no
event shall the fee exceed one thousand dollars ($1 ,000) for an initial self-service
storage limited lines license and five hundred dollars ($500) for each renewal.
(2) The fee prescribed for an owner that is engaged in self-service storage
transactions at ten (1 0) or fewer locations in this state shall not exceed one hundred
dollars ($1 00) for an initial license and for each renewal.
SECTION 9. Tennessee Code Annotated, Section 56-6-110, is amended by adding the
following new, appropriately designated subdivision thereto:
( ) Self-service storage insurance;
SECTION 10. Tennessee Code Annotated, Section 56-6-104(b), is amended by adding the
following new, appropriately designated subdivision thereto:
( ) An officer, director, employee or authorized representative of a business entity
engaged in the sale, solicitation or negotiation of self-service storage insurance licensed
pursuant to and acting in compliance with Sections 2-8 of this act;
SECTION 11. The commissioner is authorized to promulgate rules and regulations to
effectuate the purposes of this act. All such rules and regulations shall be promulgated in
accordance with Tennessee Code Annotated, Title 4, Chapter 5.
SECTION 12. For the purpose of promulgating rules and regulations, this act shall take effect
upon becoming law, the public welfare requiring it. For all other purposes, this act shall take effect
July 1, 2013, the public welfare requiring it.
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SENATE BILL NO.
PASSED:
APPROVED this
1147
April 15, 2013

BILL HASLAM, GOVERNOR
2013

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