Corporations, Associations, and Partnerships

Professional Service Corporations

SECTION 7-5.1-8

§ 7-5.1-8. Insurance required.

(a) Every professional service corporation shall maintain insurance against any liability imposed by law upon the corporation or its employees arising out of the performance of professional services, excluding liability for claims brought about or contributed to by the dishonest, fraudulent, criminal, or malicious acts or omissions of any employee. The insurance shall be maintained in a company lawfully authorized to write insurance in this state and shall be, with respect to each claim, in the aggregate amount of fifty thousand dollars ($50,000) multiplied by the number of professional employees of the corporation as of the policy anniversary date. However, in no case is the coverage to be less than one hundred thousand dollars ($100,000). Not more than five hundred thousand dollars ($500,000) coverage is to be required of any corporation. Any policy for insurance coverage may include a deductible provision in an amount not to exceed twenty-five thousand dollars ($25,000) for each claim multiplied by the number of professional employees of the corporation as of the date of the issuance of the policy.

(b) Every insurance company shall furnish to the incorporators of each corporation to be insured by it a certificate reciting that application for the insurance has been duly made and that a policy of insurance as required will be issued, the amount of coverage to be provided, and the expiration date of the policy. The incorporators shall file the certificate in the office of the secretary of state at the time of filing the articles of association, and the secretary of state shall not certify the articles of association unless the certificate of insurance has been filed. Subsequently, every insurer shall notify the secretary of state and the insured of the termination of the insurance not more than thirty (30) days nor less than ten (10) days before the effective date of the termination. Upon receipt of the notice, the secretary of state shall inform the appropriate regulatory agency of the notice.

History of Section.
(P.L. 1964, ch. 185, § 1; P.L. 1968, ch. 236, § 1; P.L. 1972, ch. 100, § 6; P.L. 1977, ch. 250, § 1; P.L. 1986, ch. 90, § 1; P.L. 2005, ch. 36, § 3; P.L. 2005, ch. 72, § 3.)