TITLE 16 OCCUPATIONAL AND PROFESSIONAL
LICENSING
CHAPTER 61 REAL ESTATE BROKERS
PART 5 ERRORS
AND OMISSIONS INSURANCE
16.61.5.1 ISSUING AGENCY: New
Mexico Real Estate Commission.
[16.61.5.1 NMAC - N,
1-1-2002]
16.61.5.2 SCOPE: The
provisions in Part 5 of Chapter 61 apply to all applicants for and holders of
active New Mexico real estate broker’s licenses.
[16.61.5.2 NMAC - N,
1-1-2002; A, 1-1-2006]
16.61.5.3 STATUTORY AUTHORITY: Part
5 of Chapter 61 is promulgated pursuant to the Real Estate Licensing Law, NMSA
1978 Section 61-29-4.2.
[16.61.5.3 NMAC - N,
1-1-2002]
16.61.5.4 DURATION: Permanent.
[16.61.5.4 NMAC - N,
1-1-2002]
16.61.5.5 EFFECTIVE DATE: 1-1-2002, unless a later date is cited at the end of a
section.
[16.61.5.5 NMAC - N,
1-1-2002]
16.61.5.6 OBJECTIVE: The
objective of Part 5 of Chapter 61 is to set forth the errors and omissions
insurance coverage requirements for all applicants for and holders of active
New Mexico real estate broker's licenses.
[16.61.5.6 NMAC - N,
1-1-2002; A, 1-1-2006]
16.61.5.7 DEFINITIONS: Refer
to 16.61.1.7 NMAC.
[16.61.5.7 NMAC - N,
1-1-2002]
16.61.5.8 GROUP ERRORS AND OMISSIONS
INSURANCE POLICY: Effective January 1, 2002 every active New
Mexico real estate broker shall have in effect a policy of errors and omissions
insurance. The commission shall enter into a contract with a qualified insurance carrier or
its agent or broker to make available to all New Mexico real estate brokers and
broker applicants a group policy of insurance under the following terms and
conditions:
A. the insurance
carrier is licensed and authorized by the New Mexico department of insurance to
write policies of errors and omissions insurance in New
Mexico;
B. the insurance
carrier maintains an A.M. Best rating of “B” or better;
C. the insurance
carrier will collect premiums, maintain records and report names of those
insured and a record of claims to the commission on a timely basis and at no
expense to the state;
D. the insurance
carrier has been selected through a competitive bidding process;
E. the contract and
policy are in conformance with Part 5 and all relevant New Mexico statutory
requirements.
[16.61.5.8 NMAC - N,
1-1-2002; A, 1-1-2006]
16.61.5.9 TERMS OF COVERAGE: The
group policy shall provide, at a minimum, the following terms of coverage:
A. coverage of all
acts for which a real estate license is required, except those illegal,
fraudulent or other acts which are normally excluded from such coverage;
B. an annual
premium not to exceed the amount set by statute 61-29-4.2B NMSA 1978;
C. that the
coverage cannot be cancelled by the insurance carrier except for non-payment of
the premium or in the event a broker becomes inactive or has their license
revoked or an applicant is denied a license;
D. pro-ration of
premiums for coverage which is purchased during the course of the calendar year
but with no provision for refunds of unused premiums;
E. not less than
$100,000 coverage for each licensed individual and entity per covered claim
regardless of the number of brokers or entities to which a settlement or claim
may apply;
F. an aggregate
limit of $500,000 per licensed individual or entity;
G. a deductible
amount for each claim of not more than $1,000 per claim and no deductible for
legal expenses and defense;
H. payment of
claims by the provider shall be on a first dollar basis and the provider shall
look to the insured for payment of any deductible;
I. the obligation
of the insurance carrier to defend all covered claims with payment of defense
costs outside of policy limits;
J. coverage of a
broker’s use of lock boxes which may include a sublimit of not less than $5,000
per claim for property damage or loss of use of property arising from a lock
box claim;
K. the ability of
a broker, upon payment of an additional premium, to obtain higher or excess
coverage or to purchase additional coverage from the insurance provider as may
be determined by the provider;
L. that coverage is
individual and license specific and will cover the associate broker regardless
of changes in qualifying broker;
M. an extended
reporting period of not less than 365 days;
N. a conformity
endorsement allowing a New Mexico resident broker to meet errors and omissions
insurance requirements for an active license in another group mandated state
without the need to purchase separate coverage in that state.
[16.61.5.9 NMAC - N,
1-1-2002; A, 1-1-2006; A, 12-31-2008; A, 1-1-2017]
16.61.5.10 EQUIVALENT ERRORS AND OMISSIONS
INSURANCE POLICIES: New Mexico real estate associate broker or
qualifying broker applicants may obtain errors and omissions coverage
equivalent to the group plan from any insurance carrier subject to the
following terms and conditions.
A. The insurance
carrier is licensed and authorized by the New Mexico department of insurance to
write policies of errors and omissions insurance in this state and is in
conformance with all New Mexico statutes.
B. The insurance
provider maintains an A.M. Best rating of “B” or better.
C. The policy, at a
minimum, complies with all relevant conditions set forth in this rule and the
insurance carrier so certifies in a certificate issued to the insured real
estate broker or broker applicant in a form acceptable to the commission and
agrees to immediately notify the commission of any cancellation or lapse in
coverage. The commission will make no
independent determination of whether equivalent policies meet the requirements
of Part 5.
D. Coverage
includes all acts for which a real estate license is required, except those
illegal, fraudulent or other acts which are normally
excluded from such coverage.
E. Coverage cannot
be cancelled by the insurance provider except for nonpayment of premium or in
the event a broker becomes inactive or the license is
revoked, or in the event an applicant is denied a license.
F. Coverage is for
not less than $100,000 for each licensed individual and entity per covered
claim and not less than a $500,000 aggregate limit per licensed individual or
entity.
G. A deductible
amount for each claim of not more than $1,000.
H. Payment of
claims by the provider shall be on a first dollar basis and the provider shall
look to the insured for payment of any deductible.
I. The obligation
of the insurance carrier to defend all covered claims with defense costs
outside of policy limits.
J. Coverage of a
broker’s use of lock boxes which may include a sublimit of not less than $5,000
per claim for property damage or loss of use of property arising from a lock
box claim.
K. Real estate
brokers or broker applicants who obtain equivalent coverage and wish to be on
active status must present to the commission the certificate referred to in
16.61.5.10 NMAC:
(1) when renewing an active license, no later
than at the time of renewal; or
(2) upon any request for reinstatement or
activation of a license; or
(3) upon application for an active
license.
L. An automatic
90-day extended reporting period with the ability of the broker, upon payment
of an additional premium, to obtain an optional extended reporting period of
one, two, or three years.
[16.61.5.10 NMAC -
N, 1-1-2002; A, 1-1-2017]
16.61.5.11 BROKER COMPLIANCE: Applicants
for licensure, transfer, and renewal shall certify compliance with this rule by
submitting along with the license, transfer, or renewal application a copy of a
certificate from their insurance company certifying current coverage. The commission will not issue an active
license to a first time applicant who fails to provide
proof of current coverage, and the license of any active New Mexico broker who
fails to provide a certificate certifying current errors and omissions coverage
will not be renewed or transferred until such certificate is received in the
commission office
[16.61.5.11 NMAC -
N, 1-1-2002; A, 1-1-2006]
16.61.5.12 INSURANCE REQUIREMENTS SUSPENDED: The
requirements of 16.61.5 NMAC shall be suspended if the commission through a
competitive bidding and contract award process is not able to enter into a contract with a qualified insurance carrier to
make available to all applicants for or holders of active New Mexico real
estate broker's licenses a group policy of insurance under the terms and
conditions described in Part 5.
[16.61.5.12 NMAC -
N, 1-1-2002; A, 1-1-2006]
16.61.5.13 PENALTIES FOR VIOLATION:
Brokers who fail to obtain and maintain an errors and omissions
insurance policy as specified herein are guilty of violating NMSA 1978 Section
61-29-4.2 of the Real Estate License Law and are subject to license suspension
and revocation as provided in Section 61-29-12 A (10).
[16.61.5.13 NMAC -
N, 1-1-2006]
HISTORY of
16.61.5 NMAC: [RESERVED]