{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/38.2-1603.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/38.2-1603.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/38.2-1603.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/38.2-1603.html"}],"law_id":81301,"edition_id":1,"section_id":81301,"structure_id":14435,"section_number":"38.2-1603","catch_line":"Definitions","history":"1970, c. 766, \u00a7 38.1-760; 1986, c. 562; 1987, c. 529; 1998, c. 230; 2004, c. 285; 2015, c. 710.","full_text":"As used in this chapter:\n\t\t“Account” means any one of the three accounts created by \u00a7 38.2-1604.\n\t\t“Affiliate” means a person who directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with an insolvent insurer on December 31 of the year next preceding the date the insurer becomes an insolvent insurer.\n\t\t“Association” means the Virginia Property and Casualty Insurance Guaranty Association created under \u00a7 38.2-1604.\n\t\t“Claimant” means any insured making a first party claim or any person instituting a liability claim; provided that no person who is an affiliate of the insolvent insurer may be a claimant.\n\t\t“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, 10 percent or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not exist in fact.\n\t\t“Covered claim” means an unpaid claim, including one for unearned premiums, submitted by a claimant, that (i) arises out of and is within the coverage and is subject to the applicable limits of a policy covered by this chapter and issued by an insurer who has been declared to be an insolvent insurer or (ii) arises out of and is within the coverage and is subject to the applicable limits of a policy that would not be excluded from the coverage of this chapter under the provisions of \u00a7 38.2-1601 if it were a policy of direct insurance and that has been assumed as a direct obligation by an insurer who has been declared to be an insolvent insurer, where such obligation is assumed through a merger or acquisition, or pursuant to an acquisition of assets and assumption of liabilities, an assumption under the provisions of subsection B or C of \u00a7 38.2-136 or a substantially similar law of another jurisdiction, or any other novation agreement. The claimant or insured shall be a resident of the Commonwealth at the time of the insured loss, provided that for entities other than an individual, the residence of a claimant or insured is the state in which its principal place of business is located at the time of the insured loss or the property from which the claim arises shall be permanently located in the Commonwealth. “Covered claim” shall not include any amount awarded as punitive damages or sought as a return of premium under any retrospective rating plan; any amount due any reinsurer, insurer, insurance pool, or underwriting association as subrogation recoveries, reinsurance recoveries, contribution, indemnification, or otherwise; any amount due under any policy originally issued by a surplus lines carrier or risk retention group; any obligation assumed by an insolvent insurer after the commencement of any delinquency proceeding, as defined in Chapter 15 (\u00a7 38.2-1500 et seq.), involving the insolvent insurer or the original insurer, unless it would have been a “covered claim” absent such assumption; or any obligation assumed by an insolvent insurer in a transaction in which the original insurer remains separately liable. An obligation owing under a contract of reinsurance shall not be deemed a direct obligation for the purposes of this definition unless it shall have been assumed pursuant to the provisions of subsection B or C of \u00a7 38.2-136 or a substantially similar law of another jurisdiction. No claim for any amount due any reinsurer, insurer, insurance pool, or underwriting association may be asserted against a person insured under a policy issued by an insolvent insurer other than to the extent the claim exceeds the association obligation limitations set forth in \u00a7 38.2-1606.\n\t\t“Insolvent insurer” means an insurer that is (i) licensed to transact the business of insurance in the Commonwealth either at the time the policy was issued, when the obligation with respect to the covered claim was assumed, or when the insured loss occurred and (ii) against whom an order of liquidation with a finding of insolvency has been entered after July 1, 1987, by a court of competent jurisdiction in the insurer’s state of domicile or of the Commonwealth under the provisions of Chapter 15 (\u00a7 38.2-1500 et seq.), and which order of liquidation has not been stayed or been the subject of a writ of supersedeas or other comparable order.\n\t\t“Member insurer” means any person who (i) writes any class of insurance to which this chapter applies under \u00a7 38.2-1601, including reciprocal insurance contracts, and (ii) is licensed to transact the business of insurance in the Commonwealth but shall not include persons listed in subdivision 9 of \u00a7 38.2-1601.\n\t\t“Net direct written premiums” means direct gross premiums written in the Commonwealth on insurance policies applicable to this chapter, less return premiums and dividends paid or credited to policyholders on direct business. “Net direct written premiums” does not include premiums on contracts between insurers or reinsurers.","order_by":null,"text":{"0":{"id":291387,"text":"As used in this chapter:\n\t\t“Account” means any one of the three accounts created by \u00a7 38.2-1604.\n\t\t“Affiliate” means a person who directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with an insolvent insurer on December 31 of the year next preceding the date the insurer becomes an insolvent insurer.\n\t\t“Association” means the Virginia Property and Casualty Insurance Guaranty Association created under \u00a7 38.2-1604.\n\t\t“Claimant” means any insured making a first party claim or any person instituting a liability claim; provided that no person who is an affiliate of the insolvent insurer may be a claimant.\n\t\t“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, 10 percent or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not exist in fact.\n\t\t“Covered claim” means an unpaid claim, including one for unearned premiums, submitted by a claimant, that (i) arises out of and is within the coverage and is subject to the applicable limits of a policy covered by this chapter and issued by an insurer who has been declared to be an insolvent insurer or (ii) arises out of and is within the coverage and is subject to the applicable limits of a policy that would not be excluded from the coverage of this chapter under the provisions of \u00a7 38.2-1601 if it were a policy of direct insurance and that has been assumed as a direct obligation by an insurer who has been declared to be an insolvent insurer, where such obligation is assumed through a merger or acquisition, or pursuant to an acquisition of assets and assumption of liabilities, an assumption under the provisions of subsection B or C of \u00a7 38.2-136 or a substantially similar law of another jurisdiction, or any other novation agreement. The claimant or insured shall be a resident of the Commonwealth at the time of the insured loss, provided that for entities other than an individual, the residence of a claimant or insured is the state in which its principal place of business is located at the time of the insured loss or the property from which the claim arises shall be permanently located in the Commonwealth. “Covered claim” shall not include any amount awarded as punitive damages or sought as a return of premium under any retrospective rating plan; any amount due any reinsurer, insurer, insurance pool, or underwriting association as subrogation recoveries, reinsurance recoveries, contribution, indemnification, or otherwise; any amount due under any policy originally issued by a surplus lines carrier or risk retention group; any obligation assumed by an insolvent insurer after the commencement of any delinquency proceeding, as defined in Chapter 15 (\u00a7 38.2-1500 et seq.), involving the insolvent insurer or the original insurer, unless it would have been a “covered claim” absent such assumption; or any obligation assumed by an insolvent insurer in a transaction in which the original insurer remains separately liable. An obligation owing under a contract of reinsurance shall not be deemed a direct obligation for the purposes of this definition unless it shall have been assumed pursuant to the provisions of subsection B or C of \u00a7 38.2-136 or a substantially similar law of another jurisdiction. No claim for any amount due any reinsurer, insurer, insurance pool, or underwriting association may be asserted against a person insured under a policy issued by an insolvent insurer other than to the extent the claim exceeds the association obligation limitations set forth in \u00a7 38.2-1606.\n\t\t“Insolvent insurer” means an insurer that is (i) licensed to transact the business of insurance in the Commonwealth either at the time the policy was issued, when the obligation with respect to the covered claim was assumed, or when the insured loss occurred and (ii) against whom an order of liquidation with a finding of insolvency has been entered after July 1, 1987, by a court of competent jurisdiction in the insurer’s state of domicile or of the Commonwealth under the provisions of Chapter 15 (\u00a7 38.2-1500 et seq.), and which order of liquidation has not been stayed or been the subject of a writ of supersedeas or other comparable order.\n\t\t“Member insurer” means any person who (i) writes any class of insurance to which this chapter applies under \u00a7 38.2-1601, including reciprocal insurance contracts, and (ii) is licensed to transact the business of insurance in the Commonwealth but shall not include persons listed in subdivision 9 of \u00a7 38.2-1601.\n\t\t“Net direct written premiums” means direct gross premiums written in the Commonwealth on insurance policies applicable to this chapter, less return premiums and dividends paid or credited to policyholders on direct business. “Net direct written premiums” does not include premiums on contracts between insurers or reinsurers.","type":"section","prefixes":[""],"prefix":"","entire_prefix":"","prefix_anchor":"","level":1}},"ancestry":[{"id":14435,"edition_id":1,"name":"Establishment and Operation of the Association","identifier":"1","label":"article","depth":3,"order_by":1,"parent_id":12868,"metadata":{},"date_created":"2026-06-26 03:48:08","date_modified":"2026-06-26 03:48:08","permalink":{"id":212213,"object_type":"structure","relational_id":14435,"identifier":"1","token":"38.2\/16\/1","url":"\/38.2\/16\/1\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12868,"edition_id":1,"name":"Virginia Property and Casualty Insurance Guaranty Association","identifier":"16","label":"chapter","depth":2,"order_by":1,"parent_id":12698,"metadata":{},"date_created":"2026-06-26 03:43:57","date_modified":"2026-06-26 03:43:57","permalink":{"id":212211,"object_type":"structure","relational_id":12868,"identifier":"16","token":"38.2\/16","url":"\/38.2\/16\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12698,"edition_id":1,"name":"Insurance","identifier":"38.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:49","date_modified":"2026-06-26 03:43:49","permalink":{"id":210661,"object_type":"structure","relational_id":12698,"identifier":"38.2","token":"38.2","url":"\/38.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":69368,"structure_id":14435,"section_number":"38.2-1600","catch_line":"Purpose","url":"\/38.2-1600\/","token":"38.2\/16\/1\/38.2-1600","metadata":false},{"id":82396,"structure_id":14435,"section_number":"38.2-1601","catch_line":"Application","url":"\/38.2-1601\/","token":"38.2\/16\/1\/38.2-1601","metadata":false},{"id":77832,"structure_id":14435,"section_number":"38.2-1602","catch_line":"Liberal construction","url":"\/38.2-1602\/","token":"38.2\/16\/1\/38.2-1602","metadata":false},{"id":81301,"structure_id":14435,"section_number":"38.2-1603","catch_line":"Definitions","url":"\/38.2-1603\/","token":"38.2\/16\/1\/38.2-1603","metadata":false},{"id":86917,"structure_id":14435,"section_number":"38.2-1604","catch_line":"Association created; members; divided into three accounts","url":"\/38.2-1604\/","token":"38.2\/16\/1\/38.2-1604","metadata":false},{"id":71289,"structure_id":14435,"section_number":"38.2-1605","catch_line":"Board of directors","url":"\/38.2-1605\/","token":"38.2\/16\/1\/38.2-1605","metadata":false},{"id":72860,"structure_id":14435,"section_number":"38.2-1606","catch_line":"Duties and powers of Association","url":"\/38.2-1606\/","token":"38.2\/16\/1\/38.2-1606","metadata":false},{"id":72859,"structure_id":14435,"section_number":"38.2-1607","catch_line":"Plan of operation","url":"\/38.2-1607\/","token":"38.2\/16\/1\/38.2-1607","metadata":false},{"id":83949,"structure_id":14435,"section_number":"38.2-1608","catch_line":"Duties and powers of Commission; judicial review","url":"\/38.2-1608\/","token":"38.2\/16\/1\/38.2-1608","metadata":false},{"id":57575,"structure_id":14435,"section_number":"38.2-1609","catch_line":"Insured's rights and liabilities; settlements binding on receiver or liquidator; priority of claims; statements to be filed with receiver or liquidator","url":"\/38.2-1609\/","token":"38.2\/16\/1\/38.2-1609","metadata":false},{"id":68508,"structure_id":14435,"section_number":"38.2-1610","catch_line":"Exhaustion of remedies under policy; claims recoverable from more than one association","url":"\/38.2-1610\/","token":"38.2\/16\/1\/38.2-1610","metadata":false},{"id":85806,"structure_id":14435,"section_number":"38.2-1611","catch_line":"Aids in detection and prevention of insurer insolvencies","url":"\/38.2-1611\/","token":"38.2\/16\/1\/38.2-1611","metadata":false},{"id":83184,"structure_id":14435,"section_number":"38.2-1611.1","catch_line":"Tax write-offs of certificates of contribution","url":"\/38.2-1611.1\/","token":"38.2\/16\/1\/38.2-1611.1","metadata":false},{"id":60574,"structure_id":14435,"section_number":"38.2-1612","catch_line":"Examination and regulation of Association by Commission; annual financial report","url":"\/38.2-1612\/","token":"38.2\/16\/1\/38.2-1612","metadata":false},{"id":80495,"structure_id":14435,"section_number":"38.2-1613","catch_line":"Exemption from payment of fees and taxes","url":"\/38.2-1613\/","token":"38.2\/16\/1\/38.2-1613","metadata":false},{"id":72837,"structure_id":14435,"section_number":"38.2-1614","catch_line":"Repealed","url":"\/38.2-1614\/","token":"38.2\/16\/1\/38.2-1614","metadata":false},{"id":58179,"structure_id":14435,"section_number":"38.2-1615","catch_line":"No liability for action taken in good faith","url":"\/38.2-1615\/","token":"38.2\/16\/1\/38.2-1615","metadata":false},{"id":55799,"structure_id":14435,"section_number":"38.2-1616","catch_line":"Stay of proceedings against insolvent insurer; setting aside judgment, etc.; access to records","url":"\/38.2-1616\/","token":"38.2\/16\/1\/38.2-1616","metadata":false},{"id":82413,"structure_id":14435,"section_number":"38.2-1617","catch_line":"Termination of operation of Association; expiration of chapter","url":"\/38.2-1617\/","token":"38.2\/16\/1\/38.2-1617","metadata":false}],"previous_section":{"id":77832,"structure_id":14435,"section_number":"38.2-1602","catch_line":"Liberal construction","url":"\/38.2-1602\/","token":"38.2\/16\/1\/38.2-1602","metadata":false},"next_section":{"id":86917,"structure_id":14435,"section_number":"38.2-1604","catch_line":"Association created; members; divided into three accounts","url":"\/38.2-1604\/","token":"38.2\/16\/1\/38.2-1604","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/38.2-1603\/","history_text":"

This law was first created in 1970. The record of its establishment is cataloged in chapter 766 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1970 \u201cActs\u201d aren\u2019t available online. It has been modified 5 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1986, chapter 562; in 1987, chapter 529; in 1998, chapter 230<\/a>; in 2004, chapter 285<\/a>; in 2015, chapter 710<\/a>.<\/p>","references":[{"id":66006,"section_number":"38.2-1509","catch_line":"Powers of Commission when authorized to rehabilitate or liquidate insurers by court order; disbursement of available assets to an association, etc","order_by":null,"url":"\/38.2-1509\/"},{"id":86917,"section_number":"38.2-1604","catch_line":"Association created; members; divided into three accounts","order_by":null,"url":"\/38.2-1604\/"}],"refers_to":[{"id":83796,"section_number":"38.2-136","catch_line":"Reinsurance","order_by":null,"url":"\/38.2-136\/"},{"id":66658,"section_number":"38.2-1500","catch_line":"Scope of chapter","order_by":null,"url":"\/38.2-1500\/"},{"id":82396,"section_number":"38.2-1601","catch_line":"Application","order_by":null,"url":"\/38.2-1601\/"},{"id":86917,"section_number":"38.2-1604","catch_line":"Association created; members; divided into three accounts","order_by":null,"url":"\/38.2-1604\/"},{"id":72860,"section_number":"38.2-1606","catch_line":"Duties and powers of Association","order_by":null,"url":"\/38.2-1606\/"}],"permalink":{"id":212227,"object_type":"law","relational_id":81301,"identifier":"38.2-1603","token":"38.2\/16\/1\/38.2-1603","url":"\/38.2-1603\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/38.2-1603\/","token":"38.2\/16\/1\/38.2-1603","dublin_core":{"Title":"Definitions","Type":"Text","Format":"text\/html","Identifier":"\u00a7 38.2-1603","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

As used in this chapter:\n\t\t“Account<\/span>” means any one of the three accounts<\/span> created by \u00a7 38.2-1604<\/a>.\n\t\t“Affiliate<\/span>” means a person<\/span> who directly, or indirectly, through one or more intermediaries, controls<\/span>, is controlled by, or is under common control<\/span> with an insolvent insurer<\/span> on December 31 of the year next preceding the date the insurer becomes an insolvent insurer<\/span>.\n\t\t“Association<\/span>” means the Virginia Property and Casualty Insurance Guaranty Association<\/span> created under \u00a7 38.2-1604<\/a>.\n\t\t“Claimant<\/span>” means any insured making a first party<\/span> claim or any person<\/span> instituting a liability claim; provided that no person<\/span> who is an affiliate<\/span> of the insolvent insurer<\/span> may be a claimant<\/span>.\n\t\t“Control<\/span>” means the possession<\/span>, direct or indirect, of the power to direct or cause the direction of the management and policies of a person<\/span>, whether through the ownership of voting securities, by contract<\/span> other than a commercial contract<\/span> for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person<\/span>. Control<\/span> shall be presumed to exist if any person<\/span>, directly or indirectly, owns, controls<\/span>, holds with the power to vote, or holds proxies representing, 10 percent or more of the voting securities of any other person<\/span>. This presumption<\/span> may be rebutted by a showing that control<\/span> does not exist in fact<\/span>.\n\t\t“Covered claim<\/span>” means an unpaid claim, including one for unearned premiums, submitted by a claimant<\/span>, that (i) arises out of and is within the coverage and is subject to the applicable limits of a policy covered by this chapter and issued by an insurer who has been declared to be an insolvent insurer<\/span> or (ii) arises out of and is within the coverage and is subject to the applicable limits of a policy that would not be excluded from the coverage of this chapter under the provisions of \u00a7 38.2-1601<\/a> if it were a policy of direct insurance and that has been assumed as a direct obligation by an insurer who has been declared to be an insolvent insurer<\/span>, where such obligation is assumed through a merger or acquisition, or pursuant to an acquisition of assets<\/span> and assumption of liabilities, an assumption under the provisions of subsection B or C of \u00a7 38.2-136<\/a> or a substantially similar law<\/span> of another jurisdiction<\/span>, or any other novation agreement. The claimant<\/span> or insured shall be a resident of the Commonwealth at the time of the insured loss, provided that for entities other than an individual, the residence of a claimant<\/span> or insured is the state<\/span> in which its principal place of business is located at the time of the insured loss or the property from which the claim arises shall be permanently located in the Commonwealth. “Covered claim<\/span>” shall not include any amount awarded as punitive damages<\/span> or sought as a return of premium under any retrospective rating plan; any amount due any reinsurer, insurer, insurance pool, or underwriting association<\/span> as subrogation recoveries, reinsurance recoveries, contribution, indemnification, or otherwise; any amount due under any policy originally issued by a surplus lines carrier or risk retention group; any obligation assumed by an insolvent insurer<\/span> after the commencement of any delinquency proceeding, as defined in Chapter 15 (\u00a7 38.2-1500<\/a> et seq.), involving the insolvent insurer<\/span> or the original insurer, unless it would have been a “covered claim<\/span>” absent such assumption; or any obligation assumed by an insolvent insurer<\/span> in a transaction in which the original insurer remains separately liable. An obligation owing under a contract<\/span> of reinsurance shall not be deemed a direct obligation for the purposes of this definition unless it shall have been assumed pursuant to the provisions of subsection B or C of \u00a7 38.2-136<\/a> or a substantially similar law<\/span> of another jurisdiction<\/span>. No claim for any amount due any reinsurer, insurer, insurance pool, or underwriting association<\/span> may be asserted against a person<\/span> insured under a policy issued by an insolvent insurer<\/span> other than to the extent the claim exceeds the association<\/span> obligation limitations set forth in \u00a7 38.2-1606<\/a>.\n\t\t“Insolvent insurer<\/span>” means an insurer that is (i) licensed to transact the business of insurance in the Commonwealth either at the time the policy was issued, when the obligation with respect to the covered claim<\/span> was assumed, or when the insured loss occurred and (ii) against whom an order<\/span> of liquidation<\/span> with a finding<\/span> of insolvency has been entered after July 1, 1987, by a court<\/span> of competent jurisdiction<\/span> in the insurer’s state<\/span> of domicile or of the Commonwealth under the provisions of Chapter 15 (\u00a7 38.2-1500<\/a> et seq.), and which order<\/span> of liquidation<\/span> has not been stayed or been the subject of a writ<\/span> of supersedeas or other comparable order<\/span>.\n\t\t“Member insurer<\/span>” means any person<\/span> who (i) writes any class of insurance to which this chapter applies under \u00a7 38.2-1601<\/a>, including reciprocal insurance contracts<\/span>, and (ii) is licensed to transact the business of insurance in the Commonwealth but shall not include persons<\/span> listed in subdivision 9 of \u00a7 38.2-1601<\/a>.\n\t\t“Net direct written premiums<\/span>” means direct gross premiums written in the Commonwealth on insurance policies<\/span> applicable to this chapter, less return premiums and dividends paid or credited to policyholders on direct business. “Net direct written premiums<\/span>” does not include premiums on contracts between insurers<\/span> or reinsurers.<\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nDEFINITIONS (\u00a7 38.2-1603)\n\nAs used in this chapter:\n\t\t“Account” means any one of the three accounts created by \u00a7\n38.2-1604.\n\t\t“Affiliate” means a person who directly, or indirectly, through\none or more intermediaries, controls, is controlled by, or is under common\ncontrol with an insolvent insurer on December 31 of the year next preceding the\ndate the insurer becomes an insolvent insurer.\n\t\t“Association” means the Virginia Property and Casualty Insurance\nGuaranty Association created under \u00a7 38.2-1604.\n\t\t“Claimant” means any insured making a first party claim or any\nperson instituting a liability claim; provided that no person who is an\naffiliate of the insolvent insurer may be a claimant.\n\t\t“Control” means the possession, direct or indirect, of the power\nto direct or cause the direction of the management and policies of a person,\nwhether through the ownership of voting securities, by contract other than a\ncommercial contract for goods or nonmanagement services, or otherwise, unless\nthe power is the result of an official position with or corporate office held by\nthe person. Control shall be presumed to exist if any person, directly or\nindirectly, owns, controls, holds with the power to vote, or holds proxies\nrepresenting, 10 percent or more of the voting securities of any other person.\nThis presumption may be rebutted by a showing that control does not exist in\nfact.\n\t\t“Covered claim” means an unpaid claim, including one for unearned\npremiums, submitted by a claimant, that (i) arises out of and is within the\ncoverage and is subject to the applicable limits of a policy covered by this\nchapter and issued by an insurer who has been declared to be an insolvent\ninsurer or (ii) arises out of and is within the coverage and is subject to the\napplicable limits of a policy that would not be excluded from the coverage of\nthis chapter under the provisions of \u00a7 38.2-1601 if it were a policy of direct\ninsurance and that has been assumed as a direct obligation by an insurer who has\nbeen declared to be an insolvent insurer, where such obligation is assumed\nthrough a merger or acquisition, or pursuant to an acquisition of assets and\nassumption of liabilities, an assumption under the provisions of subsection B or\nC of \u00a7 38.2-136 or a substantially similar law of another jurisdiction, or any\nother novation agreement. The claimant or insured shall be a resident of the\nCommonwealth at the time of the insured loss, provided that for entities other\nthan an individual, the residence of a claimant or insured is the state in which\nits principal place of business is located at the time of the insured loss or\nthe property from which the claim arises shall be permanently located in the\nCommonwealth. “Covered claim” shall not include any amount awarded\nas punitive damages or sought as a return of premium under any retrospective\nrating plan; any amount due any reinsurer, insurer, insurance pool, or\nunderwriting association as subrogation recoveries, reinsurance recoveries,\ncontribution, indemnification, or otherwise; any amount due under any policy\noriginally issued by a surplus lines carrier or risk retention group; any\nobligation assumed by an insolvent insurer after the commencement of any\ndelinquency proceeding, as defined in Chapter 15 (\u00a7 38.2-1500 et seq.),\ninvolving the insolvent insurer or the original insurer, unless it would have\nbeen a “covered claim” absent such assumption; or any obligation\nassumed by an insolvent insurer in a transaction in which the original insurer\nremains separately liable. An obligation owing under a contract of reinsurance\nshall not be deemed a direct obligation for the purposes of this definition\nunless it shall have been assumed pursuant to the provisions of subsection B or\nC of \u00a7 38.2-136 or a substantially similar law of another jurisdiction. No\nclaim for any amount due any reinsurer, insurer, insurance pool, or underwriting\nassociation may be asserted against a person insured under a policy issued by an\ninsolvent insurer other than to the extent the claim exceeds the association\nobligation limitations set forth in \u00a7 38.2-1606.\n\t\t“Insolvent insurer” means an insurer that is (i) licensed to\ntransact the business of insurance in the Commonwealth either at the time the\npolicy was issued, when the obligation with respect to the covered claim was\nassumed, or when the insured loss occurred and (ii) against whom an order of\nliquidation with a finding of insolvency has been entered after July 1, 1987, by\na court of competent jurisdiction in the insurer’s state of domicile or of\nthe Commonwealth under the provisions of Chapter 15 (\u00a7 38.2-1500 et seq.), and\nwhich order of liquidation has not been stayed or been the subject of a writ of\nsupersedeas or other comparable order.\n\t\t“Member insurer” means any person who (i) writes any class of\ninsurance to which this chapter applies under \u00a7 38.2-1601, including reciprocal\ninsurance contracts, and (ii) is licensed to transact the business of insurance\nin the Commonwealth but shall not include persons listed in subdivision 9 of \u00a7\n38.2-1601.\n\t\t“Net direct written premiums” means direct gross premiums written\nin the Commonwealth on insurance policies applicable to this chapter, less\nreturn premiums and dividends paid or credited to policyholders on direct\nbusiness. “Net direct written premiums” does not include premiums on\ncontracts between insurers or reinsurers.\n\nHISTORY: 1970, c. 766, \u00a7 38.1-760; 1986, c. 562; 1987, c. 529; 1998, c. 230;\n2004, c. 285; 2015, c. 710.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}